"If we see a novel with an online sample that looks interesting, we may look at the sample. But if it's limited to, say, two chapters, we hit a brick wall: we have to put the book down unless and until we stumble across a copy of it in a bookshop and remember reading it. Whereas if we run across a complete online ebook we can begin reading it and, if we like it, we keep on going. Because reading online sucks, the pain slowly increases -- but we get more and more hooked. Some of us get so hooked that we finish the ebook, but in a large number of cases we get hooked enough to want to finish it badly, but pained enough to be motivated to buy the hardcopy. And in those cases, the motivation to go out and buy a copy and finish the story is a much stronger one than in the cases where the experience is artificially truncated at the end of chapter #2.
So why isn't giving away the full text as a free download a more widespread practice?
Here we run up against the realities of the publishing industry.
For starters, the idea of giving something away in order to make more money is not intuitively obvious, especially to people who have been brought up in a business revolving around physical lumps of paper and cloth, rather than fungible data. The publishing business is not incredibly profitable for the most part, and non-net-savvy editorial folks (and marketing and sales people) are likely to be suspicious of a new-fangled idea that smells of dot-com snake oil. They'll be asking "where are the hidden costs?" all the way to the royalty statement."