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People are making analogies and such, but the bottom line is this: Value is in the eye of the beholder. If millions of people (myself included) are willing to pay $50 a year for LIVE, then Microsoft isn't overcharging.

And, despite your well articulated arguments, I (and I'm sure there are others) have a PS3 and a 360. I MUCH PREFER the 360 online experience over the Playstation experience. Just because one is free doesn't detract from the quality/value of the other.

/my two cents