I kind of can see the "freeloaders" side of things.... to a point.
I believe we should all have access to our culture via libraries. I love books and will buy books, but I only will buy the books that I am insanely attached to, where just "borrowing a copy" isn't good enough. There are some books where, when the due date comes up, I think, "damn", and put it on my to buy list.
In a way, from a publisher's point of view, I can see the fear that comes from their books being loaned out for free. Often there are books that are out there that are not worth the price tag that comes with it and they darn well know it, and they are scared people are going to discover that before shelling out the money.
But isn't this a good thing? Allowing the customer to choose? What I may return to the library in disgust may provide the next person ultimate joy, and THEY may ask for it for a birthday gift? So I don't wind up buying all of the 80 books I take out of the library every year. But to have discovered and fallen in love with even 2 of them is a good thing. They'd have someone talking about their book for a long time.
I have respect for institutions that allow me to be a conscious consumer. I cannot afford blind consumerism. One of my favorite authors Margaret Atwood has many books out there that I either love passionately or don't want to own at all. There is one of her paper books I have lost three times and re-bought it new, whereas others I was glad I had the library.
But libraries as a cornerstone to culture is the main thing here. There are a lot of authors I never would have heard of had I not seen them featured in the library as a "perhaps you may give this a try...." table.
There are many people for whom e-books have gotten them to read more (points to self). I can't always get to the library in person. Especially during this month where local transit strikes are occurring. But even then, there are people who sometimes for many reasons, can't make it out there.
Penguin books has just cut off a huge potential customer base. For me it's obvious which books come from penguin, because the e-book loan often has just the penguin on the cover and not the book's actual cover.