Of course! The point is, to the end reader they are free! (right, i know, taxes or some other funding provides the resources for the library)...
The author and publishers that are fearful of people pirating their books are irrationally afraid of ebooks and not afraid enough of libraries, based on their viewpoints.
Another point - It's just not sexy or good PR to tell the libraries to take the books out of circulation. ;) It is good buzz to yell at Amazon.
Essentially Google Books is attempting to be what I suggest. I think Google Books will eventually succeed and authors / publishers will get a cut of revenue from advertising and/or subscriptions.
The folks that are trying to kill of digital distribution or cripple it will never win with books. Never in the history of mankind has trying to limit distribution succeeded. The only way to make money in content is to give people BETTER ways to get at content - higher fidelity experiences (movie theaters) OR easier and easier access (itunes, pandora, magnatunes).
One last point that I didn't want to get mixed up in... people generally pay for GREAT content. It's the produces of SWILL that complain the most about piracy. The only way bad content can make money long term is by bait and switch, forced distribution... The business of bad content isn't content, it's arbitrage. Piracy really hurts arbitrage and that's what people are complaining about. Again, go back to my examples of LOTR, Bible, add to those Charles Dickens, Plato, etc. etc. these books are STILL routinely top sellers even though you can EASILY get ecopies, print copies and what not for free.