Free content is attributable to more readers, thus more advertising dollars and subscribers. Conference talks online are attributable to more people wanting to come next year. Free product generates paying customers for premium product (freemium). Free food samples is attributable to more customers.
I hear these arguments all the time for free content. This blog does generate me paying customers for my consulting services. My course on how to get customers over Facebook probably will generate some genuine leads (with no pressure sell, so feel free to join up). Freemium products do generate some paying customers.
But at some point you need to draw the line. Sometimes there is a mismatch. There comes a point where everybody who will pay is paying, or the conversions to paying customers is of a higher cost than supporting the free userbase. We saw this with Ning who have removed any possibility of a free option, including for existing free users. I’m a firm believer in charging and making money from product (that includes intellectual capital).
If your conversions are low maybe it is because you are giving away too much for free. Often we remain delusional and expect the old conversions rates. Figuring out when we reach this point is terribly difficult. Maybe everybody who would pay is already paying. Then what do you do?