Going Beyond Music and Podcasts: Spotify Swoops in on Audiobooks
Introducing Books to the Lineup
Spotify Technology (SPOT) was founded in 2006 when the world of music streaming was just starting to grow into the massive sector it is today. The company has since expanded into podcasts, securing the exclusive rights to major shows such.
Now, the company is hoping the next pillar of its business will become audiobooks, once known as “books on tape” in the era of cassettes and Sony (SONY) Walkmans. Its audiobook platform features 300,000 titles as of Tuesday’s launch, including titles from journalist Malcolm Gladwell, romance novelist Abby Jimenez, and horror legend Stephen King. Much like audiobook platforms offered by Apple (AAPL) and Alphabet’s Google (GOOGL), users will pay on a per download basis.
Challenging Apple and Amazon
It became evident Spotify was planning a move of this kind about a year ago, when it acquired Findaway, a global audiobook distributor. It also meant more competition with Amazon and Apple, which is already happening in the music and podcast space.
One aspect of Spotify’s audiobooks platform will take a bite into some of Apple’s revenue: Users will be able to download titles from a web browser, as opposed to the app, where Apple takes a commission.
Meanwhile, Amazon (AMZN) is the audiobook industry leader through its subsidiary Audible. Through mid-April it controlled nearly half of all US audiobook unit sales. While Spotify’s audiobooks platform will set prices for each individual title in consultation with the publisher, Audible offers a subscription service — and boasts 760,000 audiobooks in its library.
Key Part of Spotify Plan
Spotify held its investor day in June, where CEO Daniel Ek discussed audiobooks and their importance to the company. He explained the new division is a major part of his plan to grow the company 10 times larger. Ek noted the audiobook market has the potential to reach $70 billion in annual revenue, with around 40% margins for Spotify.
For publishers, getting book titles in front of as large an audience as possible makes sense. Spotify also has a unique upside given its strong presence in podcasting. Authors are often guests on various podcasts, which are hosted on Spotify. Now their audiobooks will be available on the same platform. Industry observers say there will likely be more to come in terms of book release events and author-curated music playlists, given the opportunity for the audio and literary mediums to cross over.
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