While I agree with you that in general it's mostly casual players that don't want to pay for Live I would say the same applies to a sizable portion of hardcore gamers. I as well as several of my friends refuse to pay to play online when we can do so already for free on the PS3 and PC.

Not to take anything away from Microsoft and live as they have pioneered console online gaming but I'm not comfortable paying to play online for non MMO games.

@ OP

I don't think it's a simple yes or no answer, both paid and free online have their positive and negative aspects. Just because I don't think it's a good option does not mean it isn't for someone else.

OK. Its like this. Considering you think you know MS and obviously bindly favour PSN.

Live Gold is not free. Why?

You can stand there until your blue in the face and tell me it is better to only charge for content. And playing should be free. But then Live would be PSN. 

What is PSN and what does it offer in comparison. 

PSN regularly disconnects and many times wont respond. Happens all the time whenever we try to play UC2 or GT5 online. Like clockwork. 

PSN trails every single time behind Live with features and moving forward. 

Gold service supllies Xbox customers in my country with Sky Cable TV through the Xbox while needing no dish fixed to your house. Record rewind etc all on Live TV. Also Gold supllies use of Last.FM free in a radio station format. Xbox Lve Gold supplies discounts on XBLA games and donloadable content you never get as a Silver member. 

Paying for Gold allows MS much greater R&D in Online than Sony, and also provides a larger workforce for Lives divison. Sorry, but the fact Sony hadan out of date security system Which is FACT tells me they dont spnd money in that division. The only reason they have spent money is not to get any further lawsuits. Of which over 65,000 have been filed World wide after PSN outrage. 

PSN has cost Billions to Sony and its not over. Live has made millions for MS. Its so obvious to see which company cares about there online service. 

Live attracts many games first with no need for moneyhattng. Bastion, From Dust, IPdT etc etc. 

Next to Live PSN feels snd operates like the old man. Slow, crippled and out of date. Until Sony actually put some workforce behind it and fix the bloody PSN connection  issues in my country I will not even consider it on the same page as Live. 

I love paying for Gold. And find it funny it pisses people off.

Nah.
It's not that expensive.

An free Xbox live would simply be an horrible idea, first of all MS would make less money, secondly the money not spent on Xbox live then would go to niche arcade games and third party devs like EA and Ubisoft who then would make horrible games Mirror's Edge 2 and Beyond Good and Evil 2.

Conclusion: Only a Sony and Nintendo troll wants Xbox live for free because they want to see MS making less money and more money spent for for crapgames so they have something to play aswell. A Real MS fan should be proud to pay for Xbox live knowing that MS would make a lot of money with it! What are you waiting for soldier? Get you an extra year of gold ..Heck;.get two!!

 The point you made is that Xbox Live is P2P, I proved you wrong by listing games and two whole developers that make games for Xbox that run on dedicated servers, why your being so childish about this i do not know. Spin it in how many ways you want in your first comment you did not mention anything about first party, third party, who host this who host that, how many people playing, or where the money is going all you said was Live is P2P. So i posted a reply by listing games on Live that run on dedicated servers, both being third party and FIRST party. So it really dosn't matter how you spin it because you would still be wrong.

Also why do i need to proved facts that state Live runs on MS servers? Its common sense, because it is. So your telling me that when i turn on my Xbox and stream a movie, or download a demo all that is being hosted by another kids Xbox? Oh please just stop. You said Live is P2P i proved you wrong, just accept it, there is no shame in manning up and realizing your mistakes the more you continue arguing with me the more of fanboy you will make your self look. And i doubt your really are a fanboy you just seem misinformed and cant accept facts. It dosnt matter where the money goes, how many people are playing, or who host the dedicated servers, the point you made from the very beginning is Live is P2P i proved you wrong, accept it and move on along with everyone else who keeps saying live is P2P.

A funny thing about human nature is that, if you make people pay for it, they think they are getting greater value and will defend it. This likely has a part of the defense of the fee for Live, and definitely is a factor with people defending Playstation Plus, saying they are getting immense value for their money out of it, even if a number of them would of normally only been interested in a handful of titles in it, if it wasn't for the fee.

A bit of an old article, but a very good read-
http://www.gamesradar.com/xbox360/f/why-xbox-live-isnt-free/a-20080617101147502012/p-3

Essentially what Xbox live offers, PC/PSN/Nintendo offers for free. The only thing you could say that XBL has is a solid interface which the competitors don't have, but then again, I don't think MS needs $50 per year to create a decent interface for its users to use.

But really what live is doing is benifiting the individual game developers rather than the actual consumers. This is because when we pay for live, a substantial amount of the money is used by MS to host servers and take care of the online infrastructure of games. The same can not be said for PSN where the developers/publishers have to pay money from their own pockets to keep the online going for games. So in essence what this does is allow for smaller developers of XBLA+Indie titles to create solid online experiences. Also bigger publishers prefer the Live infrastructure more and problems are fixed much quicker on XBL regarding online games, as they have more incentive to do so.

So overall, live does encourage more developers to create unique titles and the question is whether or not it would have been possible without MS charging money for online play.

Assuming the level of service was the same (which I presume that you are presuming in your query) then of course. Particularly outside the regions where Live service is only partial compared to what US, UK, etc. get it would make a big difference I believe.

No thanks. I don't want my service to be hacked, plus gold subscriptions are a huge revenue for MS to offset hardware costs (Imagine how much longer it would have taken MS to get of the RROD hole without Xbox Live subscriptions, and of course the over priced accessories).

You do know a ton of accounts and pws for xbl and accounts for sites linked and credit cards were comprisoned by a hacker who claimed he hacked live, they were posted on twiter, MS denied the leak was on their but they denied the 360s failrate too so I doubt they are telling the truth and xbl is the only thing everything that was comprimised had in common