Let's take Amazon, for example. They don't like free ebooks, because there's no money in it for them. If you're a publisher and you want your ebook to be free for people to load onto their kindles, Amazon will charge you for the privilege. They rationalize that they're paying for a separate wireless network, "Whispernet", so it's only fair to assess "delivery charges" to free ebook publishers. If you use their 70% royalty option, the delivery charge is 15 cents per MB of data, and the minimum price you can set is 99 cents. The only way to get Amazon to deliver your ebook for free is to select their 35% royalty option, and then invoke this "matching Competitor Pricing" clause:
From time to time your book may be made available through other sales channels as part of a free promotion. It is important that Digital Books made available through the Program have promotions that are on par with free promotions of the same book in another sales channel. Therefore, if your Digital Book is available through another sales channel for free, we may also make it available for free. If we match a free promotion of your Digital Book somewhere else, your Royalty during that promotion will be zero. (Unlike under the 70% Royalty Option, if we match a price for your Digital Book that is above zero, it won't change the calculation of your Royalties indicated in C. above.)Apple, Kobo, and Google are much happier to set prices to zero, because they make some money on hardware sales or advertising, so you can get Amazon to give your ebook away for free by getting people to report your zero price on Apple, Kobo, and Google.
So just to get your ebook to be free on Kindle, you're forced to be incompletely honest with your customers and distributers.
But Amazon creates a great temptation. Why not use the suckers paying on Kindle to subsidize the free availability for those smart users who come to your website? Isn't it convenience that these people are happily paying for?
And libraries are another temptation. They'll pay for the convenience of getting your ebook though their preferred platform, Overdrive or whatever, even as you offer the book for free to users at all the libraries that don't pay for your ebook. But would they still buy if they knew they could get the ebook for free? Maybe you shouldn't ask questions when you don't want to know the answer.
So here's my simple, unproven postulate: in the long run, full disclosure about pricing and an honest relationship with readers will be in the best, mutual interests of authors, publishers, readers, and libraries. And customers will prefer a distribution channel that enables that honesty.