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I think part of it is that Eric's doing multiple things at once and they're feeding off each other.
The first is that he's short-cutting the darknet and making all his books freely available for download: you just have to wait until they've been out a while. It's only the newest ones he charges for and puts that down as "paying for speed and convenience."
The second is that he's building a community. It's an established fact that people are more likely to cheat or steal from members of an out-group than the in-group. By building an in-group with his readers this makes them that much more likely to want to pay for his works.
The third is that he is counting on the Luddites as Steve mentioned. Most people don't want to read on a computer. Otherwise there would be no market for portable reading devices. As reader device penetration goes up I would think that this will come into effect less and less. However there are still a number of years to go before that happens.
In some ways Eric's experience is a "Perfect Storm" and we can't guarantee that it would work the same for everyone. However, I do think it can and will work for other writers in a similar position. The question is how similar a position do they need to be in?
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