“Free stuff gives people a feeling of entitlement. When they pay for something they are much more grateful for what they have and subsequently are less demanding and satisfied. People want to feel like they actually worked for something. It gives them self worth and a sense of accomplishment.”

Hmm
Or it could be that “free stuff” is stuff that for one reason or another customers feel is not quite so free.
In terms of frequent flyer miles, they may well just feel that they have already paid for it and therefore be more demanding when it fails to be what they expected it to be as people generally are when something they paid for is less than it should be.

Another example, actual cable company in the UK.
Their prices aren’t actually too bad, almost reasonable even. But here’s the thing, some people have found that if they call up and threaten to leave, they get even better deals but those deals tend to be for a defined period, say 12 months. So what some of these some people do, is repeat the procedure every 12 months and so consistently get even better prices than pretty much everyone else.
But on the whole, these people aren’t happy.
They feel that unless they make the call once a year that because they then won’t get a special deal, that they would be in effect be being cheated. So now they resent the company that forces them to jump through this hoop on a yearly basis to get what they now consider to be the “proper” deal.

It’s not that they view it as a freebie, it’s that they view it as at best a reward for work done (phoning the company to negotiate a better deal) or at work they are forced to do to avoid being “cheated”

I don’t know the specific circumstances of the free to use games or services being discussed in the article but I suspect that Zach isn’t far off in suggesting that paying customers in those circumstances are largely going to come from free users who are particularly happy with the service offered and therefore a self selecting group of people who mostly are not going to be particularly complainey.

Look at at this way, there might have been a typical traveling salesman, who flew back and forth regularly between, say, Fort Wayne, Indiana and Ceder Rapids, Iowa. This was the sort of flight which was marginal for airline travel, because of the short distance, and the fact that both of the end-points are small cities. The big airlines competed for this kind of business traveler, not with low fares, but with frequent-flyer miles, which he did not have to tell his company about, even though the company was paying for the tickets. There were likely to be restrictions which prevented the frequent-flyer miles from being taken out in the form of free trips over the regular route (ie. volume discounts), or otherwise being transferred to the passenger’s employer. However, the frequent-flyer miles could be turned into a vacation in Acapulco. In plain language, this was bribing purchasing agents. It did not differ in any fundamental way from giving bottles of whiskey, or sets of golf clubs.

By way of “protective coloration,” frequent-flyer programs were oversold. People were encouraged to take out memberships, even if they had essentially no chance of accumulating enough frequent-flyer miles to actually go anywhere, the kind of people who only flew once a year (Grandma visiting the Grandkids). It was necessary to encourage these people in false beliefs to obscure the actual bribery which was going on. No doubt this generated a certain level of complaints.

A lot of businessmen who “materially participated” in their companies decided that if they were paying what the airlines wanted to charge them, they might as well charter a small airplane, such as a Cessna 172, piloted by a nineteen-year-old kid, and fly direct, rather than going indirectly through airline airports. Other businessmen did the sums, and decided that a salesman working for them could be ordered to drive instead, that there was no point in paying him to sit around in airports rather than driving down the interstate. Thus the airlines were selecting for the kind of business traveler who ran fiddles at the expense of his company, and got away with it. No doubt they tried the same tactics on airline reservation agents.

I wonder if this is a bit chicken and the egg though.

When something is given away for free, the giver also has a sense of “what are you complaining about, it’s free?” When they are charging for something, they act much more accountable to provide great service.

So with the frequent flier miles, it’s frustrating when you finally earn a flight and then dates are blacked out, there are extra fees, etc. But some airlines don’t care about these issues, because they see the program as a bonus. However, if something goes wrong with a flight you paid for, they are much quicker to correct the problem.