Libraries pay the publisher (who in pays the author in turn) and are limited to giving out one copy at a time (even electronic copies are often limited in this way). Piracy doesn't result in any money going to the artist.
Sure it does, presumably the original person that ripped their CD paid for it. Libraries don't pay the publisher "per checkout", they merely buy the books.
"A Public Lending Right (PLR) programme, is a programme intended to either compensate authors for the potential loss of sales from their works being available in public libraries [...] Canada, the United Kingdom, all the Scandinavian countries, Germany, Austria, Belgium, the Netherlands, Israel, Australia, and New Zealand currently have PLR programmes. [...] How amounts of payment are determined also varies from country to country. Some pay based on how many times a book has been taken out of a library, others use a simpler system of payment based simply on whether a library owns a book or not. [...] In the United Kingdom authors are paid on a per-loan basis calculated from a representative sample of libraries. The current rate is 7.82 pence per individual loan."
(I imagine that any occurrences of "authors are paid" should be replaced by "publishers are paid", but I don't know specifics.)
