What you describe is more like the traditional VC structure for most businesses. Provide low cost services while they need to grow user base -- as user base is established the model now needs to extract value from the users - quality drops and the costs increases.

It happens for all VC based products since the drive on returns of invested capital is so high.

Put another way -- early stage products that every uses and love (in most not all cases) should not be assumed to be the end product.