This article first appeared in Hot Pod Insider, The Verge’s audio industry newsletter.
Spotify wants to make audiobooks the next pillar of its business. On Wednesday, company executives presented the audiobooks business to investors as their next target for industry dominance. When they launch the vertical audiobooks (which is TBD), it could have huge ramifications not only for Spotify’s own business, but also for the publishing industry.
“We believe that audiobooks, in their many different forms, will be a huge opportunity,” Spotify CEO Daniel Ek said:† “And just like we’ve done in podcasting, expect us to play to win.”
Spotify’s first big step into that business is its acquisition of Findaway, announced last year. The audiobook platform is similar to Anchor in many ways. It will enable authors to create, distribute and monetize their work, and with the acquisition, Spotify will snag an important part of the audiobook ecosystem. It’s fitting, then, that the executive overseeing audiobooks at Spotify is Nir Zicherman, co-founder of Anchor.
One thing to note: the Findaway deal isn’t quite closed yet. It was first announced in November 2021with an expected acquisition date set for late 2021. However, the deal is still under review by the Justice Department’s antitrust division.
How the model will work is not entirely clear, but it seems that at least some of the audiobooks will be free. Ek said the freemium model will be applied to audiobooks, and Dawn Ostroff, head of the content and advertising business, said, “We’re looking at how we can monetize advertising in audiobooks.”
If so, that would be a huge change for the industry. Audiobooks are usually not cheap. Subscription services from Amazon’s Audible and audiobooks.com are credit-based (1 credit per book). Both services cost $14.95 per month to access top titles. Apple and Google offer audiobooks for sale, with popular titles typically costing $15 or more. But at the same time, most of Findaway’s creators won’t exactly be the next Sally Rooney, and it’s unclear how and at what price top books will become available on Spotify.
So what does that mean for the publishing world? According to Michele Cobb, executive director of the Audio Publishers Association (APA), it’s complicated. Millions of new listeners around the world will be exposed to audiobooks, which could greatly expand the market.
Earlier this week, the APA released its 2021 statistics on the size of the sector. The study, conducted by Edison Research, found that the audiobook market grew by 25 percent in 2021 up to $1.6 billionwhich would make it slightly larger than the $1.45 billion podcast market that same year. Spotify’s presentation stated the market is even bigger, potentially worth more than $9 billion, according to a report by Grand View Research† (It’s worth noting that the numbers aren’t really apples to apples: the APA report is based primarily on North America, and the Grand View number is global.) Ek took it a step further and predicted that the market is actually worth just as much could be like $70 billion.
Even if Spotify helps expand the audiobook market with its creator content and ad-supported listening, there are potential downsides for publishers and authors. “I think the hope is that you would increase revenue enough so that everyone gets more,” Cobb said. “But the concern is that you’re getting so much less per unit that it would end up depressing revenue.”
In its quest to move beyond the clunky and expensive music industry, Spotify doesn’t stop at audiobooks. The presentation cryptically teased companies “X”, “Y” and “Z” for the future. Your guess is as good as mine as to what those might be.