I heard an interesting anecdote regarding public library DVDs and CDs. While this is one data point, I've believe it's not an isolated incident.
Apparently the kids clearly state that they are taking out movies and music with the intention of copying them. With the national trend of less people visiting public libraries, they (the libraries) have been forced to try new ideas to win back their patrons. One way they've been doing this is by stocking new music and movies, as well as providing more computers and Internet access. If you're a person who doesn't have a broadband connection to pirate in the comfort of your home, you can still visit your local library check out a disc bring it home and rip it. The availability of cheap computers equipped with CD-RW drives makes it easy for the less well connected to partake in what the high-speed crowd has been doing for years.
The problem is bigger than college and high school kids with broadband connections using P2P software.
Digital distribution eliminates inventory carrying costs, pass the savings on to the consumers.