Let's take it from my personal experience. My site (www.janisian.com) gets an average of 75,000 hits a year. Not bad for someone whose last hit record was in 1975. When Napster was running full-tilt, we received about 100 hits a month from people who'd downloaded Society's Child or At Seventeen for free, then decided they wanted more information. Of those 100 people (and these are only the ones who let us know how they'd found the site), 15 bought CDs. Not huge sales, right? No record company is interested in 180 extra sales a year. But … that translates into $2700, which is a lot of money in my book. And that doesn't include the ones who bought the CDs in stores, or who came to my shows.
Or take author Mercedes Lackey, who occupies entire shelves in stores and libraries. As she said herself: “For the past ten years, my three 'Arrows' books, which were published by DAW about 15 years ago, have been generating a nice, steady royalty check per pay-period each. A reasonable amount, for fifteen-year-old books. However … I just got the first half of my DAW royalties … And suddenly, out of nowhere, each Arrows book has paid me three times the normal amount! … And the only change during that pay-period was that I had Eric put the first of my books on the Free Library. There's an increase in all of the books on that statement, actually, and what it looks like is what I'd expect to happen if a steady line of people who'd never read my stuff encountered it on the Free Library—a certain percentage of them liked it, and started to work through my backlist, beginning with the earliest books published. The really interesting thing is, of course, that these aren't Baen books, they're DAW—another publisher—so it's 'name loyalty' rather than “brand loyalty.” I'll tell you what, I'm sold. Free works.” I've found that to be true myself; every time we make a few songs available on my website, sales of all the CDs go up. A lot.
And I don't know about you, but as an artist with an in-print record catalogue that dates back to 1965, I'd be thrilled to see sales on my old catalogue rise.
Now, RIAA and NARAS, as well as most of the entrenched music industry, are arguing that free downloads hurt sales. (More than hurt—they're saying it's destroying the industry.)
Alas, the music industry needs no outside help to destroy itself. We're doing a very adequate job of that on our own, thank you.
So it's not only authors who are learning that making their content freely available increases sales. Janis Ian, a recording artist, makes the same argument in this (long, but excellent) article. And like Courtney Love and Steve Albini's screeds against the RIAA, she shows just how screwed over artists are.
Perhaps it's time for most artists (of any media) to follow the footsteps of Dave Sim and refuse to give up control of their own work. The RIAA has screwed you over—best to return the favor.