Neil Gaiman's got some good further ruminations on the nature and reason for free ebooks in a post he called "The nature of free." Bottom line: low-risk/low-cost books are how readers discover new authors, and the biggest threat writers face is the overall unpopularity of reading books, not people reading for free. The more barriers there are to reading, the worse the former gets.
During one of the interviews recently, a reporter said something like, "Of course, a real publisher wouldn't give away paper books," and I pointed out that 3,000 copies of The Hitchhiker's Guide to The Galaxy were given away by Douglas Adams' publisher, with a 'write in and get your free book' ad in Rolling Stone. They wanted copies of HHGTTG on campuses in the US, and they wanted people to read it and tell other people. Word of mouth is still the best tool for selling books.
