There are two scenario's I'm wondering about, which would be the best way to make profit, and make sure it's legal (it sort of sounds like a pyramid scheme). Ok:

Business: E-mail system

Option A:
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10 friends are selected to be "Head Recruiters." These 10 people must sign up for our e-mail. They pay $1 / month to use it. These Head Recruiters' job is to recruit people. For each person they recruit, they will get paid 25 cents / month from the Head Admin. So if they recruit more than 4 people, they are being paid monthly to have e-mail. Now, to keep spreading customers this is what happens. Those people they recruit, are told they can make money. But the Head recruiter will be in charge of that part. So the head recruiter pays them 25 cents / month for each person this new customer recruits. This new person will pay their dollar to us directly still, but will be paid by the Head recruiter. This recruitee is told that they can tell thier recruitees can make money the same way. But the difference is, they are paid by Head Admin instead of the person who recruited them, since the person who recruited him is a recruitee, not a Head Recruiter.

So in all, Option A has a Hierarchy:
Head Admin (pays Head Recruiters)
Head Recruiters (pays recruitees)
1st level Recruitees (they do not deal money to their recruitees, but tell them to talk to Head Admin, but are paid by their Head Recruiter)
2nd level Recruitees (they do not deal money to their recruitees, but tell them to talk to Head Admin, and are paid by the Head Admin)


Option B:
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The same basic principal applies, except this is the difference. The people the Head Recruiters recruit, are told they can make money in the same manner, but they are paid by Head Admin, not the Head Recruiter. So that really makes the Head Recruiter title meaningless, since all customers will be on the same level in the hierarchy.

1) Which option seems to maximize profit?
2) Which option seems to seem the most fair?
3) Are both options legal?
4) Which option seems to be the most reliable?

Tell me again why I should pay you for e-mail, when I can get it for free? I have 5 e-mail accounts that are free.
And yes it does sound like a pyramid scheme.

Very bad ideas all together

How do successful e-mail providers make a profit? I mean, how can they afford it and all? Don't they somehow make a profit?

They tend to do other things - be an ISP or a hosting company or have a product. Or be a company like MS. What is going to set your product apart from anyone else's? Will you let them have a personal domain name? (oh wait, it's been done already).

Oh man! My Spam directory is full with stuff like that.

make a website with free email.
sell addspace.
sell "premium option" acounts. (there's gotta be some suckers out there who will buy this stuff.)

I know this sounds stupid: but what's wrong with a real job? you won't become a millionaire on the internet wave, the dot com boom has busted.
only the best surrvive.

titanium_geek

My advice:

- never mention "pyramid"...
- put down some numbers, to make it clearer, even if you would realise this thing I don't see a way of making good profit
- do you really believe in this stuff? what is the real deal??? (I have the feeling you are keeping something back, obviously, otherwise see my next advice)
- never announce your business idea's before they are realised

goodluck and be persistent with any business you undertake, the boom is past but be innovative with applicating current services and models to new services, real services (and or goods) which make sense, otherwise you will fail for sure and running a business in an opportunistic way will not work for long I think. Plus people tend to abandon email accounts over time and stick to their first one... do some more research ;-)

How about getting a job like a regular person