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up to the customer to return the cassette tape before the due date. If the customer failed to do so, late fees were charged that had to be paid before they would be permitted to rent again. Many stores would also charge customers an additional fee if they did not rewind the tape before returning it. Hastings was one of the many people who used video rental stores in the 1990s. “I had a big late fee for Apollo 13 ,” he recalled. “It was six weeks late and I owed the video store $40. I had misplaced the cassette. It was all my fault.” He was embarrassed and annoyed by the experience, which led him to think of a better way to go about renting movies. “On my way to the gym, I realized they had a much better business model,” he said. “You could pay $30 or $40 a month and work out as little or as much as you wanted.” A subscription-based video rental model would be like nothing else that existed at that time. OPERATING ONLINE Hastings’ new company would be different in another significant way. He would allow people to rent movies using an online service. Customers would not have to go to the store to pick up or return a movie, because everything would be delivered straight to their door. Taking the rental service online would not only be easier for customers to use, but also less costly for him to manage. Hastings also decided to switch to using DVDs as much as possible. Since DVDs were much smaller and lighter than video

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