Should libraries have ebooks?

After a discussion n ebooks and copyright with Nat Torkington he refered me to
http://activitypress.com/2009/04/22/should-libraries-have-ebooks-im-not-sure-they-should/

The NZ$100 million upgrade to New Zealand’s National Library building has prompted debate about whether it’s money well spent. The latest contribution to this debate from the New Zealand Herald’s Brian Rudman suggests that the money would be better spent digitising the library’s collection so it’s available to everyone, not just tourists and residents of Wellington.
This raises an important question for the book industry. Should libraries be able to lend ebooks? Right now, the libraries are focusing on digitising out-of-copyright works or material that falls outside of copyright such as historical documents. This sort of material, 50 or more years old, is mainly of interest to researchers. The general public’s idea of a library is more closely associated with borrowing commercially-available, new and recent books. This is no doubt what Rudman had mostly in mind with his suggestion.
There are several problems with letting libraries lend ebooks, but there are also opportunities that could be a big help to our emerging digital publishing industry. It’s worth looking at both sides. First, some of the potential problems.
If a library buys an ebook, how many times can it lend this ebook and under what terms? With a paper book, there is no limit to the number of times a single copy of a book can be loaned. The main constraint currently is the physical availability of the book — if another borrower has it, you can’t get it until it’s returned.
Notwithstanding the recent passing of the Public Lending Right for New Zealand Authors Act 2008 to partially compensate New Zealand authors, the library can continue to lend that single copy without any further payment for the book to the publisher, international authors, or other rights holders.
If the paper book is replaced by an ebook and that ebook is just a click away — no need to drive to the local library to borrow and return the book — it’s probable that borrowing from libraries will see a surge in popularity, especially if it’s free or a nominal fee. Terrific for literacy, educational improvement and many of the cultural benefits that accrue from books. But how can this be reconciled with the need for a commercial industry of publishers, booksellers and others who will have much more to fear from libraries when technology brings the local library to every home and mobile phone.
So, given the potential problems, let’s look at some possible solutions.

The National Library of New Zealand, Wellington
One solution is simply to keep ebooks out of libraries, other than for archival purposes. This is an option that the industry should give serious consideration to. After all, in this digital age, is there really any public good justification for making vast numbers of books available free, in an instant, especially when it has the perverse consequence of undermining the viability of the book industry (and other media such as magazines and perhaps newspapers if libraries go down this path)?
If there are sectors of society that, say for financial reasons, could not buy books, it would make more sense for the taxpayer and ratepayer to subsidise their book purchases than to pay for an expensive library system whose main purpose is to give the books away. Publishers, authors and booksellers would be better off, and so arguably would the public, including those most disadvantaged.
Another option is to severely restrict the terms under which ebooks are supplied to libraries to minimise the harm that can be caused. Examples would be to restrict concurrent loans, limit the number of times a book can be loaned out, and specify devices it can be read with and/or places it can be read. This is one area where DRM could be justified since it’s not just preventing copying, but enforcing a range of terms. Of course, it might seem odd or even pointless that you’d still have have to drive to a library to read an ebook.
On the payment front, instead of a one-time purchase at standard (usually discounted) retail rates, publishers could be reimbursed on a per loan basis, or via a much higher initial purchase price. If this happened sooner rather than later, libraries could, in fact, play a big role in developing the digital reading habit and financing a large part of the commercial sector’s early digitisation needs.
But if terms imposed on libraries were too lax — for instance by allowing a low cost or a large number of times that libraries could lend a book — then commercial booksellers would be undermined, an undesirable consequence regardless of whether or not publishers and authors are fairly compensated. The library sector, as a heavily subsidised competitor, may need competition regulations placed on it.
So, measures such as these could work to reduce the potential harm digital library lending could cause. But would this be reason enough to allow libraries to perform a similar role in the digital world that they perform today with paper? If they have to be so severely restricted, shouldn’t we just drop them completely? There will be plenty of commercial options to fill the gap.
My own feeling is that the lending library, except for specialist research and archival libraries, probably has no place in the emerging digital world. What public benefit would arise from maintaining an expensive digital library system when access to New Zealand’s, and the world’s, books and knowledge is so ubiquitous? Keep the specialised research and archival functions, the role of major libraries since the great Library of Alexandria. But that should be its sole digital function.