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If Xbox Live Gold Package was free it would be an inferior product. Without money coming in we wouldn't have all of the great features we have today. The sales of games would also go down because people would take the product for granted (IE: Arcade and Avatar sales would be at an all-time low). Any update would come slower than usual and we wouldn't have several updates in a year. It's a proven fact that Xbox Live sells more, because they have more motivated buyers in their installed base than PSN. It has sold over a billion dollars in products.