This is a complex question and I'm excited to pull it apart, because it gets down into the perceived disparity between art and commerce, and the value of enjoyment versus the cost of time. But I'm getting ahead of myself. Let's start off with how this question relates to creative writing.
A beta reader is an increasingly popular term to describe someone who is willing to read work prior to its publication and/or submission. This person is not there to edit the work, but rather, to react to it as a member of the audience. Considering the wealth of self-publishing options available now and the competitive nature of the marketplace, a beta reader is a valuable asset to have in your writer's desk, and you need look no further than groups on Absolute Write, Good Reads, or World Lit Café to find tons of people willing to be your free beta reader.
This annoys me. Here's why.
I've offered my services as a beta reader for free a few times (to friends and family). I'll go line-by-line. A short story of just ten pages will take two hours. Here's an example of what you might get out of a beta reader. When the volume is too loud, they'll let you know. If there was a scene they expected and never got to see, they'll let you know. Ideally, a beta reader is well-educated in storytelling technique. They'll hear flat dialogue. They'll recognize a sexist character.
I wouldn't offer my free services to a stranger for several reasons.
1) Some of these collectives cling to the principle that a beta reader "does it for the love," which turns being free into some kind of philosophy. Charging doesn't mean that you don't love to read. Charging means that you have a bookshelf crammed with half-read novels, and in your leisure (free) time, the first book for which you reach isn't going to be a first draft about which even the author isn't sure. I don't think most adults have the time to perform a proper beta reading for free.
Suffice it to say, the less experience and education you have writing, the more work your beta reader will end up doing, and the more sorely you'll need real help.
2) A proper beta reader isn't just a reader, but a reader with the entire audience in mind (including editors and agents), and a reader who writes constructive criticism of varying degrees. This is why reading ten pages will take them two hours.
"I don't like this!" shouldn't appear in their responses. "I don't like this because it glosses over the deeper issue of John's depression," would be a C-grade beta response. "I don't like this because it glosses over the deeper issue of John's depression. Because it would be out-of-key with the conversation, however, to truly discuss it, perhaps the details could manifest from his surroundings," is an A-grade beta reader.
If your beta reader is responding to singular lines and pages, rather than writing a bulk review at the conclusion of the piece, they absolutely deserve compensation.
3) When you pay for a service, you pay for multiple things. You're paying for their discretion. (Notice how I did not post up any direct samples of my beta reading, or of the piece involved.) If you have a free beta reader, a stranger, no contract, how secure is the work? What kind of legal claim would you have if the identity of the beta reader (for example, "beta1234") isn't possible to trace to the plagiarist you later confront? When you trust an individual with your intellectual property, it's important that you're aware of their identity, and it's important that the exchange is somehow documented. Otherwise, there might not be proof that you aren't the plagiarist yourself.
You're also paying for dedication and focus. Life is a hectic thing. Not everyone has the dedication to keep chipping at a book while the family dog is sick and work is going crazy and Facebook keeps blowing up their phone. A stranger who "works" for free is just as likely to never contact you again, especially if the little flaws we want a beta to find instead deter them from finishing.
4) Finally, let's talk about art. It's a common misconception that art is a spiritual endeavor that is sullied with commerce. The truth of the matter is that art is not only a spiritual endeavor but also a product and/or service. I used to sell shoes, and I enjoyed it. But I needed to be compensated for not only the service I was providing; I needed to be compensated for my time. The starving artist is best left as a trope and not a reality; like the car mechanic, everyone has a skillset that allows something to work, and storytellers are just as valid in that respect. It might be the case that we need art even more than we need transportation. Imagine a world devoid of art (including television, interior design, and fashion!) compared to a world devoid of transportation. In which would you rather live?
"Doing it for the love" is the modern version of "Art is a spiritual endeavor." I intensely dislike this notion because it turns artists into mystical creatures who don't need to eat and have infinite leisure time. It's unfair to perceive artists in this way. Football players don't go to the NFL for free, because their craft takes up too much time, just like with many artists. They can't function in that capacity without compensation.
People say, "Nothing's free." That's not exactly true. More accurately:
"You get what you pay for."
I've never patronized a beta reader, but I have seen poorly executed readings happen to colleagues. I'm not aware if they were free or not, but considering the quality, I'd bet they were. These reviews (of book-length projects) were only a few sentences long, and seemed, to me, cheap and patronizing, the equivalent of, "I really liked it!"
You may save yourself a lot of time (and time is money, as they say) by hiring a professional beta reader before submitting the book to the global marketplace for review, not to even mention the jaded reading glasses of editors and agents.
That having been said, if you can find a safe, thorough beta reader for free, more power to you. Personally, I would not trust an anonymous person without any proven credentials to handle my work in a way that will cost them significant time and careful thought. I feel that, for a bulk review at the end of a book, $20-50 would be fair, depending on how concise and explicit the review. For a critique that takes place page-by-page, for a project of 150 pages (with constructive reaction taking place on every page and being a small paragraph in length), I would expect a rate of $150-300.
