Hoopla Digital is based in Toledo, Ohio proving that you don't have to be in Silicon Valley to come up with great business ideas. Hoopla has pulled off a stunning achievement, it has managed to negotiate the right for local libraries to lend digital versions of Hollywood movies and music as if they were physical artifacts on their shelves — and library members can view them on Hoopla's smart phone and tablet apps.
Here's my notes from a recent conversation with Hoopla founder Jeff Jankowski (above, showing off the smart phone and tablet apps):
About $11 billion is spent on public libraries and their budgets, every year in the US. California spends about $12 per resident on public libraries, New York has the highest at $53.
Hoopla is financed by its parent company Midwest Tape, which was founded in 1989 to distribute cassettes and other forms of media to public libraries, complete with each library's labeling and index information printed and attached. Jankowski called it a light manufacturing operation.
When Jankowski joined it had $200,000 in annual revenues, he helped build revenues to $150 million and create relationships with nearly every public library in the US. This long and trusted relationship with public libraries is a big advantage for Hoopla Digital and why it has had a positive reception from librarians.
How it works: Anyone with a library card and a local public library that has joined Hoopla, can borrow a digital movie, music album, or audio book. Typically, public libraries allow up to ten items to be borrowed per member.
There are no limits on how many people can borrow a specific title as is the case with the physical objects themselves: DVDs, CDs, etc.
Jankowski is proud of his agreements with studios and music publishers because of the limitless lending provision. Licenses for lending media to others have generally treated each digital version as if it were a physical object that has to be "returned" before anyone else can borrow it. Hoopla has managed to convince publishers that there is no sense in creating a false scarcity when it comes to meeting demand from people "borrowing" their titles.
The libraries are charged a fee of $1 to $2.99 per movie or music album and can set limits so that their lending stays within their monthly budgets.
Hoopla has signed up all the Hollywood studios except Sony. It's an impressive feat but the deals require minimum monthly payments so Hoopla is keen to roll out its services as quickly and as widely as possible.
The Hoopla web site and its mobile and tablet apps look great. They were developed using a team of about 13 developers located around the US and led from Toledo.
E-books are coming but the progress is slow. There are also plans to showcase local music and movie producers in each public library town.
San Francisco public library offers Hoopla Digital to its members. There are more than 50,000 movies available.
Jankowski notes that public libraries are terrible at any form of publicity and that means Hoopla has to get the message out in each town and city.
I mentioned that it would be great to have the public library and its events and message board better represented on the Hoopla web site for each user, creating a tighter connection between the library service and its community.
Foremski's Take: It's a good idea and looks to be well executed so far. The apps are top class and well designed. It proves you don't need to be in Silicon Valley and you don't need venture-capitalist money to launch an ambitious consumer digital media service.
Its biggest challenge is the national marketing effort required to promote the service because local public libraries are terrible at promotions of any kind. The monthly minimum royalty payments Hoopla has to make to Hollywood will quickly become a heavy burden if its marketing budget fails to rouse enough users.
Hoopla is an example of how we are moving into a post technology world where the idea and its execution is what matters. The underlying technologies of the web and the connected mobile device have become near ubiquitous and powerfully simple to use — what will we use them for? That's when tech stories become interesting again, and move beyond tech product stories.