The freemium concept

The freemium business model works by offering basic services for free, while charging a premium for advanced or special features. The word freemium is a portmanteau created by combining the two aspects of the business model: free + premium[1]. The business model has gained popularity with Web 2.0 companies

Source: wikipedia

Famous exemples:

Rather than bragging about how insanely great its VoIP products are, Skype makes its users insanely productive by letting them talk with any other user worldwide for free. The company makes money by charging users for connecting to phone systems outside of its network. It's a freemium model: Attract users with free services, then charge them a premium for special features.—Bruce Sterling, "Blogging for Dollars," Wired, June 1, 2006
Source: Word Spy

Files are stored centrally, so you will not want to use this method to transfer sensitive data. And since somebody has to pay for storage and bandwidth, you get limited capabilities for free — premium plans get you more storage, bandwidth or access to your files (Web 2.0 jargon alert: this free-to-premium escalation plan is being called the 'freemium' model).—Rafe Needleman, "The large-file problem," ZDNet UK, May 18, 2006
Source: Word Spy

Blogging for dollars, Wired Magazine

Advantages of the freemium model:
- no need to advertise, the 'buzz' makes it instead of you