It's ok for a good to be copyable.

A good can be "nonrivalrous" and still be a good:
http://en.wikipedia.org/wiki/Rivalry_(economics)

Lemon mint might be another example. It has a pleasant taste and smell, so you might want it as an herb. It's also very, very aggressive. Once you have a little, you can--and will if not careful--have more than anyone would ever need in a very short amount of time.

Excludability is another interesting property of goods:
http://en.wikipedia.org/wiki/Excludability

An incredibly deep water table provides a source of water that could be considered both nonrivalrous and nonexcludable. Your digging a well doesn't prevent anyone else from digging a well and drawing water. If you have the only well making technology, though, access to the water table is "excludable," ie, you can charge people for access to your well.

DRM is usually an attempt to take a nonrivalrous, nonexcludable good and turn it into a nonrivalrous, excludable good.

That's the best case for producers, since it means they can charge everyone for each new copy, but marginal cost is zero. That is, each new copy costs them nothing to make. So after the first few sales, every purchase is 100% profit.

Calling e-books services in this case affects their tax rate, but probably also affects a bundle of consumer rights that are highly specific to the EU and fairly complex.

We tend to thing of goods as tangible things, and services as when we make someone spend some time to produce some change (paint a house, fix our hair).

Nothing is inherently a good or service though, so that's really a bit of oversimplification. Hiring a painter? You're actually paying for the paint as well as the work. Buying from a restaurant? You're paying for waitstaff as well as food. A freelance journalist? Seems like providing a service when tasked to report on a certain story. A magazine at a drugstore? That seems really good-like. All of this blends together in messy ways, and it's easy to get wrapped up too much in the significance of a distinction that's mostly historical convention.

Well, except that it's not mere convention once you realize that legal systems around the world treat this as a very important distinction, and vary in how they treat each category in bizarre and unpredictable ways. VAT is one. Why should taxes on booksellers be high but taxes on bookbinders be low? Trade and immigration is another. Why can people pay for a rake from Tanzania but not a Swiss gardener? Warranties and remedies in contract disputes and commercial law are filled with nutty discrepancies.

Each one of these has some historical reason, I'm not saying we should just treat everything like a good, that probably wouldn't work. But it's important to realize that no one could guess all these rules in advance from first principles.

So if you're sitting down and thinking, "what's the best set of policies for e-books?" The answer you want is probably not as simple as, "We should just treat them like goods" or "We should just treat them like services."

Nor does it make sense to make up a whole body of law from scratch to deal with every funny new case. There's really no easy answer, that's why the law evolves really slowly to deal with new technology.