Yes, I'd be happy to pay a subscription fee to a good library. I already do this for music (Napster) and have done so for films - and will again soon - (Lovefilm).
I also can't see it necessarily being a loss-maker for publishers, with micro-payments made from the subscription agreements based on lending. Renting (or borrowing) rather than buying means the reader is more likely to risk a new author. This would lead to more reading and reading more widely, resulting in more micro-payments and more actual purchases outside the library.
Graham
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