Zolgar: Most creators and artists I know (which is a lot), will actually disagree with your notion that giving shit away or taking a loss is good for business.. because they've all tried it, and found out the hard way that.. If you give your product away, or you sell it for super cheap, that's what people expect of you.. The person who "loved your CD" when they got it for $1, probably won't be $10 interested in your new album. Generally speaking undervaluing your work in order to "get out there" is a newbie move that miiight help short term, but hurts a lot more long term.
ET3D: I've seen Kickstarter projects make a lot more than what your father is asking on completely free products, such as web comics. Take The Cucumber Quest project for example, which made $62,953 for creating a book of a web comic that's available for all. I pledged for it. Only $5, mind you, but that's $5 I paid just because I enjoyed the comic (which I didn't know of before that project). Not to mention the Homestuck adventure game, which brought in around $2.5m.
Also what I've read about limited time promotions is that they work. Another anecdotal evidence from me: I bought Faeries Solitaire for cheap, then bought another copy to gift because I liked the game and it was on another sale (that was before the creator gave away ton of keys), then I pre-ordered Faerie Solitaire 2. If the game stayed at $7, I probably wouldn't have ended paying anything even if it was promoted.
I'm also not sure what you mean by "taking a loss". A digital copy doesn't cost money, so you're not losing money by giving it. You do for giving away physical copies (which means that giving away physical copies makes less sense).
I've seen Kickstarters asking for less, for something cooler, fail even when they offered things at lower prices. Kickstarter is a finicky beast, and the biggest factor involved.. is how much traffic you can get. Web comics or the like, get a lot of traffic because they have people who visit their website daily or several times a week.. this makes their Kickstarter campaigns far more likely to go viral.
Now, for limited promotions.. tell me, what do you know about the services like Groupon?
If you watch those, you'll notice most of them are reaching the point of just recycling the same few deals with an occasional something new. You know why this is? Most businesses have realized that when they do a Groupon or the like, they don't gain much, if any, repeat customers.
It's the same thing with giving away your work as an artist. When selling your art is how you intend to make money, giving it away makes people expect it free. Now since you've brought up web comics, which are free, I'll explain how those are a different beast: Web comics are free because the artist can sell advertisement space on their web comic, and once they get large enough they can also sell merchandise such as books, t-shirts.. whatever really. For them, their primary source of income is not directly selling their art.
As for the taking a loss bit, I wasn't talking 100% about only digital services. I know a lot of artists of many different types. I routinely talk to authors, musicians, sculptors, a machinist, artists (I still find it funny that people who draw pictures are just called artists), dancers, fire performers, costumers.. and the one thing most of them agree on, is that you never sell yourself too cheap, because that makes people expect you to always be that cheap.
