No matter the criticism, Xbox Live Gold will likely never be free. Scouring the litany of blogs, comments, editorials, and rants against Xbox Live Gold's annual fee, the general consensus is that Microsoft should forego the $60/year fee (or $120/year by the $10/month approach) and simply be free. The obvious comparison is to the PlayStation 3's free online service, a point which has been made since the console's inception, and also to PlayStation Plus which only costs $50/year and is an additive service instead of an restrictive one. No one should need to pay to unlock online multiplayer.
But this negative perception of Xbox Live Gold wasn't always the popular opinion. When the Xbox 360 first arrived on the scene, its online capabilities were lauded and were enough of an upgrade from the previous PS2/Xbox/Dreamcast generation that most people didn't mind paying the upfront cost of the online service. Since then, it has evolved with the addition of new party functions, a better user interface (remember the blades interface?), and the addition of apps like Netflix and HuluPlus.
The trouble now is that the online playing field has evened out, and PlayStation Plus offers similar, if not more, content than its competitor with new games and various PlayStation Network discounts. Some apps like Netflix even work better on PSN, and users don't have access to Netflix on Xbox 360 if they don't have Xbox Live Gold. So it's difficult justifying the $60 cost anymore, or in other words, sacrificing the equivalent of one full game every year just for online service.
Defenders will point out that, while Xbox Live does get hacked every now and then, its security breaches have not been as severe as those of Sony's in the last three years. Making this service free would also feed into a sense of consumer entitlement, to a base who wants everything but doesn't want to pay anything. Also, on a per title basis, online communities on Xbox 360 tend to be stronger than those on the PS3, particularly in North America.
In fact, the major reason why players still pay the barrier-to-entry fee is to remain in contact with their friends. Microsoft allowed itself a head-start on the PS3 by releasing earlier, helping to establish social circles that are tough to break. It's not a matter of simply refusing to fork over $60 to a big business that doesn't really need it, but a matter of whether you're willing to drop from your network of gaming friends. Likewise, it seems silly to ask all your friends to switch over to PSN or complain that $60 (cheaper, if you shop around) is too expensive.. It's peer pressure.
Still, the prospect that Microsoft will ever make Xbox Live entirely free is farfetched given how profitable it is. The $60 goes straight to the company without going to other publishers and developers. As a conservative estimate, Microsoft stated in 2010 that at least half of its 25 million XBL base are Gold subscribers. Given the assumption that this figure has increased over the last three years, that's a total of at least $750 million going to Microsoft every year since then. So shout all you want; they can't hear you through all the money.
So why is the fight still worth the trouble? Because Microsoft needs to know our gripes before the next-generation consoles rolls out. It's the time between generation cycles that consumers have the most purchasing power, and though it's unlikely that every Xbox 360 owner on this issue alone will abandon the console for the next PlayStation or Steam on PC, Microsoft wants to attract its fanbase as well as newcomers. Having a restrictive annual fee for online (effectively paying for it twice since you have to pay your internet provider too) is one strong bullet in the cons column.
Ultimately, I believe the best solution is a sort of "Xbox Live Plus" that's similar to PlayStation Plus and to make the traditional Xbox Live Gold free; essentially, change what the $60 fee gets the consumer. Even if they decide to keep online services behind a barrier, having additional games and discounts through an "Xbox Live Plus" would be a noticeable improvement and something I would be willing to purchase. Of course, if the next PlayStation continues to deliver free online service, that might force Microsoft's hand. Besides, it's important in a negotiation to start high even it's unreasonable, and thus why it's important to demand free online service for the next Xbox.
Are you still willing to pay for Xbox Live Gold as it is for the next Xbox console? State your claim in the comments!