When the internet started, yes, everything was free. It was also almost entirely educational institutions and hobbyists. These things don't scale. Yes I can provide free e-mail to my friends and family, but I can't give it to everyone. As more "consumers" joined the web, it became a lot more one sided. Most people on the internet now provide nothing of value to the internet. I can provide a free product (say facebook, google, drop box, etc) when I can handle the load off of one computer. When demand grows, I either have to shut it off or monetize it, I can't continue to give it away when the demand for my product requires a million dollar server farm on every continent.
To provide a car analogy:
I can give my friend a ride to work for free every day so he has no need to have a car. I might even be able to work a couple more friends in. But eventually, I either have to charge for the ride and become a full time taxi service, or start saying no.