I was composing a response about why Wizards of the Coast should sell out-of-print game material when they announced that 1st Edition Advanced Dungeons & Dragons is back! I'll bet some people were shocked by Wizards' decision to go backwards in time to the original AD&D.
The decision to release a special copy of the 1st Edition Player's Handbook, Dungeon Master's Guide, and Monster Manual might not be that monumental. Honoring the memory of Gary Gygax with these Premium edition books might be a sweet and harmless PR stunt. If it were me doing this, it would also be an innocuous way to send up a trial balloon and test the waters. Will this product sell? How much will it sell? Either way I think this is a good deed by Wizards of the Coast whether as an olive branch to die-hard 1st edition fans or as a business opportunity.
Kris Hansen made the zero-sum argument in his blog post and, while it sounds intuitive, the truth is that we seldom act in such narrow circumstances. We don't know if "every dollar spent" on 1st edition PDFs translates one-for-one to less dollars spent on 4th edition. The current edition of D&D faces a lot of accusations that it tries too hard to be like World of Warcraft. I think we can all agree that Wizards of the Coast believes they are competing for share of wallet with computer games (like Skyrim). Every dollar spent on digital copies of AD&D 2nd Edition may be one less dollar spent on computer games or Pathfinder or any number of other things.
In a world where there are a huge array of choices you can't force the customer to do what you, a business, want them to do. We live in a customer-centric age (thankfully) and Wizards of the Coast needs a customer-centric DNA if they want to compete against prettier, flashier, easier, more advanced forms of entertainment.
Give customers what they want as long as they're willing to pay appropriately for it. PDFs sales for out-of-print roleplaying books are a niche market but they provide some key benefits: combating piracy, insights into popular topics, keeping brand loyalists happy, and revenue. Take the iTunes example, the music industry was floundering with massive digital piracy of music until Steve Jobs came along. The vast majority of customers would prefer to pay than be pirates as long as it's reasonable (and not too difficult). When Wizards of the Coast refuses to provide digital versions the pirates step in and take over.
Old editions of D&D have a finite amount of official products; no new roleplaying books are being produced for those old editions with the Dungeons & Dragons logo. You are starving (OSRIC) customers of those editions from getting new material but you can't starve them of the material you already produced because of piracy. Queen of the Spiders was the best selling PDF outside of the core rulebooks back when those old editions were for sale on RPGNow.com but WotC wouldn't have known that if they didn't make it available. That's valuable market research information (see City of the Spider Queen and the R.A. Salvatore's War of the Spider Queen series).
I will probably buy the 1st Edition Premium Player's Handbook and the other two core rulebooks from that set. I'm never going to play them because I think that the D&D game has improved since then. I'll buy them for the nostalgia that comes along with flipping through the pages and being inspired by the ideas present there, all over again, like I did when I was ten years old.