As an alternative viewpoint, his thinking seems incredibly shortsighted. When it comes time to launch "InstaAlbum, share your family photos", he is going to have 1/3 the potential audience to draw customers. 3x the existing customers could make the difference between the top of the charts and the press recognition that goes with it.

Part of his rational is that some tiny percentage of the free customers complain, and write negative reviews. Marco should man up and simply accept he has a good product and is a talented developer. That way he doesn't have to give a damn about the haters. It is sad that the %.1 of the population that is inherently bitchy, is driving his business decisions.