"Or should this really be something that should be built at the Federal level, like an Electronic Library Of Congress where every US citizen gets access, with representative funding coming from each state, or earmarked Federal funding that would have gone towards paying for brick and mortar libraries?"
This ignores the reality that "All politics is local." Texas will want a huge State archive of Texas-related materials--especially material not available elsewhere. Smaller states, particularly those with chronic economic problems such as the "Rust Belt" states, will want their federal tax dollars spent on more fundamental things like roads, bridges, etc. It's like--China's going to put a man on the moon. Yeah, it was done in 1969--but they didn't do it.
Different states and cities will want their own centers--so a single federal system isn't politically realistic.
Realistically, something very analogous to the brick-and-mortar system will still be used. Special "Library-Edition" e-publications will be created. You want a copy of a particular e-issue of the St. John's University Law Review? Good luck finding it at your local library--you'll have to get access through a library that subscribes to that particular e-publication, or you'll have to buy access. Realistically, trying to find all sorts of highly-specialized e-publications such as professional journals and then buy them yourself will be a nightmare.
Oh, yeah ... chances are your library will belong to some sort of e-publishing clearinghouse. The librarians will know how to find what you want, then you can order it and pay directly at the library--and the system they belong to will take care of the logistics of getting you your e-copy from the seller to the library and distributing your payment. The difference will be that you will have access to a LOT more publications than now.
Another thing is that being a "librarian" is boring but being a "digital information specialist" is cool. More knowledgeable specialists means there will be more demand and more availability--not less.
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