Spotify hints at move into audiobooks

Spotify wants to meet all your audio needs

Can Spotify repeat the success of its podcast business by expanding into audiobooks?

Since 2019, Spotify has gone on an acquisition spree to build out its podcast catalogue and creation tools, buying up podcast companies such as Gimlet Media and Anchor, the podcast advertising platform Megaphone and the live audio developer Betty Labs.

The company is now expected to overtake Apple as the largest podcast provider by the end of this year, with more than 3m titles. Its US podcast audience is also forecast to surpass Apple Podcasts for the first time this year.

With its acquisition of the digital audiobook distributor Findaway, it now looks like the streaming platform might follow a similar playbook for audiobooks.

The company has already announced a partnership with the audiobooks platform Storytel, allowing existing subscribers to connect their account through Spotify to access their audiobooks within the music streaming app. Then there was that time it got celebrities to narrate classics such as Frankenstein, and had Daniel Radcliffe and others to read aloud the first Harry Potter book at the start of the pandemic, exclusively for Spotify.

Spotify does not currently stream audiobooks (the books above were presented as podcast episodes) but the Findaway deal, as well its partnership with Storytel, suggests that it might have designs on this business.

Does Audible need to watch out?

The global audiobook market is expected to be worth $9.3bn by 2026 from $4bn in 2020, according to research group Omdia. Amazon’s Audible is the largest producer of audiobooks in the world, but there are a number of other platforms Spotify will also find itself competing against.

Its partnership with Storytel looks a clever move given that the Swedish company has just announced its acquisition of audiobooks.com, marking its entry into the US market. Storytel already has 1.7m subscribers in 25 markets with about 700,000 titles globally, and audiobooks.com is one of the leading audiobook services in the US. 

But Storytel is still a relatively small fish in a big pond. Kobo, which also sells ebooks and ebook readers, had ​​close to 30m users globally in 2020 and a presence in over 180 countries. Then there is Ximalaya, which has the majority share of China’s online audio market with 80m monthly active users tuning in for podcasts and audiobooks (and don’t forget that after the US, China’s the second biggest country for audiobook revenue).

Apple and Google also sell audiobooks, both with deep pockets and millions of people already using their wider services they can market to. These are just a handful of the audiobook sellers out there.

Spotify’s business model for books will be under the spotlight

Ultimately, whether Spotify can take on Audible and other audiobook sellers will depend on what its offering ends up looking like and consumer preference.

“The audiobooks landscape is a complicated landscape that’s getting more complicated as we see podcasts and audiobooks coming together in the same space,” Michele Cobb, executive director of the Audio Publishers Association, told me. The question at the front of her mind: “How will those with different business models come together?” 

Audible runs on a credit subscription model, where a user buys one title a month for a set price. Kobo, Apple and Google all sell audiobooks, book by book. These models are preferable for publishers as they guarantee they’ll get a certain amount of money per book, she explains.

Storytel and Scribd, another audiobook subscription service, offer unlimited subscriptions. These might appeal more to users, but they also dramatically reduce the average revenue per book.

It is not clear yet how Spotify will sell audiobooks. Its huge user base (381m active monthly users) in theory should give it a head start. Offering exclusive content might also help. But if it offers audiobooks unlimited on its current subscription plan (as it does for music and podcasts), this could draw listeners away from the competition, even if it means getting used to ads between chapters.

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Tech tools

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