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MrBubbles said:
how does sony pay for the games they give away? is there a large sum given to the publisher before its put up...or does sony pay them the full rate they would get if the game was sold...or do they give them some smaller amount since the users dont actually own the games?

has sony said anything about how many subscribers they have? i assume it isnt overly huge but even so it seems like it could be expensive if they were paying out the full rate.

I can't imagine they pay too much. Either it doesn't have many members so developers are less hesistant about putting games up for free/discount, or it has so many members Sony can pay more for developers releasing games for it. 

I think the idea is to try and pull in as many people as possible, and assume they will want to keep playing these "free" games, so they will continue to renew each year.