Can you elaborate? Why do you need to fix the number of digital copies in a geographic area?
When we all went from using Blockbusters (=akin to library) to using Netflix (=akin to what is being proposed upthread), did it break the economic model for DVDs?
The "Northern California Digital Library" (http://califa.lib.overdrive.com) already loans out digital books (read with Adobe Digital Editions software) to patrons of many Northern California library branches. The system enforces limits on how many copies of any book can be checked out and so is just like a library. It's convenient but the selection is, for now, limited. I've found some good books there and really prefer this to going to the library.
And the DRM appears to just work. I don't mind this model for books, music (I'm a Napster-to-Go subscriber), and when the first viable stream-for-rent system for movies arrives I won't mind that either.
This could work if we had a fixed number of digital library books per a zip code.