Jeffrey Tucker of the Mises Institute has some interesting observations on why giving away books doesn't necessarily mean you can't sell them–or even sell more of them than before. An excerpt:
The current publisher would not allow the text [of Ludwig von Mises' book Omnipotent Government] to be put online through the Mises Institute. Many of Mises's books have been online and, as a result, were being referred to and quoted and discussed (and purchased) as never before. But not Omnipotent Government. It was not getting the attention it deserved, and, indeed, faced the prospect of forever living in the shadows of those books that are online.
After three years of letters, emails, and phone calls, we finally persuaded the publisher to let us go ahead, but we could only do so on the condition that we compensate the publisher in advance for all the lost sales they were sure that they would absorb. Their attitude is somewhat understandable. They figured: why would anyone buy the book now that it is being given away for free? They demanded an upfront payment. And so we paid, essentially leasing the book from the publisher. And, after lots of formatting and proofing work, we put it online here.
What happened was precisely the reverse of what the publisher expected. Instead of lost sales, the sales of the book shot up. In the few weeks since the text went online, more copies of this book left our warehouse than during the whole of the last decade. Omnipotent Government is now a top seller in the Mises.org catalog. The publisher obtained not only the leasing fee from our offices but suddenly enjoyed a flood of new orders for the book from us.