Correct, they need a license. If your report is published from a Power BI Pro workspace, they need a Pro license to see it, no matter where you subsequently host that report - SharePoint for example. If it is a Premium Per User workspace, they also need a PPU license to view it.
If you post it to a Premium Capacity, they still need a license but that is a Free license as now you are effectively renting a server to share the reports.
The free part is you can create whatever you want, and publish it to My Workspace if desired. But without a Pro or higher license, you cannot share it. That is the revenue model.
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MCSA: BI Reporting