re: No Spec - yes, it's a position I sympathize with but at the same time, I don't believe any of these markets operate in a vacuum. Given the tensions in the spec market (or any service that seeks to be sold based on price/free), over time it seems almost inevitable that it attracts the bottom end of the market. It's the same reason why I try to make sure I don't underpay employees or service providers as the cost can be far greater in the long run if you do.
re: large amounts of data entry. Having had to do it at one time for a professor, though I was paid, being paid did make me feel as if I had an obligation to do it as right as possible without allowing bad data to fall through the cracks. I'd like to think I was better than that but frankly if I wasn't paid I suspect I would not nearly have been as careful. But that's the thing - sometimes you get what you pay for - and especially for the more menial tasks if you don't value the output that's fine but there was still a cost for the professor to manage the project and there was indeed value to the underlying data that he needed to be accurate. Indeed - often the cost of the overhead is a significant cost of the underlying wages - even more so I suspect for entry level positions.
Such is the case for managing volunteers or unpaid interns for which I don't really see too much of a differentiation. The way I see it is that unpaid work is essentially producing a sample of your work for sale. Sure you don't want to keep on doing it, but at least in a market these things tend to work themselves out. As for spec work (or any industry that provides free samples) - are also of the view that this should be made illegal?
As long as it's the businesses that foot the bill then I really can't complain right? However when it comes to free interns the consequences are either paid for by the people, or it's limited to those that can afford to go without a pay check. If I'm paying for someone's rent and food stamps while they get an education / experience / whatever as an intern, then I'd feel better if I knew it was a respectable education / experience etc.
I simply do not believe free internships will give me this piece of mind. On a case by case basis, sure there are probably plenty of great free opportunities, but this is shark infested waters imo. I think the majority will see very little benefit if the floodgates were opened.
It also sounds like the way you run your ship is very ethical and mature. While I'm sure plenty of other business would be just as fair, I highly doubt they would be the majority. In fact I think you would be part of a very small minority. The words Free Interns would attract a lot of attention. Maybe there should be a qualifying process that a company could go through to have this right? Similar to government grants maybe.
What annoys me most about many of the opinions expressed in this discussion is that people think it's okay to punish the honest employers, and the people those honest employers would like to employ, for the actions of the dishonest employers.
There are some great articles at http://www.no-spec.com/ that describe a fairly similar problem.
Let's say I'm starting a business and require a large amount of data entry. I categorize this work as grunt work for the most part. I get free interns to do it since I don't have the capital to pay anyone for it. Let's even say the availability of free work prompted me to start the company in the first place. I sit all these interns in cubicles and have them populate my application. What I'm not doing though is keeping a really good eye on the content their grabbing, copyright infringements etc. because to me, this work is free, if one of them messes up I'll just replace them. I don't have the time to babysit this free work because I'm busy running other parts of my business.
Now, if I was paying for the work I would value it more, and keep a closer eye on it. Why? Well beause I'm paying for it and if I'm paying for it, I want to make sure I'm not getting ripped off. We only value something when it costs us something. Just like we only value the poker pot once we've invested in it. I wouldn't value a free intern nearly as much as a paid intern. This will be reflected in the way I treat the free workers (lack of respect when they are easily replaced, because if I actually respected them, well then I'd pay them), it will reduce the interns sense of pride in their work, and it will definitely degrade the quality of work.
Now there are definitely exceptions, and maybe this article is one of them. However, by and large I think free workers is a really bad idea, and therefor I agreed with laws that prevent this practice.