Sharing privately-owned books: the modern public library?

There's a new scheme in Sutton, in south London, which invites people to list their own books online, so they can be lent to other people. It's associated with the local libraries, but the libraries insist it's not intended as a substitute for their service.

But why not? Today's libraries are too much like Waterstones, with most of the books being recent paperbacks. Older stock is sold off for 10p a book. Surely the point of a public library is to give people access to books that can't be picked up at the bookshop?

Now that secondhand bookshops are rare, it seems to me that libraries should assemble collections of older books - bought secondhand, not new -, and only buy those they think will still be read in ten years' time, not paperbacks that will be replaced before next Christmas.

The book share scheme is a good idea because it taps into a huge, underused resource - the thousands of books which sit on shelves for years never being read. I haven't found exactly how it's organised: do people make private arrangements with each other to collect and return the books? And what happens if someone doesn't return a book or returns it damaged? Does the lender apply to the library for compensation?

I wonder whether Amazon could be roped in to make this a national scheme, using its database, in the hope of people buying books as they use the service? Posting books can be expensive, so perhaps local delivery and pickup would work best. Could libraries be used as places where the private, shared books could be collected and returned, so people don't have to go to each other's houses?