Kindle Lending Library" is the inciting marketing move. As with the mainstream availability of e-books, publishers are under fire for entering into distribution agreements that aren't covered under their author contracts.
From a consumer's perspective: Amazon is adding e-books to their Amazon Prime subscription package. Now, along with free two-day shipping, streaming movie rentals, and instant TV show downloads, Amazon Prime members can "borrow" One Free e-Book a month -- all other books the consumer has to buy.
From an author/agent's perspective: Publishers engaging in this subscription-based distribution deal with Amazon make money off of a pool of authors' works. The size of the pool is critical since consumers are more likely to pay for a service that offers a million books versus one that only offers three hundred of the best sellers. The happy theory is that each time a publisher makes money off of a book, the author of said book also makes money. The amount the author (and the author's agent) earns is determined by the contract between author and publisher. Big publishers have only recently adopted e-book verbage in their contract boiler plate. Subscription digital distribution, at first glance, hasn't been addressed. The root argument is if an author is due money by simply having the title of their work available to the subscribers -- even if their book isn't downloaded by a single consumer.
The Association of Authors' Representatives (AAR) has a great summary of the issue and a breakdown of the math behind potential solutions over on their blog: Author Contracts and Subscription Models.
From an unpublished author's perspective: I'm probably not going to win friends by saying it's much unnecessary ado about a marketing strategy. Unlike tangible books versus e-books, subscription services aren't new products. They're not even new means of distribution. They're marketing strategies -- for a retailer. The only thing "new" is a retailer bundling existing products to attract more consumers and retain existing customers.
Marketing -- creating consumer awareness and purchase opportunities -- is one huge reason authors sign publishing contracts in the first place.
True, true, I don't know all the moving parts nor do I have a crystal ball for seeing the ass-biting that will result from digital subscription models. However, publishers have been discounting books for eons. Retailers have run subscription programs with lures for ages as well. So, why wouldn't an author's payment fall under an existing contract?
Subscriptions models aren't a new product. "Lending" is a misnomer only in the consumer association with a non-profit public library, versus a for-profit Free Product Sample / 30-day trial. Each time a customer downloads a book, that download is logged by the retailer and reported to the publisher as a unit of sale. The retailer pays the publisher for that unit sold according to the distribution deal in place with the publisher -- regardless of whether the retailer collected money from the consumer. The publisher then pays the author (or agent) for that unit of sale according to the contract in place.
Why would an author expect to get paid if no one downloads their work? It's like saying I expect to get paid by Google and Twitter since I've created content that populates their sites, since empty search results or content streams are worthless. Never mind that Google is one of the few companies who get paid to include a listing in search results.
I'm assuming authors don't have an "opt-out" for publisher or dealer promotions that discount the prices on their paper or digital books. I'm also assuming they don't get paid extra each time the publisher or retailer promotes their books or even lists them in search results. An author gets paid each time someone buys their book. Period.
Authors -- keep writing books that people want to read.
Marketers -- keep finding new ways to improve discovery. (P.S. You might want to take that Tech geek out to dinner and pick his brains.)