My name's Eric Flint. I'm a science fiction author myself and also handle the Free Library for Baen Books. I just read Tim's article with great interest. I agree with all the basic points he makes, and have made many of them myself in my own essays (entitled "Prime Palaver") in Baen Books' Free Library. If you're interested, you can find the essays and the Library by going to www.baen.com and then selecting "Free Library."
At this point, something like half of the novels I've written are available in electronic format for free, either in the Free Library or in the CD which Baen included with the latest novel in David Weber's popular Honor Harrington series. And all of them are available in a cheap, completely unencrypted electronic edition. If that's resulted in a drop in my income, it's news to me. In fact, my income as a writer has been rapidly growing for the past few years. I'm not only able to write full time, but I'm earning about twice as much as I ever did as a machinist.
Electronic publishing will remain small potatoes until and unless publishers give up their obsession with encryption and provide their customers with what they want: user-friendly, cheap, and no-hassle electronic texts. If they do that, they will discover -- as Baen has, and O'Reilly also -- that the problem of so-called "piracy" just vanishes as anything other than a minor nuisance.
(And, as Tim says, really only happens on a large scale in countries where people are too poor to be buying your books anyway. So who cares? Hopefully, if economic conditions improve in those countries, you will have built up a potential paying audience down the road. And, even if that doesn't happen, you aren't losing anything anyway.) (Besides, in my opinion you have to be a real jackass anyway to be getting upset over the fact that people whose lives are hard enough already are getting a little pleasure from reading one of your books.)
"Piracy" is a labor-intensive enterprise, even leaving aside the potential legal risks. That's why pirates rob bullion ships, not grain ships. If publishers stop making their product artificially expensive and a headache to use, they will discover that "pirates" lose all interest in them. Why "pirate" something that's already available for no more than $4 a book? (Especially when many of those books can be looked at ahead of time, at no cost, so the potential customer can gauge whether it's something they'd be interested in buying.)