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Well there's multiple ways to do it.
There's the skype model. You take product, you release it for free. Once it's reached a critical point of proliferation, you make alot of money selling associated services. Skype phone, skype-in, skype out, online numbers.
There's google with their advertisement and also additional buy-ons.
I'd like to refer to my previous post though on page 4. the main money would be made by companies being best capable of taking advantage of a free product making it alot more easy to reach a wider audience and create alot of income from derivatives. In terms of dealing with an established fanbase and not being an anonymous use product, the original product, even free, enjoys an advantage. There's the luxury market; leather bound signed editions and official props (some people will always be willing to pay more money if its official). There's the discount market, ads, there's book tours, you can even create an entire ecosystem around the author, online q&a's, ads, endorsements etc.
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