It did seem like giving away the family silver.
My feeling is that all the CDs were intended for private sharing, not mass public distribution (which is why Baen don't offer them for download themselves.) Although I admit I haven't let that trouble me too much. In Bujold's case I already owned everything up to Cryoburn - in some cases more than one copy - but I've also read a lot of Weber and barely bought anything.
I'd be interested to know if there was a major fall in sales, and also how the new one sells when it gets its mass-market release.
It is also notable that they've stopped doing the CDs. Maybe it was a step too far.