Playbook

Spotify launches an audiobook business, taking on Amazon and Apple in its quest for profitable growth

Wednesday, September 21, 2022 by Robinhood Snacks |
Spotify’s new chapter (Jakub Porzycki/Getty Images)

Spotify’s new chapter (Jakub Porzycki/Getty Images)

“Spooky vibes” playlist... feat. Stephen King. Yesterday Spotify launched an audiobook service to US users. The catalog has 300K+ titles from independent authors and major publishers like Penguin Random House. But your monthly subscription isn’t enough to download that Taylor Jenkins Reid best-seller:

  • Pay per download: You pay for each audiobook à la carte (prices vary). Malcolm Gladwell's "Talking to Strangers" = $21.90 + tax.
  • Web-only: Inconveniently, you can't download books through the app (only on the web). Spotify has beef with Apple's in-app commissions and is avoiding the 30% "App tax."
  • Made for you: Eventually Spotify wants to curate audiobooks the same way its algorithms recommend tunes based on your listening habits.

"Dune" on the I-90... Audiobooks are experiencing a growth chapter: audiobook revenues hit $1.7B last year — up 25% from 2020. Spotify believes the audiobook market has massive growth potential that could help drive profits. In July, it bought audiobook distributor Findaway for $119M. But there’s competition in this lucrative market…

  • Top charts: Amazon’s Audible is by far the largest audiobook retailer (about half of US sales in April). Apple’s and Google’s pay-per-book platforms are also popular.
  • Top concerns: Spotify has significantly grown subscribers and content (think: massive pod investments) but has never made an annual profit. The stock’s down 60% this year (lower than its IPO price).
THE TAKEAWAY

A big player can change the playbook… As the curated-playlist OG, Spotify revolutionized how we listen to music. By taking a novel approach to audiobooks, it could transform that “B-list” product, too (audiobooks still represent less than 7% of the worldwide book market). With its 188M loyal paying subscribers, Spotify could become a hub for book recommendations and bonus content (think: author-curated playlists) and expand the global audiobook audience.