How virtual worlds profit

In chapter 5, Castranova goes over the business of creating and maintaining virtual worlds. The first thing Castranova covers is the suppliers and practices of these worlds. Some firms just operate games developed from smaller firms. Others develop and run games while they have publishers who take care of selling the units. And there are some that do everything. The thing that people must realize is that these games aren't like older games where they can just develop the games, sell them, and work on something new. "...some have had difficulty anticipating the burdens of satisfying thousands and thousands of eager customers, month after month. The politics of running a world--or perhaps the fact that this is politics...seem to baffle more than a few companies that ought to know better."
The way a virtual world begins is a series of tests. The main idea of the game is conceived and made into a testable version of the game, alpha. Tests and adjustments are made over and over again until "management declares a beta version for testing. This is the phase where gamers are invited to try the game for free so developers can continue to make adjustments based on how the game performs with a large group of people--basically free labor. In addition, "the idea is to get a community of insiders hooked to the game, so that when it goes gold and begins to charge a fee, newcomers will already find an active and vibrant community within the world." The downside of letting users beta test is if the game has too many problems, it can be declared a failure before it hits the stores, drastically decreasing profits.
There are a few different pricing models for these games. The common one is the "two-part pricing system," where players buy the game and expansions and continually pay for subscriptions as long as they want to play. Another model is allowing players to play for free, but charging for goods and services within the virtual world. Similar to this is letting people play for free and letting them build the actual virtual world, but charging for pieces of land, like in Second Life.
Advertisements within games is another way developers can profit from games. It not only brings in money, but depending on the game, it can enhance the experience. Advertisements are all around us in the real world; including them in games can increase the realism of the game and enhance the experience, as long as realism is what the developer is trying to achieve. Here is a link to a CBS news article about in game advertisements:
http://www.cbsnews.com/stories/2005/06/04/tech/gamecore/main699689.shtml

There are some games that involve a subscription fee, and others that don't. Do you think that games that charge fees are better than those that don't? (in terms of quality of game and regardless of how your pocketbook is thinning)