Your friend's been played for a tool, but I think you know this already. It happens all the time, especially with naive and insecure developers but not limited to them - our corporate overlords are always looking for some new way to encourage people to work more for the same amount of money. Hooking people on their ego is a very easy and common technique. Often people will just do it to themselves just fine with no help.

Personally, I either code for money or for a cause. The latter will almost always require some sort of GPL licence.