Charging for things works best in areas where there are weak or no network effects. In something like facebook, having half of the customer base drop out would

Charging for things works best in areas where there are weak or no network effects. In something like facebook, having half of the customer base drop out would be disasterous, because those remaining are left with a worse product - having all of their friends on it is one of the strongest features. In small business software a la 37 signals, you don't care how many other customers are there except for the vetting it provides. In landgrabs in a high network-effect area, you can't afford to charge more than one's competitors. Hence, advertising.