OVERDRIVE

Steve Potash founded OverDrive in 1986 in Cleveland, Ohio. Back then it had nothing to do with ebooks.

There were no ebooks. The company started out making floppy disks and CD-ROMs for businesses and publishers.

Potash was a former lawyer who got obsessed with digital publishing early. As the internet arrived, OverDrive pivoted to distributing digital books.

By the mid-2000s it had cracked the hard problem. How do you let a library lend an ebook to one person at a time, just like a paper book.

That one idea built the whole company.

Libraries and schools pay OverDrive for access to digital books. OverDrive licenses ebooks and audiobooks from publishers.

Then it lends them out to library members through apps like Libby. A library buys a set number of copies, and only that many people can borrow a title at once.

When your hold is ready, you get the book for a couple of weeks, then it vanishes. OverDrive makes money on the licensing deals and platform fees.

In plain terms, it is the middleman between publishers and every public library's digital shelf.

Libby is the star. It is the free app most people use to borrow ebooks and audiobooks from their local library.

Sora is the school version, built for students and teachers. Kanopy is the video streaming service, offering films and documentaries through libraries.

Behind all of them is OverDrive Marketplace, where librarians actually buy and manage their digital collections. The apps are the friendly face.

The Marketplace is where the money moves.

OverDrive won by getting there first and going wide. It signed up libraries one by one until it had tens of thousands of them worldwide.

The real breakthrough was the Libby app in 2017. The older app was clunky and people hated it.

Libby was clean and simple. It made borrowing feel as easy as Netflix.

Suddenly library ebooks were not a chore. OverDrive also expanded into schools with Sora and into video streaming with Kanopy.

Owning the app your library recommends is a very sticky place to be.

OverDrive's biggest problem is that it does not own its inventory. Publishers do.

And publishers are nervous about library ebook lending, because a free digital loan might mean a lost sale. So they charge libraries brutal prices.

A single ebook copy can cost a library far more than the retail price, and the licence often expires after two years or a set number of loans. That fight over pricing never really ends.

If publishers squeeze harder, libraries get less, and OverDrive sits in the middle taking heat from both sides.

OverDrive was bootstrapped for almost 30 years, which is rare for a tech company its size. It did not chase venture capital.

Instead it grew on its own revenue until it got big enough to be worth buying. Rakuten, the Japanese e-commerce giant, paid $410 million for it in 2015.

Then in 2020 private equity firm KKR bought it from Rakuten in a deal reported around $775 million. KKR then used OverDrive to roll up more of the digital reading market, including RBdigital.