They had about 35 million customers. Say less than one in three stayed and paid $2.08 per month ($25 per year).
Ten million customers paying $25 per year = $250 million.
Maybe ten thousand business and heavy user customers would pay the $399/yr.
Ten thousand customers paying $399 per year = $3.99 million.
Even with the hosting costs, the ad revenue would have been substantially more than with vastly fewer customers.
It's a no brainer. Someone wasn't thinking this through at all.....