Originally posted by luftfluss Flickr probably feels it needs a free gateway to compete with Facebook/Instagram.
I was going to write "why would a photo hosting service aimed at real photographers want to compete with the Facebook/Instagram freakshow?" but it's a moot point, anyway. Facebook is like the Google Search Engine, it is its own planetary system in cyberspace and attempts to do anything other than wait for its inevitable demise from self-inflicted wounds is only going to end in failure.
I have a free Flickr account, but I have looked at other alternatives and Flickr is still the best service out there, for what I want, an attractive, flexible, responsive service that provides an easy way to embed my photos on this site and to share a bunch of photos with whoever else I want to, whenever I want to. I don't need unlimited storage, visitor stats or sales aids for marketing my photographs, but I would pay a modest sum to get the benefits of the free-for-now accounts without the ad blanks (even on my computers without AdBlock, I almost never see an ad when looking at my photos on Flickr, just a black space and a brief message to nag me every fourth photo). I have also looked at open source photo galleries that I could install on my own web hosting service (for which I pay less than what a Flickr Pro account would cost), but I haven't found anything that checks as many boxes for me as Flickr does.
Obviously, sprinkling ads in the free Flickr accounts isn't paying for what it costs SmugMug to host those accounts, so why doesn't SmugMug can the free accounts and offer a paid account with the same limited features of the free-for-now accounts at a price point slightly below what Pro accounts cost when SmugMug bought Flickr? Everyone who thought upgrading to a Pro account at the old price was a good deal for them, has already paid for a Pro account. Raising the price of a Pro account might lose some paying customers for SmugMug and won't help one bit to convince cheapskates like me to upgrade to a Pro account now when I wouldn't do it 12 months ago.