I think there will be little difference between the service model and the shrink-wrapped product model when it comes to costs and the profits generated for the software company. Some companies profit more than others right now too so it's sort of the same thing. You are saying that you won't pay $300/month but what if it's $300/year? I think it is more likely that each software company will price their product differently. A specialized, high-end, software (say something targetted towards businesses) will likely charge more per month than a mass-market consumer oriented, low-end, product. The latter may charge $100/year whereas the former may charge $100/month.

There is no reason to think that people are going to get ripped off or get charged even more than now. It may happen in some areas but I expect costs to be lower since distribution costs for the provider will be lower (CD pressing, boxes, shipping to retail outlets, profit for retailer, etc). In fact, don't forget that most retail products, software or not, are marked up 50%+ by the retailer.

People always diss Microsoft and its so-called monopoly but I think online provider model will result in even more monopolies--contrary to what many think. It will be far easier to lock in customer by bundling things and making it easy for newbies and non-tech-savvy-people to stick with a single provider than now. For instance, how many people end up using Google, as an example (not dissing the company or anything), to do their search, e-mail, maps, etc. In the future, Google may lock in users for their future services (say maps, or who knows what). Similarly, Yahoo doesn't get a lot of respect on Slashdot but they own most of the top internet sites ("suite") on the web. How many people who start out using Yahoo stick with it?