Gold and Silver
Xbox Live offers two different versions of their service, Gold and Silver.
Gold
Xbox Live Gold costs $60 a year and allows you to use all of the features of the service. Gold members can usually play demos and enter betas a few days earlier than Silver members. New Xboxes come with a 1-month free trial of Gold, and many games also come with shorter free trials.
Silver
Xbox Live Silver is free for any Xbox 360 owner. You are allowed to purchase any content available for download, be it demos, movies, game add-ons, XBLA games, etc. The defining characteristic of Xbox Live Silver is that you cannot play multiplayer games on the network. Silver members must wait a week before they can download a demo, whether it's for Xbox Live Arcade, Indie Games or regular Xbox 360 games, this is something that started in late 2008. Additional features such as Last.fm, Netflix, etc. which were added in 2009 cannot be accessed by Silver members either, even if they have a paying subscription to them.
Source: Xbox Live
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