How do popular free sites, make so much money?

[Trevor]

Yes the ads make the money.

However it is interesting to note that while Twitter and Youtube are huge sites and are worth a huge amount they actually loose money. That's right they are not in any way profitable. It is their huge online presence and potential to one day turn over big profits that keeps the companies alive.

Another interesting thing to look at is the information these companies get. Much of it ends up being sold to third parties, so be aware of that.