Also, if you borrow an author's book from a library in the UK, that author gets more than 12 pence per loan in Public Lending Rights. Any author can earn up to £6,600 per year this way.
I don't think they get anything extra in the USA, just the standard royalties from the book purchases. But if a book is popular they'll buy or lease more copies. And if it's free readers are more willing to take a chance on a book. If they like it they might buy it or read more books by the author.
Exactly - and as I've often said, one of the more welcome recent trends in publishing is the growth of reprint lists and publishers. So often driven by people who literally found treasure gathering dust in the library stacks and said "More people need to know about this"!