Netflix for books
This is an interesting business model, and it sounds like Booksfree has perhaps found a viable niche for itself. But I suspect the market will prove too small for multiple players. Shipping costs (especially for hardcovers) would seem to be a significant obstacle, and there isn't likely to be much economies of scale as a company's subscribers and library grow. Also, with direct-to-consumer retailers like Amazon keeping consumers' costs down through free shipping promotions and heavy discounting (e.g. see this regarding Harry Potter), the demand for a rent-and-return service will face pressure a lot of pressure. Finally, to the extent that e-books are finally beginning to gain traction, they will also mitigate the need for this kind of service.