The idea is to build a fan base first. Once people find they love your work, they will be much more inclined to buy your other books. Readers as a group, tend to be loyal to the authors they love. They will shell out the money in order to read more from that author.
Yes, readers will look for cheap books, free or 99 cent wonders, but those are not the only ones they read. They do buy books too, but they will only plonk out the money for authors they already know and trust. That is the point of giving away books, or virtually giving them away.
In these tight economic times, who wants to risk spending lots of money on someone they don't know?
Don't get me wrong, I am opposed to piracy in any shape or form, but I do find value at pricing books for Free or as low as 99 cents.
Try me out and discover a great new author you can add to your favorites list.
I've been trying to convince my publisher of that but no luck yet.