What is happening to the airline industry?

Everytime i fly, i tell myself that domestic air travel cannot hit any new lows, and every single time i am proved wrong. The latest? United has stopped serving even the two measly cookies that they used to with beverages. And just 25 minutes before boarding, they changed gates, and not just within a terminal, but to an entirely different concourse. So, i had to make a mad dash to my new gate, with my baggage in tow, so that i could go in time to beg for a seat assignment (thats right, i had a full proper reservation, but no seat assignment till the last possible minute).

On my return trip, the American Airlines kiosk tried to extort $25 from me.

Reader alert -

This article may be really boring if you have not been in the situation that I have, but, for the sake of consumer rights, please humor me by reading on!
I wanted to travel standby on an earlier flight. The kiosk gave me two options - standby for free, or get a guaranteed seat for $25. I thought "what a rip-off" and chose the standby for free option. A boarding pass printed, with a seat allotted to me. Earlier in the day, I had already checked and made sure that this flight had many empty seats. Why did the airline even give me the $25 option? If I had agreed to that, what benefit would I have had as a customer? A passenger can be allotted a standby seat in one of two ways -

1) The flight has empty seats, so the airline will have no issues with allotting a seat to you. Once the boarding pass is printed, you are already guaranteed a seat. So why trick you into a moment of self doubt? (like uh oh..what if i dont get a guaranteed seat??)

2) The flight has no empty seats, and could accommodate you as a standby passenger only in the event that passengers with a confirmed reservation do not show up or cancel. In that case, when you are at the kiosk, the airline does not as yet know the number of passengers who may not show up. So, how can they give you a guaranteed seat even if you pay the $25? Or, if someone has already cancelled their reservation and if there is an empty seat, that automatically leads you to the above scenario 1, which means that there is no reason to charge you the $25.

I am no airline expert, i am trying to look at this logically. If you know why airlines do what they do, and if you think they are justified, please let me know. I would love to change my opinion on this.