I've some buddies at Ezweb.com who did run (actually still do) a free hosting section. They offer 10 MB of space with 100 MBs of data transfer with the stipulation that they may place a small add on the site (though they usually didn't). Conversion to a small paid siate was (is) only $5 per month. They found well over half of the sign-ups were fake or scammers.

The convsersion rate was VERY low--most people looking for free hosting aren't exactly professionals transfering multiple sites. Eventually they had to refuse handling any domain registrations for the free sites--the false registrations were causing a serious loss in time and money.

They still have the free sites and do still take new signups for them, but they don't advertise it.

This is a very good marketing strategy, more and more companies are using this to promote their services. Later on when the user has larger needs, user will most likely upgrade to a paid plan for more features.

Yes, usually the hosting plans are very small and can't do much. Once the people who have the free hosting realize this, and then they usually go and BUY hosting form the provider. THen again, some poeple are satisfied with the small amounts of space.

millions of customers are paying for hosting everyday and month - why host for free? advertising? too much work managing customers and advertising clients.