As for authors, nothing changes here: libraries lent their physical books without paying before.
In almost every other country in the world libraries do pay a royalty to lend books.
It's notable that the IA service was not geofiltered to the US only.
The IA doesn't geofilter it's availability, and therefore it is subject to the laws of the country it does any substantive distribution to, same as every other website in the entire world.
[1] My favourite library branch in my town is, while associated with the city library system, partly volunteer-run and was consequently the last to computerise its lending system, and therefore kept on using the classic system until I think somewhere around 2010 or so, whereas the rest of the city library had already switched in the 90s.
I remember seeing books that had been lent easily over 100 times.
Not to mention a book can be rebound by a library if it's purchase price is high.
While I understand the plight of publishers, I also think digital rights favor them too much, atm.