I don't know about you, but I'd estimate that at least 90% of the books I read are not available at my local library. I also tend to read tens of books in parallel over months, something I can't do with the library.

Alternative explanations for library usage being down is that paperbacks are already pretty cheap, consumers are interested in a "long tail" of books libraries don't have, and if you want really cheap then you can easily find a long tail of used books for $1-3 on Alibris.