Reviewers are paid by not having to pay for reviews of their own papers. To be sure, many reviews are not worth the time to read them, but the good ones have been invaluable to increasing the quality of my work.
The need for a journal in the first place is, in small part, to coordinate peer-review. Eliminate pre-publication peer review and you eliminate, in a small part, the need for a journal.
The fact that a coordinator like a publisher exists isn’t necessarily in dispute. Sometimes it’s necessary to have a 3rd party coordinate reviewers, maintain quality standards, and settle plagiarism disputes. The issue is the price. It’s wholly unreasonable to charge $30 to read a paper, to charge a PI upwards of $2k-$7k to remove the $30 reader charge, or to charge whatever ungodly amount they charge libraries to offer free access to researchers.
Like I said, I’d value the service I get at a factor of 10-20x less than what they charge.
the question how to best organize academic peer review is independent from the price gauging.