The knee-jerk reaction to this is to say "free is stupid."  But I agree with the minority here... it's possible to envision a scenario in which something is given free and leads to payment by some means afterward.

I've posted my watermarked images at flickr for people to use.  My watermark is very prominent, so when the user puts it on his blog he is advertising my work.   This user was not going to buy images from anyone to begin with.  He might as well have my watermarked image, often with a credit that Google picks up so I also get good SEO out of the deal.   But how do I actually profit from this?  Many people have found me after doing image searches on Flickr and asked me to do custom work for them.  "Free" has worked very well for me so far.

You may not like it, but it's a movement that you're going to have to deal with sooner or later.  Figure out how to make free work for you or compete with those who have.

Here's an excerpt from a recent Wired article:

"Once a marketing gimmick, free has emerged as a full-fledged economy. Offering free music proved successful for Radiohead, Trent Reznor of Nine Inch Nails, and a swarm of other bands on MySpace that grasped the audience-building merits of zero. The fastest-growing parts of the gaming industry are ad-supported casual games online and free-to-try massively multiplayer online games. Virtually everything Google does is free to consumers, from Gmail to Picasa to GOOG-411.

The rise of "freeconomics" is being driven by the underlying technologies that power the Web. Just as Moore's law dictates that a unit of processing power halves in price every 18 months, the price of bandwidth and storage is dropping even faster. Which is to say, the trend lines that determine the cost of doing business online all point the same way: to zero."

FULL ARTICLE: http://www.wired.com/techbiz/it/magazine/16-03/ff_free

Overall, from the stock site's point of view the freemiums make good sense. If were a buyer and looked at a dozen or so really crappy free images and then saw some good ones next to them for just a few bucks I'd go for the good ones every time. However, I'd also be thinking "bait and switch" and maybe think that there was some sleaze goin' on. I guess it would boil down to how much work I'd have to do to wade through the garbage and find the gems.

Guys the concept of "Freemium" although we do not like it is here to stay. I have heard various movers and shakers on the management side of micro talking about it over the last 6 months as the next natural step of their marketing campaigns.

That's what I have been saying in the "other" thread. But the model can also fail. Look what happened with the newspapers. They offered online free versions of their content, in the hope that readers would switch to their paper paying versions. That didn't happen: paper sales kept going down. One of the reasons is lack of an easy upgrade path to "premium": you still have to walk to the news stand. As it turned out, most readers were happy with the (limited) online version, so some titles (I think of Murdoch) plan to offer paying content again, this time online.
"Free" is meant to appetize, not to replace.

The knee-jerk reaction to this is to say "free is stupid."  But I agree with the minority here... it's possible to envision a scenario in which something is given free and leads to payment by some means afterward.

What happens when everyone is doing this, and they will? Does it become 4 of the price of 3? Or 3 for the price or 2? Or 6 for the price of 1? Lost leaders are to get customers in the store but I don't see more images being used because of it. So it becomes the same number of  images selling for less on average.

"Once a marketing gimmick, free has emerged as a full-fledged economy. Offering free music proved successful for Radiohead, Trent Reznor of Nine Inch Nails, and a swarm of other bands on MySpace that grasped the audience-building merits of zero. The fastest-growing parts of the gaming industry are ad-supported casual games online and free-to-try massively multiplayer online games. ."

Maybe free can be a good idea for some products, but not for stock images. I can imagine Rolling Stones becomes famous with free than make money. But I cannot imagine a microstock contributor, specialist of isolated images, build a faithful fan club this way. Even if we think be artists our "products" , in huge majority, are not art.
Free is not good at all for contributors.

"Free" is meant to appetize, not to replace.

Good point!

Everything what has some value, it will not be free of charge, always been so and will be...
Nobody will use their knowledge and time to produce something worthwhile, and then give it for free or without any reward...
When we say that something is worthwhile,, it means that someone is willing to give something to get it...
Thing, picture, information, tool etc., isn't matter ....

This topic only reflects unjustified fears of  microstockers and it is completely unnecessary....

Some sites will switch your old unsold photos over to their free section if you don't watch out. Change the default setting for auto-removal to "delete". I sell pictures on several sites. Why should I give away full-sized files that are still selling? Sure, some of my old ones have fewer mp and my older versions of PhotoShop weren't as good with WB, but I still don't want to give them away. Recently, a friend who is not a photographer told me she is having a harder time finding good free photos to use on her personal projects. I think that may be good news. In spite of all the talk about free content, I think we are seeing a shift to subscriptions or pay for use for writing and visuals online. The days of free samples are slowing drawing to a close. Creators have expenses just like everybody else.

I don't see a big difference between giving away pictures free, and earning $0.26 "XSmall" royalties, of which I have seen an inordinate number lately.  /gripe

Well, there is a huge difference.
If you give your file away for free, somebody else will make money off of it. People who need it, and those who don't need it, will download it anyway, and later you will find your file on sale burned onto CDs on Ebay. So why don't you sell it and make money off of your own file? Or, just stop doing stock photography, this is a business (at least for some of us) not a charity.
I don't like the prices of subscription as well, but what can I do? Maybe we should all follow Madalaide and stop selling subscriptions on all sites (where possible) and then when the customer who has purchased a subscription plan sees that most images are not available through a subscription plan, they will stop buying it. I know many sites will go out of business, but do they care about us? In the end, we will have fewer sites to deal with and with an acceptable pricing range.
Up in the thread, someone said that free files are for promotion. We are already paying a big chunk of our sales to agencies for advertising. That 50-80% fee on every sale should be enough for them to promote our work or their businesses. If they cannot, too bad, they should go back in time and open a free-stock site.
I won't work for a free-stock site.

I don't like the prices of subscription as well, but what can I do?

There is a difference between the real subscription site SS, and sites that adopted the model later, out of greed. With SS, you know what you'll get and you can upload smaller sizes there pre-emptively. With hybrid sites like DT, you tend to upload the largest size possible for the size/revenue benefit on credit sales, just to find out that the max size is almost always downloaded as sub. Since higher level images on DT are very costly as a credit sale, buyers can make a huge profit after 3-4 days in a month with the smallest subs package and at max size.

What can you do? Upload small sizes to DT (and forsake the almost non-existing max size credit sales) and reward SS with larger sizes since after all, SS makes (me) 5 times as much as DT.

The problem would largely be solved if hybrid sites would put a size limit on the subs. After all, the argument for subs is that buyers can make comps for customers without an unprofessional looking watermark. They don't need the max size for that: 1024px will do fine.