Or it could be that Amazon is underwriting the costs. Amazon is clearly very invovled in this move. They are working with Overdrive to make sure that the books work the same way that they would for a Kindle, including the note taking functions and whispersync. That screams Amazon involvement.
Also, the announcement came from Amazon, not Overdrive. Overdrive specifically states that they are working with Amazon to make this happen. Not libraries, but Amazon.
If it is the case that Amazon is underwriting the costs, and I admit it is pure speculation right now, then it is a move of pure genius. It removes a major obstacle for people who are looking for Kindles, now they can read library books. It comes right when they have announced the $114 Kindle with Ads, which makes the Kindle more afforable for people who would want to use it at the library.
"Amazon is working with OverDrive, the leading provider of digital content solutions for over 11,000 public and educational libraries in the United States, to bring a seamless library borrowing experience to Kindle customers. "We are excited to be working with Amazon to offer Kindle Library Lending to the millions of customers who read on Kindle and Kindle apps," said Steve Potash, CEO, OverDrive. "We hear librarians and patrons rave about Kindle, so we are thrilled that we can be part of bringing library books to the unparalleled experience of reading on Kindle.""