Why Spotify is betting big on the booming audiobooks industry
By Alex Christian5th November 2023
Spotify has added audiobooks to its subscription model. Reaching millions of people, it may revolutionise the already booming audiobooks business.
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In recent years, audiobooks have become a multibillion-dollar industry, with dedicated subscription services, from both big conglomerates and independent companies, driving most of this revenue. But their addition to Spotify's streaming selection marks a watershed moment.
From 4 October, Spotify Premium subscribers in the UK and Australia have been able to access up to 15 hours of audiobook content per month – from more than 150,000 titles – at no additional cost. The feature is set roll out in the US by the end of 2023. Bestsellers and literary classics are now housed in the same app as music and podcasts: a "seamless one-stop destination for all things audio", according to Spotify's announcement.
"Just like in music and podcasting, we believe that many more consumers want to consume audiobooks and want to listen to audiobooks," said Daniel Ek, Spotify founder and CEO, at the feature's announcement in New York. "And just like in music and podcasting, we're really excited to be able to bring all the amazing tools that we built for creators and consumers alike to enable more discovery of these amazing audiobooks to the entire world."
Spotify has 213 million global subscribers – which represents a huge market for publishers to tap. Early signs show promising potential: at Spotify's Q3 earnings call, Ek said subscribers in the UK and Australia had already listened to more than 28% of its audiobook catalogue, in just two weeks. The company hopes the free 15 hours will hook consumers in the world of audiobooks, opening revenue streams and tempting subscribers to purchase additional listening hours, as opposed to the à la carte pricing model favoured by rival platforms.
Spotify's inclusion of audiobooks in its subscription service follows the format's continual growth in popularity and profit. According to US trade organisation Audio Publishers Association, its 28 members – including publishing giants Penguin Random House, HarperCollins and Simon & Schuster – saw audiobook revenue grow 10% to $1.8bn (£1.48bn) in 2022, marking more than a decade of double-digit growth.
Michele Cobb, executive director of the Audio Publishers Association, based in New York, says audiobooks' integration on Spotify is a coup for the industry. "It's what we've been striving for, for a long time. There are hundreds of millions of Spotify subscribers – a good proportion have probably never listened to an audiobook before. So, introducing them to the format, alongside other audio entertainment options, is a great thing."
Spotify also stands to win big from offering audiobooks in its regular subscription package, adds Cobb. "All streaming platforms want to keep you on the platform and have as much original content as possible. Everyone is trying to keep eyeballs and ears on one place, so having audiobooks on Spotify becomes a natural fit."
'An essential part of the whole publishing ecosystem'
Audiobooks are the fastest growing arm of publishing – total worldwide listening hours on Amazon's audiobook platform Audible alone increased by 25% year-over-year in 2022, according to data seen by the BBC. Major publishers now have dedicated audio divisions, with the biggest titles often narrated by Hollywood talent.
"The audiobook has rapidly become an essential part of the whole publishing ecosystem," explains Sarah Rigby, publishing director of independent book publisher Elliott & Thompson, based in London. "They captivate readers who may never have picked up an author in print, expanding the opportunities to reach that audience beyond the usual publishing cycles."
While audiobooks have existed for decades, they were traditionally in cassette or CD form. Cobb cites the smartphone as precipitating audiobooks as a lucrative business – an industry consulting firm Acumen estimates to be worth $33.5bn (£27.5bn) globally by 2030. "Technology has enabled accessibility," she says. "It's being able to have hundreds of books in your pocket at any time, without any friction."
Along with altering reading habits, the smartphone has fundamentally changed consumer behaviour. "People are more used to listening to informational content now, especially through the popularity of podcasts," says Daniel Willingham, professor of psychology at the University of Virginia, US, and author of The Reading Mind. "And we've developed the habit of mind that we should never be bored: audiobooks have enabled us to experience literacy while commuting, exercising or doing chores."
Today, consumers listen to nearly four-billion hours of audiobook content on Audible annually, according to the company's data. More than 600,000 narrators and authors have been involved in a title release over the past five years, including more than 1,100 Audible Original titles exclusive to the platform in 2021. For the basic plan at $7.95 in the US and £7.99 in the UK, members can access unlimited streaming to the Plus catalogue; UK members also receive one credit to purchase any audiobook, regardless of price.
As a result of this growing popularity, sales are becoming increasingly split between physical and audio releases, often now released simultaneously. For example, Britney Spears' memoir, The Woman In Me, sold 1.1 million copies in its first week in the US alone, according to publisher Gallery Books. Based on data from analytics company Circana, which tracks the publishing market, it’s estimated that more than half of sales came from the audio edition read by actress Michelle Williams, becoming publisher Gallery's fastest-selling audio release in its history.
'There's still a huge audience we can reach'
A higher volume of audiobook consumption potentially sets the stage for increased publisher and author revenue, too.
When audiobooks are purchased outright on digital platforms, rights holders (usually publishers) earn a set percentage of each title sold. It's less clear how Spotify's streaming model works with the royalty model, however, since users have a set number of free hours.
Yet not every group is convinced this explosion of audiobook accessibility is blanket good. Following Spotify's addition of in-app audiobooks, UK trade union the Society of Authors said it was "deeply concerned" that major publishers had agreed to streaming deals without authors being consulted on licence or payment terms, citing the sometimes negative impact music streaming has had on artists' incomes. Publishers that have agreed to deals with Spotify, including Macmillan, Simon & Schuster and Pushkin, didn't respond to requests for comment.
Regardless, based on the trends of changing reading habits and soaring accessibility, Cobb expects the audiobook to only grow in business. "This won't hurt reading, but rather expand what 'reading' means," she says. "Nearly half of all people in the US still haven't listened to an audiobook, so there's still a huge audience we can reach. We're going to have retailers and business models come and go, but we're still going to create great content."