I think you should still get a little something for losing, a consolation prize. But I think they should make a loss (3rd place in FL) reward only a small amount of tomes and XP, and instead greatly increase the rewards for winning/2nd and 1st place - 1st place in FL should give you more than it already gives you right now.
It's the simplest way of incentivizing players to actually *try* and win and play to win I can think of. Anyone that gets salty or toxic about losing... well, that's what GMs are for.
