Free stuff is always better than expensive things. But at that time, there were still some people that were suspicious of the authenticity of what Master Red was teaching. This limited how many people were willing to switch to the free alternative.
There were some who thought themselves too big to learn on the same open field as poor people, and there were some who were afraid of Master Owl Claw.
This last group of people was afraid of what Master Owl Claw would do to them if they went to the Red Dojo. After all, what they were doing was tantamount to betrayal. So they didn't leave the dojo.
But that was two years ago. It has been three years since the dojo was open, and a lot of people now know that what Master Red is teaching is authentic. This made the students of many dojos flock to the Red Dojo.