If by "free" services you mean ad-driven internet services, I don't think this is as much a consequence of those, rather than the growing power of media companies and their influence over the law and technological development. They were fiercely against piracy since ever, their attempt to vilify VHS and cassete tapes comes to mind, but now copyright law is stricter than ever, digital ownership has been eroded into nearly non-existence through absurd one-sided License Agreements and devices increasingly act as if storefronts of the manufacturers rather than as a tools purchased by the customer.

This is not because there aren't enough people paying, but because the media companies are never satisfied. Loads of people subscribed to streaming but it isn't ever enough, it doesn't guarantee that their quality and collections will remain as good.