That means that file "sharing" infringes copyright, because it is impossible to "share" an ebook without creating a copy. Providing an author's generosity doesn't interfere with other contractual agreements, an author is free to give away copyright-protected rights.
J A Konrath is giving away a collection of short stories: Jack Daniels Stories, and is thereby causing quite a stir. Find out more: http://jakonrath.blogspot.com/2010/05/steal-this-ebook.html
Before we had ebooks and file sharing, authors who wanted readers to sample their works, contributed short stories to anthologies (and still do so). Now, short stories are often given away freely from authors' websites. I prefer that model.
Here's what I wrote as a comment to J A Konrath, pointing out that what works well for an author who has a good body of work available for sale might be devastating for an author with only one or two works ready for the online shopping basket.
You are blessed to be quite prolific.
When pirates say: "Write Faster, Write Better, Write Cheaper..." that's not a problem for you.
If a pirate shares one of your books, the chances are, there are ten or eleven more of your books that he might buy once he's discovered you.
What about the author who only has one book?
If pirates share that, it's all very well them loving it, and vowing to buy everything else that author writes, but they've read everything he or she has in print, that book's sales is what her editor judges him or her on, and in this economy (for publishing) there may never be a contract for a second or third book from that author.
No amount of admonitions to write faster, better, cheaper will make any difference to that author.
Moreover, some authors cannot write fast and well. Editing takes time. Not everyone types with perfect spelling and grammar.
When one rushes to publish, mistakes are overlooked, shortcuts are taken, there's no time to fix the wobbly bits of a plot.
Moreover, if you've spent any time on Astatalk, for instance, you will see that there are the Releases. And there are the Requests.
Pirates read one book, and they don't buy the next one. They request it.