Coming from Ymir and original RO, and having spent money on multiple accounts in both situations, original as a College student, and Ymir while I still worked, I can honestly say I prefer the format.
Back on Classic, everything was grand, and yes as Helios points out, the servers thrived on word of mouth. At a time when social media was a buzz word for up-and-coming tech where analysts were still in disagreement if Twitter would last with it's 140 limit, if Facebook could ever take over My Space, and 30 million subscribers to MySpace was considered epic and groundbreaking. There were no Youtube commercials, and technically Youtube WAS the only game in town for video sharing, which was mostly gamers. Either you knew the channel to go to, or were familiar with the game to know to even search for it. Companies had yet to plan marketing strategies around the computer space as Ad Banners were becoming "a thing" at the time, and Ad-Blocker was just starting to grow in popularity, let alone plugging into social media or having a strategy or even desire to utilize the platforms just starting out.
When the Cash Shop arrived it had NOTHING to do with a declining population. Chaos and Loki were still growing, Iris had just opened up and was growing steadily (hell they opened it BECAUSE Chaos and Loki were continuously expanding). The original Kafra Shop was to introduce a new way to make extra cash on the side, with the main sellers being the specialized versions of Ori and Elu, the enriched versions, and a few small extras here and there. I don't think we had WoE pots, Bubblegum, or Battle Manuals yet. In anycase, to further expand the game and just prior to the Cash Shop, but I believe just prior to the cash shop, was the introduction of the 30-day free period. That ruined everything. That's when we started seeing Zeny sellers and large scale bot farming operations.
With the bot farmers, and with the growing popularity of other MMO's, people left RO. As bots, zeny sellers, and the broken element of an ever expanding cash shop became an issue for many, quite a number of players migrated to pservers. Nevermind Gravity's stupid policies of forcing bans of IPs from regions with newly opened RO servers. You want to lose a player base, ban someone with a level 70 character at a time when it took 3~4 weeks of almost non-stop play to hit those levels, and prior to the EXP tweaks that rendered the game a little easier, or the monster layout repositioning. Especially surprising at the time as RO never adequately marketed.
Though again, I'll reiterate this point, the MAIN reasons for the early exodus are as follows, in order of magnitude:
1) New servers in new regions and Gravity force banning IPs from those regions from iRO, including deleting any and all accounts tied to IP's from those regions. Believe it or not, but this affected thousands of players. I know quite a number who not only didn't join up with the official in those regions, but joined pservers because they had 90+ characters on one or two accounts, all permanently lost. All that time and effort, but they still wanted to play.
2) Vastly expanding bot networks due to the 30 day free trial period, and corresponding Zeny sellers appearing enmasse. This is the main reason given in the early days of the pserver expansion.
3) Other MMO's becoming popular and doing a very solid job at openly advertising. Amongst these was the early build of WoW, Everquest (which was old, but still advertising, and had gone through several tweaks to make it easier for newbies), and Final Fantasy 11. Nevermind Lineage 1 was just breaking out of Korea, and Lineage 2 beta was on the horizon. I don't think EVE was present yet, but there WAS Second Life, which was very enticing for the level of control granted to users, and the number of existing fully functional and complex worlds built by individuals or groups of players wanting to mimic other gaming environments.
4) Marketing. Gravity is crap at marketing. Even though in the past there were banner ads and interviews with early MMOrpg sites and gaming sites, they weren't nearly as popular at the time, nor offered nearly the level of exposure to the internet audience. Afterall, Broadband wasn't considered a mandatory form of connection until 2007, and didn't even gain majority share of the market until about 2011. RO on dialup, even a 56k baud modem was the pits. Even running a 128kk or 256kk over the phone line was still too inconsistent to make it fun (or survive lag spikes).
5) The other reason was as Helios mentioned...content limitations. We were about 2~3 years behind kRO at the time depending on the content. Yet most sites kept up with kRO updates, so iRO players were well apprised of available items, options, new content, etc. Not good when pservers were actively advertising through various banner ads, and doing so far more effectively than iRO was, complete with promises for all current kRO content and actual decent anti-bot measures (advertised measures...not always implemented at the time...or broken stuff like Lord Kaho's Horns). Quite enticing at the time...
6) Lag spikes. It WAS called Lagnarok for a reason, and the slow response towards fixing server issues or software issues leading to said spikes. Always fun to get hit by a whopper 5 minute spike, where maybe 1/4 of the population stays online and the other 3/4 get logged. Especially fun if you died because the server kept running game code in the interim, and you weren't potting/getting healed, or attacking.
I came back much later on when Renewal began, and joined Ymir. Sadly finding two of my accounts were no longer present (you know that Renewal wasn't just about loss of player base on the original server, it was due mostly to the main servers and backups being corrupted...that's the whole point of ClassicRO, trying to scrounge what was left of the original build and remake it, and why Classic doesn't quite play right...anyway, many accounts were lost due to corruption). This is another attempt to recapture pre-renewal, but clearly given Classic failed so hard they figure it would be easier to combine Renewal, which is a fully functional build, with certain Classic elements. In anycase, I found Ymir was a dream. Like the original, only with more bots than the original, but less than the days of Zeny Sellers...possibly because of Valkyrie? I dunno, but Ymir was smooth, fun, had a pretty solid community, and I never had an issue finding people to party with or guilds to join, or things to do, or ways to build my characters.
Ymir's economy was a little extreme at times, but it wasn't out of control as what occurred with the merger of Yggdrasil and Ymir. I recall having fewer issues selling items, making more per sale, and having an easier time affording goodies when I needed to, with less overall time required to play to reach the same goals of whatever specialized equipment or card I wished to purchase. After the merger what was a stable and fair economy switched to a total blowout. There may have been more rares available, but prices spiked fast, and to keep up with the market and people buying from Zeny sellers, I had to spend twice as much time just playing the market to stay afloat.
Granted a lot of problems stem from the cash shop, but having 2~15% bots, no Zeny sellers feels a lot more pleasant. It's something I miss when Ymir was lost with the merger. For all the cash shop issues present, everything went downhill at lightning speed with the merger. Everything went from clean and fun to chaos and crap.
It's interesting watching new people join Renewal the last few years I played before leaving. They almost all quit. Why? The market. It's one thing to see something that's 50m and have a sense of how much time it might take to get to that number when early items sell for decent sums and quickly. It's quite another to see that same item on sale for 500m on a heavily botted server, where your basic items never move, never sell, as you're competing with botted items, so virtually everything you find from monsters, including a number of cards has to be npced or just dumped in town. Granted there are ample ways to make money in Renewal. Ample, but it's harder to give someone an idea this is even possible, or to envision being able to pull it off.
So given how well Ymir functioned. Yes, I would like to see another P2P RO server.
, wonder why that is. 
