This part was interesting:
"One of Bailey's free downloads was Finder's "Paranoia," a thriller first published in 2004. Finder, whose "Vanished" comes out Aug. 18, said he initially saw the free offering as a "no lose" deal since "Paranoia" wasn't selling many copies anyway and sales for his other books, including "Power Play" and "Killer Instinct," have gone up. But, noticing all the free best sellers on the Kindle, he wondered if readers will get used to not paying.
"I get a lot of e-mails from people, saying, `I hadn't even heard of you until I read your free book.' So no question, it does bring in free riders," Finder said. "But I'm also increasingly concerned. There are so many free e-books that basically you could stuff your Kindle or Sony Reader with free books and never have to buy anything."
Of course, you could stuff your backpack with library books and never have to buy anything either
But his argument shows exactly why these freebies can be so important. Because you could read nothing but 18th century novels or pulp fiction from the early 20th century, or Dickens, or whatever Project Gutenberg category is your poison, and never buy a book again either. Or you could do nothing but play video games, watch television, download clips off YouTube or listen to podcast episodes on iTunes. Most people have less leisure time than they might like and a dozen ways they could fill it. There are two great threats to the publishing industry: the people who don't read at all, and the ones who read but haven't heard of your books. Of the two, I am not sure which is the greater threat. It seems to me that if you have a way to gain readers, you should go for it.