This makes sense to me for publishers and writers that aren't in the top 25% of books being sold. Marketing for many consumables can be thought of as a two-step diffusion process: Diffusion step 1. Utilize the mass-media to send your product message toward a target audience. Diffusion step 2. Hope that the early adopters and opinion leaders within those audiences tell their friends and exercise their networks of influence so that "word-of-mouth" perpetuates the message first sent by the mass-media.
For many cultural product industries, like publishing, they release many more products then they can afford to buy mass-media advertising campaigns for. For those products without mass-media coverage, it makes a lot of sense to give away free copies of the book. The innovators and early adopters that crave and promote new products have the material they need to jumpstart the second step of the diffusion process (word-of-mouth), and a publisher and writer could see higher sales numbers than they otherwise would have: they still benefit from second stage diffusion without the mass-media costs.
And if there is a concern that the "message would get out" that the book is free online, the publisher could only give away the first 12,000 free online. It seems like putting a cap on free copies could maximize the potential of "word-of-mouth" diffusion and limit the risk of lost sales.
I tend to agree with the views expressed in this article. I can't stand reading books on a computer. Having an online format makes certain things more convenient like quickly looking up something in a reference book (beats flipping pages). Having an online copy of the book (for example with Amazon's search inside this book feature) has allowed me to get a better idea if I really want to buy the book (and in the case of Amazon led me to promptly add the item to my cart).
For many cultural product industries, like publishing, they release many more products then they can afford to buy mass-media advertising campaigns for. For those products without mass-media coverage, it makes a lot of sense to give away free copies of the book. The innovators and early adopters that crave and promote new products have the material they need to jumpstart the second step of the diffusion process (word-of-mouth), and a publisher and writer could see higher sales numbers than they otherwise would have: they still benefit from second stage diffusion without the mass-media costs.
And if there is a concern that the "message would get out" that the book is free online, the publisher could only give away the first 12,000 free online. It seems like putting a cap on free copies could maximize the potential of "word-of-mouth" diffusion and limit the risk of lost sales.