I could really see libraries having sections for their own lines.
One flaw would be the idea of hiring editors and all that. They wouldn't have the sales base to cover it.
Actually, since they are producing for libraries, the sales base would be "approaching zero"
But I think there are ways this could work.
One might be having a library employee run it, with interns. Not offering services to all authors--there is plenty of that going on. But generating their own titles. By local authors or contests or whatever.
I think librarians would make better gatekeepers than the Big Six -- which does provide opportunity -- but publicly funded libraries would have a difficult time competing. There's a whole lot more to business success than having a good product.
Agreed, and that starts with paying out. Who gets the bigger cut of the lending/sales royalties? The writer, the library or the taxpayers? That's too sticky to work.