This may be somewhat muddied by his use of "defend" everywhere, rather than something else. Anyway, I think he has a decent point, that libraries were last century's big threat to IP holders (would have liked to see some citations on the controversy though), the government decided a public good would be served with a smallish sacrifice from the industry, and that filesharing is a similar but much more efficient execution of that public service (but at perhaps too big of a cost to the IP holders.)
It's all about whether you look at libraries as an exception to copyright which has been carved out for the public good, or whether you look at libraries as something that is naturally allowed within copyright.
Put it another way: the article argues on the basis of a library's purpose. I'm ignoring that, and merely looking at a library's right to exist. If you see the purpose coming first, and the right to exist being created on the basis of that purpose, then the argument in the article holds. If you see the right to exist coming first, and the purpose merely being why people take advantage of that right, then you get my position.
Maybe this is one of those American versus European things. It looks from my cursory examination (and I could easily be wrong, and welcome a more informed opinion from anyone who knows better) that the doctrine of first sale is an American thing, and European laws give more rights to the copyright holder.
My local library will only allow one person to "borrow" a given e-book at a time. You must wait until someone else returns it before you can "borrow" it for a set period of time.
Obviously this is nonsense, and if the library were interested in efficient lending, they'd let everyone that wanted it borrow the e-book at the same time.
IMO, the same applies to DVDs - why not let thousands of people "borrow" a digital copy of a DVD simultaneously
There is a fundamental difference between loaning and copying, both from a legal and moral perspective.
How does this work with files? How do I distribute a file without also copying it?
If I cut->paste instead of copy->paste the file for a friend, am I distributing my original file? What happens if I give my friend my music library and decide to buy myself new music?
I'm allowed to make copies of my music for personal use (otherwise good luck getting that MP3 on your computer to play on your mobile device). I make a copy and give the original to a friend. My friend then makes a copy of the original and gives the original to their friend. The copies made are authorized and we're lending out the original.
It doesn't work once you leave physical constraints on scarcity and existence.
Which is exactly why I think it's silly to think that one's views on libraries must decide one's views on file sharing. They're extremely different things.
The only difference is outlined in the article: the movie can be watched simultaneously by different people who got it, whilst I'm the only one with the book in my hands.
As such, libraries operate within the law and within the spirit of copyright, while file sharing doesn't.
You can certainly object to the spirit of copyright as expressed here, but there's nothing inconsistent about supporting it, and supporting public libraries.
Can't do that with the physical book. Not for free anyway.
Stealing a book doesn't amount to copying the book and returning it.
The problem with this is that you could get a network of 1000s of households/users and still rarely have clashes in use. Such clashes could be managed such that additional copies are purchased (or the user chooses an alternative item of media) as needed. Then you're probably going to be able to serve 10s of thousands in a group and still reduce overall number of media items purchased.
That's the halfway point between torrent style file sharing and library lending. Imagine you could access the currently used media libraries of all your friends (and "friends") ...
Similarly, I can borrow a book from a public library and make digital copies of it and distribute it. In fact some illegal copies of ebooks you find on file sharing sites are scanned copies of legitimately acquired physical copies (I have personally come across comics with library seals in one of the scanned pirated digital copies). Some pirates also distribute colored xerox copies of physical copies acquired from libraries.
The only difference between the two is time taken to do it.
But there are other reasons to defend public libraries than simply the fact that they disseminate knowledge and this is worth carving out an exception in copyright. I think most people would defend public libraries on the basis of the doctrine of first sale: after an author sells a copy of a work, they can't control how you use it. As long as you're not making unauthorized copies of it, you can lend it out or do whatever else you like with it.