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I think it's readers that have the entitlement complex, not publishers.
Firstly, that problem with physical book selection is exactly what publishers are worried about - real books wear out, get lost, get eaten by canines, etc. E-book don't. One e-book sold to a library can last forever, while a physical book's lifetime basically depends on how many times its read.
Secondly, no one is entitled to entertainment for "free". Other than a few dozen authors like Stephen King or JK Rowling or Clive Cussler, the vast majority of authors are not well to do, most are struggling. Many work second (or first) jobs just to stay afloat, or do editing or work they don't really want to (like novelizations or licensed stuff) simply because they need the money.
Why should they be doing all this work with no benefit? Providing you with entertainment with no compensation in return? That's the real reason for copyright - to encourage creation (granted, it's been taken too far these days, but that's another argument).
Yes, to a degree giving away free stuff works for Baen (though they haven't been putting out many cds in the last year or so), but the authors choose to opt into the program, and Baen's audience tends to be those that don't believe in "entitlements".
And if you really want free entertainment, there's a lifetime supply of books by long dead authors.
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