Spotify confirmed that audiobooks are coming to the platform, but how will the music streaming giant affect the status quo of the audiobook industry?
After diversifying its portfolio with podcasts, Spotify is ready for its next adventure. The music streaming company is venturing into audiobooks, a move expected to impact the industry in different ways.
By pivoting into the audiobooks market, Spotify plans to set itself apart as a one-stop shop for customers consuming different kinds of audio besides music.
Spotify Is Expanding Into the Audiobooks Industry
Swedish music streaming platform Spotify is expanding its reach to the audiobooks market. According to a report from Spotify, its founder and CEO Daniel Ek told investors about the upcoming venture, which will be an addition to music and podcasts.
"What our successes in music and podcasting has clearly demonstrated is that we have built a powerful machine and solid infrastructure that enables us to go after new verticals," said Daniel Ek to investors at Spotify's Investor Day 2022, held on June 8. The vertical in question is audiobooks. Ek says, "we believe that audiobooks, in their many different forms, will be a massive opportunity."
Ek's announcement follows Spotify's bid to acquire audiobook distribution platform, Findaway in November 2021 for an undisclosed amount. Findaway enables authors to create, distribute as well as monetize their work. As of writing, that deal is yet to be finalized, pending regulatory review.
Alongside this announcement, Ek also refers to what the company internally refers to as the Spotify Machine. While it's not clear how the company will incorporate audiobooks into its platform or what the Spotify Machine actually is, one thing is sure; an ad-free tier will be available.
The Impact of Spotify's Expansion to Audiobooks
Spotify not only wants a piece of the audiobooks market but also wants to be the dominant player. "Just as we've done in podcasting, expect us to play to win," Spotify's CEO said at the meeting. But what impact would Spotify's foray into audiobooks have?
The first is a change in how the industry works. Typically, audiobooks don't come cheap. While the top audiobook apps use a subscription model, you still have to pay cash to access most of the content. Audible, for instance, costs $14.95/month to access the best titles. And if you want to get a top audiobook not included in your subscription, that will typically cost you about $15 or more.
Other Audible alternatives use a similar model. As such, Spotify incorporating an ad-supported tier will shake the industry. While you may certainly not be able to access everything for free, a low entry barrier will make Spotify one of the best audiobook apps as well.
Secondly, if the Findaway deal goes through, Spotify will be more than just an audiobook distribution platform. It will control the entire supply chain, from production to distribution, which, of course, means more money for the company.
Spotify's foray into audiobooks also means more exposure. The audiobook industry will potentially grow thanks to the company's global presence, multi-platform support, and low entry barrier. But while more exposure is good for the industry, it may not necessarily translate to more cash for authors.
Relying on ads, for instance, could make less money for authors, unlike when someone buys an audiobook. Just ask musicians how much Spotify pays per stream.
Spotify's foray is nothing short of bad news for other audiobook distribution platforms like Audible and Apple Books. By leveraging its massive user base and a low barrier to entry with an ad-supported tier, Spotify can quickly become the de facto app for audiobook lovers. The competition may have to dance to Spotify's tune to keep up.
Why Is Spotify Venturing Into Audiobooks?
Spotify's main reason for entering the audiobook market is to diversify its content. So far, Spotify has successfully incorporated podcasts into its platform, which has helped the company attract more users, lower subscriber churn rate, and increase engagement. But most importantly, it's also helped keep those financial books healthy.
That partly explains Spotify's obsession with podcasts that has seen it make big-ticket purchases of podcasting companies, including Gimlet, Anchor, The Ringer, and others. Ek says, "we expect audiobooks to also have healthy margins, above 40%, and be highly accretive to the business."
The company sees an opportunity in the industry that it estimates to be worth about $70 billion. However, Spotify's estimation of the industry's worth is on the upside, considering audiobooks only account for about 6-7% market share of the total book market, estimated to be worth about $140 billion globally, according to a report by Grand View Research.
Spotify Wants to Be More Than Just a Music and Podcast App
Spotify seems to be more ambitious than your typical music streaming service, with the company already betting big on podcasts. Additionally, audiobooks are on the way, and the company has already made some moves to acquire Findaway, like partnering with select creators to create and release audiobooks.
For example, it partnered with YouTube creators and J.K. Rowling's Wizarding World. On top of all this, as hinted by Ek, Spotify plans to add more verticals to its arsenal. Spotify's CEO did not provide further details.
Original Source: https://www.makeuseof.com/spotify-impact-on-audiobook-industry/