Here's my view of the pipeline or the funnel, whichever term you prefer, for a membership / freemium site:

  - the world
  - visitors
  - recurring visitors
  - members
  - paying members

The transition from being a transient to being a customer to me happens somewhere between the visitors and the recurring visitors stage, the point where people start to invest in the site, maybe store some content there or make some changes to the state.

All the people from 'visitors' (inclusive) down I'd label as users, and the visitors themselves I'd label prospects.

Fuzzy thinking isn't going to bring him closer, but rigidly defining terms in a way that is not suited to the current model (freemium services), but for instance more suited to selling cars or shoes is also not going to help.

The lines are there, but the transition points are not quite as hard as they are in retail.

Especially not in a subscription environment, users will deserve and demand to be treated as customers long before they fork over their cash or it isn't going to happen.