Olivia Humphrey doesn't much like the comparison, but it's kind of inevitable: the business she founded in 2008, in the front room of her boyfriend's house in Perth, is a lot like Netflix, only free.

"We're very much in different spaces," the 44-year-old Sydney native says of Kanopy, the 30,000-title streaming service that specialises in arthouse, indie and documentary films. "I only really consider Netflix when it comes to rights – if they're at Sundance and they buy a film as a Netflix original that precludes us from being able to access it, but that's happening less and less. And that's great for us."

Kanopy began as a university-only service, but last year started popping up in public libraries in the US. This week, the City of Melbourne's six libraries joined a rapidly growing network; WA is already on board, and New South Wales will soon follow suit.

The offering is seriously impressive, though you won't find too many Marvel movies there. Well, any.

"The studio says, 'Take Transformers' and we say, 'No, we'll take The Theory of Everything'," she says. "We want to stay true to that."

Haven't seen I Am Not Your Negro, the Oscar-nominated documentary about writer James Baldwin? You can catch it on Kanopy. For free. Missed the latest adventures of Steve Coogan and Rob Brydon in The Trip to Spain? It's there too, for free. Been meaning to catch Hunt for the Wilderpeople but missed it at the cinema? You know where this is going, right – it's on Kanopy, and it's free.

The business was born out of a situation that many would have found merely frustrating, but Humphrey took as an opportunity. She was working in distribution at Village Roadshow, trying to get shelf space for the sort of titles the big-box retailers had little interest in (docos, arthouse titles, sports movies and children's content were her bread and butter). But while the retailers thumbed their noses, the data on cinema attendance pointed to an unavoidable fact: students constituted the biggest sector of the audience. And where do students hang out? On campus.

Humphrey began visiting university librarians, trying to convince them to clear those dusty cans of unwatched 16mm film off their shelves to make way for some DVDs. "I visited every single university in Australia," she says. "The librarians were so excited, and it grew so quickly we launched the streaming service within two years."

The move to streaming had always been part of the plan – her interest spurred by the emergence of YouTube at roughly the same time she launched the business – but she couldn't have anticipated the impact it would have on Kanopy.

"Suddenly we had a direct line to students, and everything changed," she says. "With DVD, we had been relying on librarians and academics to tell us what they wanted to assign. When we went to streaming, it was a grassroots revolution where students were bringing these films to class, using clips in their assignments and really introducing the platform as a resource to their lecturers."

Now, 90 per cent of traffic is student-led, with Kanopy charging on a pay-to-play basis. Once a video has been played four times, the host institution pays a licence fee (currently $200 a year).

That has led some institutions to place a cap on consumption – the Melbourne libraries will initially allow users to watch just five titles per member per month – and Humphrey says the company is considering a slightly different model for its biggest customer, the New York Public Library, with its 8 million members.

Fifty per cent of revenue goes to rights holders, so for some smaller films Kanopy can represent a seriously attractive revenue stream – up to $80,000 a year, she says – but only if people watch it.

One key difference between Kanopy and Netflix is that viewing suggestions are only slightly personalised. Some might see that as a failing, but for Humphrey it's key to the notion of expanding horizons.

"We want to extend our users' range but the big challenge is getting people to press play on the films users have never heard of," she says. "When they do,  they're the ones that get me really excited."

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