Free does make business sense in the web world when advertising was the primary revenue driver. You cannot sell meaningful advertising without meaningful inventory, so there is a period where you spend "free" with meaningful inventory.
The larger question is whether other business models require the same focus on building a free userbase before implementing the business model. For all those services that charge, it affects user behavior if you implement too early and may limit the market size of the product. But on the flip side, sometimes if you charge, it conveys a sense of value upon the product.
If twitter started charging from the get-go, it would not be as big or as useful of a service as it is now.
The larger question is whether other business models require the same focus on building a free userbase before implementing the business model. For all those services that charge, it affects user behavior if you implement too early and may limit the market size of the product. But on the flip side, sometimes if you charge, it conveys a sense of value upon the product.
If twitter started charging from the get-go, it would not be as big or as useful of a service as it is now.