Does giving away free product lead to more sales? Many argue that, online, it does. But there are an equal number of skeptics. So who is right?

When it comes to how free e-books influence print sales, a study published in the Winter 2010 edition of the Journal of Electronic Publishing concluded that giving away free e-books is often good for business, at least in the short-term.

Two researchers from Brigham Young University used data from Nielsen BookScan, which covers approximately 70% of book sales in the United States, to compare print sales figures before and after free e-book versions of titles were made available. In total, sales figures for 41 total titles in four different categories were analyzed. Overall, non-fiction titles released for free as e-books saw a 5% sales increase and fiction titles saw a 26% sales increase.

The other two groups the researchers looked at were five random titles published by Random House and 24 random titles published by Tor. The Random House titles realized an increase of 9%, while Tor’s titles saw a double-digit decrease. The researchers speculated that Tor’s results were so markedly different because its free e-books were only available for one week, whereas the other titles were available as free e-books for much longer.

Notwithstanding Tor, the researchers note that there appears to be a “moderate correlation between free digital books being made permanently available
and short-term print sales increases
“. They aren’t ready, however, to issue a final verdict:

However, free digital books did not always equal increased sales. This result
may be surprising, both to those who claim that when a free version is available
fewer people will pay to purchase copies, as well as those who claim that free
access will not harm sales. The results of the present study must be viewed with
caution. Although the authors believe that free digital book distribution tends
to increase print sales, this is not a universal law. The results we found
cannot necessarily be generalized to other books, nor be construed to suggest
causation. The timing of a free e-book’s release, the promotion it received and
other factors cannot be fully accounted for. Nevertheless, we believe that this
data indicates that when free e-books are offered for a relatively long period
of time, without requiring registration, print sales will increase.

The researchers note that there are many factors which influence the sale of different titles, many of which weren’t looked at, and reiterate that further analysis needs to be done. Personally, I’d like to see a larger sample and longer-term study.

But one would hope publishers themselves are performing studies like this internally. After all, a philosophical debate about the virtues of giving away product for free is hardly as important as what happens in the real world. As publishers grapple with thorny digital distribution issues (like e-book pricing), it would certainly make sense for decisions to be based on a thorough analysis, and not mere assumption.

Personally, I’m skeptical that there’s a one-size-fits-all strategy for publishers in the digital age. Hard and fast rules will probably be hard to come by; there are simply too many factors that contribute to sales at work here, and as the e-book market becomes more mature these factors will almost certainly have varying levels of influence on sales. But if publishers can mine their sales data identify which titles might get a legitimate boost from ‘free‘, it might prove to be a very worthwhile endeavor.

Photo credit: ckelly via Flickr.