As I understand it, OverDrive supplies both Adobe and MobiPocket format library e-books (both with DRM). The real looser here is the Kindle. Perhaps the strongest argument for Amazon allowing DRMed MOBI content on the Kindle is MobiPocket library e-books. If the PRS-505 supports Adobe library e-books, then the Kindle will be the only current mainstream E-Ink device without US library e-book support.
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