Sony announced that it's Reader Daily Edition electronic book will be available in December of this year. Amongst the features of this book are wireless connectivity (ala the Kindle, to be able to download books wirelessly), a taller profile (so you can read it more like a newspaper or magazine), support for the ePub format (which lets you read many free books and purchasable books in this format), and the ability to borrow a book from the library.
Apparently, libraries will start purchasing electronic books to loan, much the same way they do with physical books today. The environmental benefit is that publishers won't be cutting down any trees to manufacture and ship the books (though electronic books do come at an environmental cost...the cost to store them on a machine somewhere and make them available (though this can be minimized), the cost to manufacture the electronic readers, and, more importantly, the cost to power the readers over time (though the eInk technology doesn't use much power and the wireless network in the reader is pretty efficient). Of course, the biggest benefit for the reader is convenience (though there is an additional environmental benefit of not having to travel to the library to pick up and return a physical book). Being able to browse the library and check-out a book through the reader will probably let me use the library much more then I do now.
What I find interesting is that, though a single electronic book can be easily loaned any number of times, there will be a limited number of electronic books available from the library, just like there's a limited number of physical books available. The libraries will have to purchase a number of electronic books to loan. The library can only electronically loan out the same number of electronic books as it has "purchased". Each book can be loaned out for a period of time and when the time expires, if the library needs the book "back", they will automatically remove it from your electronic reader so it can be loaned to someone else (I wonder what would happen if my electronic reader didn't have wireless access for longer then the loan period). This, of course, is to ensure the authors and publishers are compensated for their efforts. At first, I'm sure there will be a limited number of books available to borrow. However, I would think that number would go up relatively quickly.
I'm sure most, if not all books are created electronically these days. It's just a matter of getting it into the correct format. I find the prospect of being able to borrow a book without even having to go to the library enticing (see my earlier post on Your Public Library and Book Rentals).
