Most people (users/customers) don't give a crap about freedom zero because most people aren't hackers. Most people want things to "just work." Most people don't want to tinker and screw around hunched in front of a lit screen for a few hours just to set up their drivers in a specific way.
On the other side, most employees don't care about perpetuating freedom zero or that philosophy because it's not as rewarding. I mean, yeah, it feels good to have open source projects and contribute to the community. But let's be honest, it doesn't pay the bills as well as working at, say, Microsoft does. Proprietary software attracts the more highly skilled engineers (usually - obviously some people are possessed of such personal conviction in software freedom that they will give up high salaries for their hacker community, but this is not the norm).
Here's a few examples to illustrate my point:
My mother is barely computer literate. If I presented her with Banshee instead of iTunes, she'd freak out. It would either gray out, become non-responsive, and subsequently close on her while syncing, or she wouldn't have all the features that a coordinated group of engineers in a multinational company built and designed for mass production.
As a programmer, I'm the same way. I want things to just work. Just because I know how to do things most other people don't using a computer doesn't automatically mean I'm invested in the free software movement. I dual-boot linux on my Mac, but I only use it for technical reasons. I don't honestly believe it's applicable or relevant to most people's uses of a computer. It doesn't "just work" a lot of the time - enough for it to be annoying. There's a "feel good" euphoria that occurs in an intellectually superior sort of way when you install linux, but it quickly drops off when it's a hassle just to get YouTube videos to play properly.
Secondly, and just as importantly - design. Do rhythmbox or banshee have as sexy a design as iTunes? Could they, with the resources they have? No, and no. Sure, they have accomplished something impressive, and in some respects, they have higher utility than iTunes. But overall, it's not an attractive interface. As Dave Wiskus would say, it isn't relevant and it doesn't match - a program needs to look like it belongs in the system it's designed under in order for it to be liked by a user many times. This doesn't just mean that software has to look like Windows or Mac, but that it has to understand the user and take out cumbersome decisions while preserving features in a way that is similarly intuitive to the system it resides in - that's very hard. It's also why UI and UX designers are as well paid as programmers.
We see this with apps all the time. When an app doesn't look like it matches the sleekness of iPhone's design i.e. it's clunky or looks "themed" with no custom overhead, it has a verifiable impact on the marketability of the app. The same applies to software. patio11's Bingo Card Creator competes with open source by being better because he has higher motivation. It's easier to obtain proprietary software (read: not cheaper, easier) because there's no hierarchy of betas and alphas and complicated names. There's a simple "download" or "install" button. The design has full teams of people behind it, knowing which hundred things to take out for which one thing to keep. Open source can't afford that.
This is why freedom zero isn't popular. I love free software, and I have a good advantage over "normal" (non-technical) users in utilizing it, but it's just not practical if you desire convenience and utility.
[1]: http://www.kalzumeus.com/2009/03/07/how-to-successfully-comp...