Spotify will offer audiobooks starting Tuesday, expanding its offerings beyond music and podcasts. The move will help the streaming giant attract new users and keep existing ones engaged. Audiobooks will give Spotify an edge over its competitors, who do not currently offer this type of content.
Spotify is adding a new audiobook feature that will allow users to purchase and listen to a catalog of more than 300,000 titles from independent authors and major publishers. Some of the authors featured in the catalog include horror writer Stephen King, journalist Malcolm Gladwell, and romance novelist Abby Jimenez.
Spotify is launching a new audiobook service that will allow users to pay per download. This is similar to existing audiobook services offered by Apple and Google.
Spotify is known for its user-specific music recommendations, and is now working on building out similar recommendations for podcasts. For audiobooks, the company will make editorially curated recommendations to start. Over time, Spotify will add algorithmic recommendations based on the full scope of a user's listening habits.
Spotify announced its acquisition of global audiobook distributor Findaway last fall, mounting a challenge to the country’s largest audiobook service, Audible. The deal closed in June.
Spotify will sell its titles individually, rather than through a subscription service like Audible. This means that users will pay for each title separately, and Spotify will set the prices and negotiate terms directly with publishers. Audible currently controls about 48% of the U.S. audiobook market, according to Codex Group LLC.
Spotify is exploring different business models for its new audiobook offering, including ad-supported and subscription-based models, as well as exclusive titles. The company said the offering, which launched in the U.S. on Tuesday, will eventually be rolled out to other markets.
Spotify has announced that it will no longer allow users to purchase audiobooks through its app, instead directing them to purchase the books through a web browser. This means that Apple will not be able to take a commission on the audiobook purchases.
At Spotify's investor day in June, CEO Daniel Ek said that audiobooks are a key area of expansion for the company. He believes that the overall audiobook market could generate $70 billion in annual revenue, with margins of over 40% for the Spotify unit.
Audiobooks are growing in popularity, with Mr. Zicherman saying that they represent 6% to 7% of the book market globally. He added that audiobooks are growing by 20% year-over-year, and that introducing its hundreds of millions of music and podcast listeners to audiobooks could dramatically expand the market.
The stock of a Swedish company that has been having difficulties convincing investors of its viability in the audio market has dropped by 60% in the last year.
The major publishers who have agreed to make their books available on Spotify say they appreciate the opportunity to reach as many listeners as possible. Lagardere SCA's Hachette Book Group, Paramount Global's Simon & Schuster, and Bertelsmann SE's Penguin Random House, the world's largest consumer book publisher, have all made their catalogs available on Spotify.
Amanda D'Acierno, president and publisher of the Penguin Random House Audio Publishing Group, said that her authors are often guests on podcasts that are available on Spotify. This adds to the chance that a listener could quickly turn and buy the audiobook.
Ms. D’Acierno mentioned Bono’s memoir “Surrender: 40 Songs, One Story,” as an example. She said, “I don’t know how many people listen to him on Spotify, but to have his audiobook there will be amazing.” U2 has more than 17 million monthly listeners on Spotify.
Ms. Jimenez is a big fan of audiobook versions of her work, and she thinks Spotify could become a great platform for offering bonus features around a book release, such as an author-curated playlist or links to podcasts reviewing the title.
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