I actually agree with the point of your comment: GitHub, to take one of your examples, seems to be a profitable business model. My reaction in this context, however, is that I do not feel like Google is trying to figure out a business model of any kind for most of its products.

To try to draw the difference, in the case of where Google offers free things, it seems to not have any relation at all to the things where it makes money: I don't think that by offering Google Code Search they got more people using Gmail or Google Search (things they monetize).

The best idea I've seen so far is that by doing large numbers of totally random fun/free things "for the world", users will always see them as "not evil", even though their core business model (aggregate information on users and use it to drive targeted advertisements) is the same as that of companies like DoubleClick (generally considered "evil").

(Which I found to be a hilariously awesome notion: that Google's random projects /are/ "freemium" in a sense, but where the upsell is more just a general notion of trying to dampen an overall negative connotation. As Google shuts down side projects, and concentrates on more controversial things like Google+, it will be interesting to see if they manage to maintain their "people don't think we are evil" status.)

(To try to be very clear: I do not consider advertising to be intrinsically evil, and am even sometimes involved in that space: do not take that previous comments to be indicative of a reaction I personally am having to their business models. Lots of people hated DoubleClick, lots of people seem to hate most ad companies, and yet people generally like Google: I think trying to analyze why is very interesting.)

...

Now, that aside, I think that there is still a bug (but find this to me more on the philosophical side): you can also view the freemium business model as a "tax" (subsidizing a general service by taking a cut of another area), and whether that tax makes sense or not becomes tricky. In the case of GitHub, their pricing for people who want private repositories is brutal, and those people are subsidizing the ecosystem of free projects that are using GitHub to host their code.

This, however, is not actually "sustainable": people on HN constantly complain about the cost of using GitHub for private repositories, and lament that there isn't something at GitHub's level competing with them that they can switch to, which won't cost them hundreds of dollars a month for what amounts to "almost no disk space or usage" (as GitHub bills per repository).

The problem here is that if you have a large free service that you are using to bootstrap your paid service, the paid service is in danger of being attacked, and being attacked hard: if nothing else, people who are offering the paid service competing with you aren't distracted by the free service (I am brutally aware of this bug, as my actual business has this problem; it is a little better for me, though: my market position is more similar to if GitHub also was the company that primarily developed git itself).

So, last week, BitBucket announced git support, and has what many people here consider to be reasonable pricing. I am now very curious how long it will take before people currently paying GitHub take strong enough notice (maybe requiring upgrades to BitBucket, delaying the process further), and start to switch.

When this happens, GitHub is no longer going to be able to extract the tax it currently extracts, and is going to be in the interesting position of having a large number of free users it is trying to support: people who now consider social version control to be something that is intrinsically free, and which large amounts of the open source ecosystem now rely on.

If that happens, it will be quite interesting to see how it goes down, and who gets effected in the market and ecosystem implosion that results.