A ton of people use Outlook.com. The choice is usually not about the presence of ads (these are very moderate with both providers), but about the UX one finds more convenient / used to. When something like Protonmail supports tags, I may give them a try.

I do pay for Youtube premium, because without that, the amount of ads really annoys me. I usually buy ad-free versions of freemium Android apps. There must be some value to pay for; making the free version annoying subtracts enough value that paying for the uncrippled version becomes a reasonable choice. (I usually buy paid versions of open-source apps to keep them open-source; that's also a value.)

Also, a lot of people are very much not well off. They often don't have that extra $5; I remember being in that state myself as a student. So they will put up with free shit, even if it has a noticeable shit component :(