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One thing this discussion hasn't addressed is that a lot of free books don't get read. (Being a part of an author group who sells books at a low price, I often discuss prices and freebies with other authors. Take it for what it is worth.)
Free books might be downloaded by the thousands, but it doesn't seem to result in more reviews or readers in many cases. So how will the ads work? Do they have to be clicked on to pay out? If that is the case, there's less incentive for authors/publishers to make the books free.
I am one of those who will download "Maybe I'll read" books if they are free. But I tend to read only a very few. That means if they are ad supported, I'd never see the ads on most of the freebies. This degrades the whole ad model.
One of the reasons I don't make my books free is I actually think less people would read them after downloading. (That's only one reason. The other is largely because I'm trying to make a living and until Toyota offers me that placement ad, there seems little point in giving my books away as "free" does nothing to put food on the table.)
Other authors swear that giving away the first in a series has gained them a large following. I do agree, that it seems to work for some authors--or did before the plethora of free titles that constantly stream past. I'm not sure if it has worked lately.
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