Here's a story that you're probably going to see a lot over the next few years: A company started giving away its game for free, and now reports that it's making more money than before. That's what happened to Turbine, maker of the Dungeons and Dragons Online MMO. Last year, it decided to move from a subscription model to free-to-play, instead earning its revenue off of in-game transactions, and now it's announced that income has increased by 500% and the game is making more money than ever.
DDO is sort of a special case here -- the game was already developed for a subscription model, so the content might be a little more in-depth (not to mention officially licensed) than you'd find on most free-to-play properties. And since the game still does offer subscription plans, the number of subscribers has actually doubled since the changeover (there's no information about whether more money is being made from selling in-game items or from new players who have decided to subscribe). But you can be sure other game developers are closely watching this model, and it's not a stretch to think that, in the next few years, we'll see many more publishers -- of MMOs and otherwise -- try to pull off the paradox of making more money by giving their games away for free.