If you got everything for free, do you think you think you would feel the same way about it as if you had paid for it?
Here's a personal anecdote: for close to 15 years I was a freelance journalist in the music industry. Along with interviewing musicians and attending concerts, my gig also involved reviewing CDs (and for a time, it was mostly vinyl and cassettes). Over the course of that career, I had accumulated close to 20,000 CDs. Almost everything that the major, minor and indie labels released was dropped in my mailbox multiple times every week. From new releases to boxed sets, compilations and re-releases of entire collections. If you love music (like I do), that's a pretty sweet ride, but with it came a very interesting understanding of the value of free. Prior to this work, I was a music fan too. I would hear about a band working on a new album and would wait with bated breath for the release. Sometimes, I would wait in line on the day of the release and fork over my hard-earned money to hear what artistic majesty they had created. Then, when suddenly everything that comes out is being sent to me for free (sometimes even pre-release date as an advance), you start to lose perspective.
When you pay for something, you appreciate it more than when you get it for free.
That may sound counterintuitive, but it's true. When I would wait for a band to release their new album, then wait in line for a few hours to get it, pay for it, and then finally get home to listen to it, it was hard to dislike it (even it wasn't so great). The main reason is that you would feel a little stupid inside, and nobody wants to feel stupid, so we tend to look for the good in it (especially when we paid for it). It's also one of the main reasons why people get so vocal when it comes to reading negative reviews of bands they like. It's important to remember that most reviewers get their music for free (and tons of it), so they have no vested personal emotion in it.
Free is more disposable.
Mike Lipkin is a great motivational speaker, and one of my favourite lines from him that he uses onstage is: "I would do this for free, but I am going to make you pay for it so that you appreciate what you're getting." TouchÃ©. So, yes free is a great marketing strategy to drive interest and intent (for more on this, be sure to check out Chris Anderson's book, Free - The Future of a Radical Price), but it's not a long-term strategy to develop real relationships with your customers. The music, newspaper, publishing and movie industry is learning about this the hard way.
The bigger challenge is going to be in finding a consumer base that digs deep enough to understand that in a world where everything is free, there is also plenty of ambiguity and lack of loyalty.