What's the deal with traditional publishers and e-book borrowing from libraries?

You have probably heard that Penguin Books announced that it was ceasing to distribute e-books to libraries. As a result of this decision Random House now remains the only major publisher that offers libraries unrestricted access to its e-books although it has announced it will raise their prices. So what is the problem here? Why do most big publishers not want to allow libraries to carry their e-books? The answer is: because it's too easy for people to read them.

Say what?

You heard that right. The major publishers are concerned that the ease of downloading e-books from libraries will turn potential readers into book borrowers rather than book buyers thus eating into their profits. They argue that borrowing a print book from a library involves a hassle. You have to drive to the library to get the book and then to return it. However, with e-books you can download them from your home. So all these publishers are currently in talks with the libraries to figure out how they can make e-book borrowing more difficult.

On the other hand Amazon makes Kindle books available to 11,000 local libraries in the United States and the pace of e-book borrowing from libraries is currently exploding.

Jeez, why are traditional publishers having so many problems?

If they can't answer that question they deserve to go the way of the dodo!