Scott Adams makes some good points about making things free:

Recently I offered my book, God’s Debris, for free on the Internet, under the theory that the people who like it might be inspired to buy the sequel in hard copy. 170,000 people downloaded it in two weeks. Many of them presumably e-mailed it to other people who e-mailed it to yet other people. I’m guessing half a million people read it in the past month. It’s a love-it-or-hate-it kind of book, so let’s say 250,000 people loved it. That seems about right based on the reviews on Amazon.

His idea was to charge for the follow on book, as kind of an experiment - the results?

I don’t know the exact number, but it appears to be less than a thousand. An alarming number of readers were confused about this whole process and wrote to ask if they could also have the sequel for free.

This is an obvious problem (although it seems to go right past the deep thinkers at Sun, who seem to think that revenues will just flood in if they make everything free). There are a few different reactions to the challenge posed by free competition. On the one hand, you see reactions like the ones from Sun - and I think they'll run into the same issue that Scott Adams did.

The other common reaction is the one pursued by the RIAA - rage against the technology that enables free downloads, and try to be like the little dutch boy, fingers in every dike breach. Almost no one takes the approach that Jobs was smart enough to see at Apple - come up with a reasonable price and download system that encourages people to do things legally without trying to take them to the cleaners.

The Apple approach leads to growth and happy consumers - the RIAA approach leads to stupid stuff like the lawsuits they are using (which alienates customers and prospects), and self defeating DRM approaches (Sony). Funny, then, that Apple is the odd man out in the music business. I guess inertia is a more powerful force than success. Let's see if Microsoft is paying attention - will they stay with PVP-OVM, and end up stunned by angry users?