A free competitor that doesn't charge might get the business of lots of businesses. So now you -- J Random User -- have: (1) Twitter, where all your friends are, and (2) Fritter, where lots of online marketers are. Which are you going to use? Hmmmmmm, difficult decision.
And then all the businesses on Fritter notice that no one is reading their freets (frites?), and either give up or go back to Twitter and pay the twax.
Doesn't really sound like that promising a business plan, to me.