Receive free Spotify Technology SA updates
We’ll send you a myFT Daily Digest email rounding up the latest Spotify Technology SA news every morning.
Spotify has struck deals with the world’s largest publishers to offer its subscribers free listens of audiobooks, as the music streamer looks to disrupt Amazon’s stronghold on the books market.
Starting late on Tuesday, paying Spotify subscribers in the UK and Australia can enjoy up to 15 hours of audiobooks each month at no extra cost. Additional listening hours can be purchased for $11, equivalent to the current monthly subscription fee. The program will expand to the US in the winter.
With a selection of over 150,000 titles, Spotify estimates that more than 70% of The New York Times best-sellers list will be available to subscribers. This move is part of Spotify’s ambition to become the ultimate destination for all audio content, including music, podcasts, and books. Despite its wide popularity, with over half a billion users worldwide, Spotify has struggled to generate consistent profits. To diversify its revenue streams, the company has invested $1 billion in podcasting, although it has scaled back this effort recently to control expenditure.
By venturing into audiobooks, Spotify directly challenges dominant player Amazon and its Audible service, which charges $15 per month for one book credit. Abi Watson, an analyst at Enders, believes that book publishers would welcome competition to weaken Amazon’s dominance.
Spotify has not disclosed the budget for its audiobooks push. However, it will pay royalty fees to major publishing houses, such as Penguin Random House, Hachette, Simon & Schuster, HarperCollins, and Macmillan, based on listening activity on the platform. Ana Maria Allessi, head of audio for Hachette, highlights the impact of audiobooks joining music and podcasts, stating they have carefully ensured that authors receive fair compensation through the Spotify arrangement.
Spotify is in talks with independent publishers to expand its audiobook offerings. Executives at Spotify anticipate that audiobooks will attract and retain more subscribers. Earlier this year, the service increased prices for US subscribers by $1, marking the first price hike since the app’s launch over a decade ago.
Audiobooks, popular among young people, represent a relatively small but growing business. Global audiobook revenue is estimated to have reached $4.8 billion in 2021 and is projected to exceed $9 billion by 2026, according to media consultancy Omdia. In the US, digital audio revenues saw a 16.6% increase in the first seven months of this year, while the overall industry experienced a 0.7% decline in revenues, reports the Association of American Publishers.
Spotify CEO Daniel Ek expects audiobooks to contribute profit margins “above 40%” and significantly benefit Spotify’s business. The company’s gross profit margins have traditionally been around 25%.
In 2021, Spotify entered the audiobook market with the acquisition of Findaway for €117 million. While audiobooks were previously available for purchase on the Spotify app, the process was cumbersome, requiring users to buy books through a separate website.
In the first half of this year, Spotify reported a loss of €527 million on €6.2 billion in revenue. Although its stock has doubled in value this year, the company’s market valuation remains lower than the highs reached in the midst of the COVID-19 pandemic.
Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
