I'm waiting for someone to state "when you're not paying for something, you are the product", except in this case, you are paying for something, yet you're still the product.
As much as I agree with you that we seriously have got to stop trotting out that quote all the time, the quote doesn't necessarily preclude what you point out.
According to the quote, if you don't pay for it, you're definitely the product, but clearly, as you mention, just because you pay for it doesn't mean you're still not the product.
That quote is a lazy-soudbite-argument that "you shouldn't use free services" (because "you're the product" and that's "obviously" bad). However, if you stop to think about it for a second, you'll realize that it's dead wrong. It sounds nice & all, but it is in fact meaningless, and probably misguiding.
I've thought about it for several seconds and don't see what is wrong with the quote.
It is a cheap and easy way to explain to non-technical people that when something is "free" the provider is getting something back. Payment for advertising to you, collected data from you, and so on. If you(general) understand that, and are OK with that, then continue. But don't be naive.
Well, Linus and other groups make such good software that companies pay them to make it directly or otherwise; other people release code for showing their own portfolio like an artist, to prove their skills; others do it so people on the Internet can help improve the code. And finally, none of this matters, because that rule applies to organizations making money (or trying to). Jane Hobbyist writing device drivers for the love of the job isn't a part of the saying.
Note - I'm not saying people don't have a reason to provide free stuff. I'm saying that the soundbite "you're the product!" is lazy, and sometimes misleading.
The quote is not wrong. If you aren't paying for something, then 100% of the time you are the product. If you are paying for something, then <100% of the time you are also the product.
There most certainly IS a product! The only way I can imagine that you came to believe there wasn't is that you were confused by the fact that they give their product away.
Does Encyclopedia Britannica's website "britannica.com" have a product? Is Encarta a product? Of course they are, and so is Wikipedia, unless BY DEFINITION you exclude any "product" not exchanged for money from the definition of "product". And by that definition, the second can of beans I got at the grocery store on a buy-one-get-one-free sale wasn't a product -- which I feel demolishes the usefulness of the term.
It's something that's produced, but not something sold (like Encarta). Accordingly you're right that it is a product.
In the informal sense in which we talk about users "being the product" I'd call it not quite right, since there's nothing sold. The user doesn't have to worry as much about ulterior motives.
If you don't pay for it, you are the product. If you pay for it, you may still be productized. Odd that an EULA actually binds both parties, but somehow unequally? I don't think so!
This is just...disgusting.