Originally Posted by riku2

But in this case the airline should encourage people to upgrade with their points and only then give free upgrades. I know lufthansa do this - at checkin they will ask if you'd like to upgrade using miles if they know your cabin is overbooked. If they don't get enough people doing that then they upgrade for free (perhaps even the same persons they asked at checkin if they'd like an upgrade using miles).
Lufthansa ask for the same miles as a normal upgrade but finnair send out a text message at online check in time asking if you'd like an upgrade at a discount (less points than by booking it in advance). With both the aim is to get something from passengers rather than give them a free upgrade since they will be upgrading some passengers due to overbooking regardless of whether anyone uses points/money for it or not.