Because that’s the way the publishers and authors still make money instead of only selling a single digital copy that is then just copied and shared for free.
If they sold a single copy to a library who could simultaneously share it with everyone in the world, the publisher would only make a single sale.
It is usually set up so an entity can only lend as many copies at a time and they have licensed from the publisher.
In fact, when libraries pay for digital books, they come with an expiration date. A physical book will wear out over time and so a popular book will be frequently replaced by a library buying replacement copies. More sales for the publisher
The digital copies come with expiration dates to simulate this need to replace books that continue to be popular and replace those sales for the publisher.
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