[jblow]

It is not exactly that developers are "paying for exclusivity", it's that if they want to be on the platform, exclusivity is required, and fee payments are required. Basically, you have to pay to play. The reason a developer does it is because he hopes to sell enough copies on that platform to make up for the fees.

[cube13]

Is exclusivity required only for independent developers, or does that also apply to non-MS published titles?

[jblow]

It is mainly an Xbox Live Arcade thing. They know they can apply exclusivity pressure to independent developers simply because enough of those developers will cave, since indies aren't generally willing to walk away from the deal.