Very true!
When Namezero started its services in year 2000 they did the same. They did it to the extent that they were giving free TLDs (Top Level Domains) and people were getting their .coms, .net etc. for free

Strange & Interesting rite?
And then they launched their sister company MyDomain & introduced paid hosting & domain registration and stopped giving away free domains. So it happens like that. To make your brand popular and to attract customers these companies (the one with some good money) introduce free services initially and then they start their actual business i.e. paid services. Brinkster.com also followed the same strategy and there are many other names which offered free services in the start and then started selling their services.