There are lots of positives for the user. The announcement says:
This is going to be really excellent news for students who are working with titles, or people who like reading a particular author, and for bookclubs and reading groups. However, exactly how and where is this data going to be stored? Will it be linked to an individual, a specific device, an Amazon account, or via a library card? If the latter, does that mean that my other Amazon purchases are going to be linked to the library members details?
I presume that there will also be another format that libraries/librarians are going to have to deal with, as I can't image that Amazon is going to change their format - and they'd probably argue that it would break the notation aspect. This is going to be a slight pain, but equally, it's going to mean that librarians are not going to have to explain that although someone has a Kindle they can't borrow library titles to read on it. So that balances out a bit in my opinion.
Overdrive has said that "The Kindle Library Lending program will support publishers’ existing lending models." This is a shame, but isn't unexpected, so the HarperCollins 26 loans and you're out model will still work. However, it might be a final tipping point for certain other publishers to decide to allow libraries to loan their titles. However, it also looks as though it's not going to cost a library any more to have access to the Kindle format as Overdrive also said "Your library will not need to purchase any additional units to have Kindle compatibility." As The Librarian in Black has said 'The initial reports seem, frankly, too good to be true.'
If that is the case, how will Amazon make money on this deal? I suspect that they're hoping this will deal a knock out blow to other eReaders. Other readers can't do the annotate and keep function, and so it's going to be a huge reason for students to just go down the Kindle route. They might also be able to get readers to purchase titles more easily, as in 'you're 75% through but the book will expire tomorrow - do you want to buy a copy now at a slightly cheaper rate?' or 'This book is available to you at 10% cheaper as you've already borrowed it previously from your library' or 'Why wait for 4 months to borrow this, when you can buy it now?'
However, there may be greater pressure on library budgets to buy more books in an electronic format as Kindle users request them. In turn this is going to affect buying the physical item (unless Amazon is thinking along those lines as well), so libraries are going to have some even harder choices in front of them when it comes to the ever dwindled pot of money. However, since Kindle readers are obviously enthusiastic readers, this may well encourage more of them to use the library services than would have done otherwise.
I wonder how long it's going to be before we see libraries selling Amazon gift vouchers, or even Kindles? If and when the deal arrives in the UK, fairly swiftly I suspect. Who knows, Amazon may also offer special library discounts? All in all, I think this looks as though it's going to be good news for libraries, though dealing with two monopolies in Overdrive and Amazon isn't wonderful news, so sup with a long spoon!