SWTOR: Selling Around What They Can Produce?

As the comments on my SWTOR impressions post point out, the obvious alternative to the approach that Bioware has taken with the game would have been to sell access to the game's solo story content.  The game's leveling content is viewed as the best part of the product, and it would seem counterintuitive to have given all of it away for free.  The catch is that Bioware could NOT afford to get into the business of exclusively selling content because they are incapable of making content fast enough to sustain that model.

When you look at the minority of nonsubscription games that do charge for content - Turbine (DDO, LOTRO) and Kingsisle (Wizard 101, Pirate 101) - typically nonsubscribers have to be treated relatively well.  If you restrict the non subscription experience too heavily, players won't stick around to buy content.  For this to work, your content must be produced in small, repeatable chunks that you can release regularly.  Many of the issues we are seeing in LOTRO - bundling purchases into larger packages, preserving poorly implemented grinds and charging for features that no other company bills for - arise because that game's content is NOT bite-sized, repeatable, or quick to produce.

If you can't stay afloat by selling new content, you have to generate ongoing revenue from people using your existing content.   This is the route taken by the majority of nonsubscription games, whether they were originally designed that way or retrofit in a relaunch (like SWTOR).  For subscription retrofits, this often translates into restrictions that nonsubscribers cannot pay to remove, in an effort to make the "optional" subscription less optional.  If you can continue to retain the subscribers you had, collect some new nonsubscription revenue from people who were not subscribing, and incidentally rake in a ton from cosmetic cash store items, the thinking is that you will come out ahead.  More important to your bottom line, your revenue is less dependent on you ability to generate new content.

If Bioware has erred, their error may be consistency.  You don't want to charge too early and drive players away before they've given you a chance, but perhaps they should have been more willing to let people who still aren't paying more than halfway through the game leave.  What I'm guessing they were most afraid of was that introducing charges for stuff that was free earlier in the game (e.g. quests) would have an especially strong effect on players sticking around.  This fear of inconsistency may be what led to the game only charging for things that were introduced later in the level progression, such as group and PVP content.

Misc Notes

• While it is possible to play the leveling game completely free, I'd suggest that almost all players who expect to stick with it will benefit from spending at least some money to qualify for the "preferred" status.  The best bang for buck here is to snag the $5 coin bundle and take either a third crewskill slot for your main or a third hotbar and some points to spare.  If you're willing to go to $10, you can snag both the third crewskill and the third and fourth hotbars for your main (or a third hotbar accountwide if you plan to play alts).  Including the perks for the preferred upgrade, this fixes many of the most glaring deficiencies in your leveling experience.
• The cash shop allows players to pay money to unlock things earlier than it would be possible to earn them through class and/or legacy level.  For example, you previously needed a character most of the way to the level cap if you wanted the legacy level required to pay credits to unlock species for use with all classes.  Now you can pay to have a Sith Pureblood Jedi Knight almost immediately (limited only by the need to get to level 10 first so you can unlock a legacy on which to place the unlock).  It's also worth scanning the character perks tab of the legacy UI, as some options are available for relatively few Cartel Coins and sooner than they would have been if you had tried to earn them in-game.
• Bioware is trying a few tweaks that I haven't seen previously when it comes to the point stipend for subscribers.  Multi-month subscribers get increased stipend rates, and there's also an increased stipend for subscribers who use an authenticator.  I don't expect to change any purchasing decisions over this, but it's a nice perk for those who are already on board.  
• Character slots are a big X-factor in the game's business model.  Bioware does intend to add the ability to purchase character slots, and will enforce limits when they do get that up and running.  The Legacy system is a big incentive to stay on one server, but in principle players can go to multiple servers if the price is too high - in particular, some of the cartel store account-wide unlocks are good across servers.