Spotify made the lucrative audiobook market more competitive on Tuesday, launching a new hub on its app with more than 300,000 titles, including books by best-selling authors like Colleen Hoover, Michelle Obama and Stephen King.
The company transformed the music industry when it gave listeners access to a seemingly limitless catalog of songs through its music streaming service over a decade ago. Now, Spotify’s move to audiobooks could reshape what has become a rapidly growing category for publishers.
In a surprising departure from its all-you-can-listen philosophy, Spotify is selling audiobooks a la carte, rather than offering a subscription service. Executives declined to detail the revenue-sharing model with publishers, but said pricing will vary by title and be in line with other retailers.
Digital audio has seen double-digit year-over-year growth for more than a decade. Audiobook revenue totaled $1.67 billion last year, up 25% from 2020, according to the Audio Publishers Association. Last year, nearly 74,000 audiobooks were released, up from some 7,200 in 2011.
Spotify executives see an even bigger opportunity, they said. Despite recent growth, they said, audiobooks represent less than 7% of the broader book market.
“We believe we have the potential to massively expand the audience for audiobooks,” Nir Zicherman, head of audiobooks at Spotify, said Monday at a press conference. “Just as Spotify changed the way people create and listen to music and podcasts, we believe we can do the same over time with audiobooks, delivering new formats, new ways of interact with content and new ways to discover.”
Zicherman added that Spotify aims to improve curation in the audiobook market and study its users’ engagement with different titles so that it can eventually develop an algorithmic audiobook recommendation engine, similar to how the service recommends. music according to the tastes of the listeners. At the moment, its audiobook hub is only available to Spotify users in the United States.
Spotify’s audiobook push is a gamble for the company, which has added podcasts, comedy and other spoken word entertainment to its offerings and announced its ambition to become the leading service for all things audio.
Although the company has grown significantly in terms of content, subscribers, users, and revenue, it still has never recorded an annual profit. Its share price has fallen over the past year and is now lower than when the company went public in 2018. Some analysts and investors are also skeptical of Spotify’s massive investment in podcasts.
Many in the publishing world hope that Spotify will convert some of its users into audiobook lovers.
“It’s an opportunity to take their big listeners into music and podcasts and get them to try audiobooks,” said Michele Cobb, executive director of the Audio Publishers Association.
Spotify has 188 million paying subscribers worldwide. Getting even a fraction of them to buy audiobooks could mean millions of new listeners for the books.
“It introduces more competition to the market,” said Chris Lynch, president and publisher of Simon & Schuster’s audio division. “And the introduction of another major outlet that has a built-in listening audience is a good thing.”
Still, it’s unclear how Spotify users will adapt to paying for books one by one, when many are used to streaming music and shows on the platform for free or through a monthly subscription. While Spotify has determined through conversations with publishers that pay-per-view sales make the most sense, the company plans to experiment with other models in the future, possibly including one that incorporates advertising. , Zicherman said.
Audiobook listeners already had several platforms to choose from, including Apple, Google and libro.fm, which distributes digital audiobooks for independent booksellers. Audible, the Amazon-owned audio production and retail platform, is by far the largest audiobook retailer, with more than 760,000 titles, including thousands of audio originals. Much of the company’s business comes in the form of a monthly or yearly subscription plan, which gives listeners a number of credits that can be redeemed for audiobooks.
Spotify CEO Daniel Ek has hinted that the company is ready to invest heavily to compete with Audible. “Just like we did in podcasting, expect us to play to win,” Ek said during an investor presentation in June. “And, with a major player dominating the space, we believe we will expand the market and create value for users and creators.”
Spotify had already made some inroads in the field of audiobooks. This summer, they struck a deal to buy audiobook creator and distributor Findaway, which distributes more than 325,000 audiobooks, for $119 million. During an investor presentation this summer, Spotify executives were optimistic about the medium’s future, saying they expect the audiobook market to grow from its current size of 3.3 billion dollars to $15 billion over the next five years.
This article originally appeared in The New York Times.