And yes, Baen had always used the Free Library to drive book sales. It's also why Cory Doctorow releases all of his ebooks under a CC license. His reason was the same as Baen's; it was the most effective promotion tool - at the time.
The thing is, Baen launched the Free Library in a very different ebook market. This was back in the year 2k or so, back when ebooks were a pain in the ass.
The thing that some people forget nowadays is that before the Kindle Store launched ebooks were a negligible part of the market due to technical, availability, and pricing issues. At that time it made a lot of sense to have one site for all of Baen's free ebooks, and that was mainly because the ebook buying experience was a pain in the ass. Plus the Baen Free Library was directly adjacent to Webscriptions, the Baen ebookstore, which at that time was the best option for buying SF ebooks (Fictionwise came in second).
As late as 2007 there were 4 dominant ebook formats. And I don't mean a situation like we have today with Kindle plus 3 variations of Epub; at that time you could find DRMed ebooks in eReader, Mobi, MSReader, and Adobe PDF. What's more, you would often find all 4 formats sold by a single ebookstore. (While ebookstores like that still exist, they are now the exception not the rule.)
And the issues were endless. Often times you could only complete a series by buying 2 or more formats. Sometimes you'd try to buy one format and end up with another - which you would not be allowed to refund or exchange. MSReader had DRM which broke mysteriously and I sometimes heard reports of Adobe PDFs expiring with no warning.
Even though I only got heavily into ebooks in 2007, I was sitting by the sidelines and watching the ebook market throughout most of aughts. The reason I sat out was all the horror stories I had heard about DRM as well as buying and using ebooks.
The Point I Am Trying to Make
This might be of interest more to ebook sellers than readers, but my point is that Baen launched the Free Library at a time when the ebook buying options were terrible. It made sense at that time for Baen to maintain one single site for free ebooks. Readers could then go looking for the paper copies of the book wherever they prefer to buy their books.
The ebook market is very different today. Now ebooks are given away to drive ebook sales just as much as sales of paper books. As such, ebook creators should look at where and how they give away ebooks and how those freebies will connect a reader with other related ebooks. And while Baen's ebookstore is okay, it is now dwarfed by the Kindle, Nook, and other ebookstores. Baen authors might see a benefit from going it alone and giving their ebooks away in other ebookstores.
None of this is new, and in fact I'm sure the more savvy self-published authors already know these details on some level. But I have the gut feeling that not all readers understood it and that made it worth repeating.
And not even all ebook creators have realized how the market has changed; Doctorow's strategy of releasing everything as CC licensed ebooks is likely not a workable marketing technique any more. He's doing it out of principle as much as anything, and it's not a trick which I think should be repeated.
My Other Point
The reason the ebook market took off was that the launch of the Kindle Store changed the ebook buying experience from being difficult to being easy. If the digital publishing industry had any decency they would be sending Jeff Bezos flowers every year on 19 November, the anniversary of the launch of the Kindle Store, rather than cursing his name. Of course, some in publishing probably wish the market had not changed; they are welcome to burn him in effigy on the anniversary.
image by The-Lane-Team