Chris has a great response to The Economist on free models. I’ve long argued that free often gets misread as literally free. (the comments are worth reading)
Every customer comes with a cost. Rather than pay to market to you and obtain revenue now, instead I choose little or no marketing or distribution cost, focusing instead on the belief that you will pay for the product later. These freemium models are all round us. Google is doing it with Picasa. Flickr with FlickrPro.
There are those that also believe that, if you believe, you will pay. CC Cleaner is a great example. Terrific free utility for Windows. You pay to support the product if you think it is worth it. And its worth it. They are essentially monetizing a percent of their customer base that has a conscience or real enthusiasm for what they are doing.