The price of free ebooks

I recently made my book A God-Blasted Land free for 24 hours on Amazon.com and Amazon.co.uk, to take advantage of the Amazon KDP Select option to run free promotional days for books enrolled in the program, and to get the book onto more reading devices.
Over the course of the day the book was downloaded 280 times, I didn’t do any marketing other than to mention the download on twitter, so to say there is a market for free ebooks is an understatement. It looks like free might be a great way to distribute ebooks, but I’m left asking myself:

How can writers be compensated for writing books if they give them away for free?

Anybody who ventures online is familiar with free services that are supported by advertisers, or freemium services where a lite version of a service is provided (to the majority of users) for free and the extended feature service is provided for a fee to those who want to pay for it.

Could books go that way?

Will ad supported books become common place? Would readers tolerate advertising in books? What about freemium books with one time editions created with the main character’s name changed to the name of a fee paying reader? Will writers adopt loss leader tactics and release free books to draw readers to their other paid books? Or will they make director’s cut style editions with alternate endings, commentary, and deleted scenes available to their true fans for a fee instead of charging for the book?

I don’t know exactly what the future of publishing will look like, but I think its worth thinking about these things now.