My experience shows that it's not true. It depends on how much people are devoted to your site/service/product. We at gtalk2voip.com turned 30% of our free services into paid for because we could not support more unpaid traffic. The result was not as bad as we expected: 1/10 users converted and paid for the services they previously used for free. Yet we received a lot many complaines and even threats. Of course you will be regarded as doing unfair and evil business, but as someone said: "no evil - no business". To soften the situation we kindly explained in every email why we were enforced to start charging for free services.
The overall results are:
1. Not so good publicity, we are no longer treaded as "cool service".
2. Increase in revenue.
3. Significant reduction in traffic and CPU load, hence save on expenses.
The overall results are: 1. Not so good publicity, we are no longer treaded as "cool service". 2. Increase in revenue. 3. Significant reduction in traffic and CPU load, hence save on expenses.