This is a win-win-win-win proposition.
I win because I have fewer physical books cluttering up my house, while retaining access to my library.
Amazon wins because more consumers will have large Kindle libraries. This will create an incentive to make future purchases in the Kindle ecosystem.
Book publishers win because when used books are recycled, the market for used books shrinks. Physical books are durable and resalable; converting to Kindle books solves the durable goods problem and makes publisher profits higher because they would sell more copies.
UPS wins because they get a small fee-per-book that comes out of the gains to the other parties.
When I talk about this idea, I find that the main objection I get is an emotional one: “Isn’t it wasteful to destroy used books?” people ask. And the answer is not really. No information is destroyed by recycling the book, because Kindle books are a pretty good substitute. And if the book were not destroyed, then the publishers would never go for the deal, and we would be stuck in a more wasteful situation, one in which a significant fraction of real estate goes toward book storage.This gives some interesting food for thought, and I think it is especially compelling from the standpoint of Amazon. If Amazon can do the equivalent of ripping your physical library to a digital library -- that's a CD reference to those of you from the iTunes generation -- they could make the Kindle your main hub for reading. Even if the dead-tree-to-electron program costs something, it seems like it would pay for itself (at least from the standpoint of Amazon).
Now, what to do about those stubborn customers who cultivate libraries of impressive sounding books for signalling value?