That’s more or less how the Soviet Union paid authors.
Hence the 1200 page Russian Novel.
That’s an interesting point and one that many authors have brought up, but it doesn’t work in this case. If Amazon paid the authors of longer books more just because the longer book was borrowed, that would be legitimate. But if you wrote a 1200 page book and people who borrowed it only read 20 pages, the author who put out a 200 page book and had people finish it will be paid 10 times as much.
So the motivation returns to writing books people like to read. A shocking sentiment for many writers.