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/Peo, FreeWebSpace.net
Certainly the number of them is getting smaller. Considering advertising revenue is generally what supports free stuff, and ad rates have been going down, that's not surprising. To suggest free stuff will disappear entirely would be an overreaction and foolish, though. There will be less variety and you'll have to look harder, that's all.
I think before anyone starts a business, espially one whose success depends directly on the happiness of the customer, a sound business plan is needed. This is probably the reason why so many FWPs have failed. two guys want to start a little fwp for the hell of it and get in to deep. Suddenly the only way out is to quit, and dump all your users. Its reality, But those who have failed could have succeeded if they took the time to plan their future, and not act on impulse.