RH, Holtzbrinck Back Audible German Launch

Random House's German subsidiary and the venture capital arm of Holtzbrinck each kicked in $1.5 million to help fund the launch of Audible GmbH, the new German unit of Audible that will have the exclusive rights to operate Audible.de, a German-language Audible Web site. Verlagsgruppe Random House and Holtzbrinck Networxs will each have a 24.5% stake in Audible.de, while Audible will have a 51% share.

The German site, Audible's first major foreign initiative, is expected to launch in the fourth quarter. Under the joint venture agreement, Audible will provide the intellectual property, which will feature both German and English content, as well as all of the technological infrastructure to support the site. In return, Audible will receive $30,000 each month from Audible.de for 30 months and will also receive royalties ranging from 0.5% to 3% of revenue, up to a $2 million cap. Audible does not expect to begin receiving royalties until 2006.

The German investment is the second time Random House has invested in Audible. The company already has an 8.2% stake in Audible, which led to the formation of the Random House Audible imprint, through which the two companies produced digital spoken-word content that was delivered exclusively over the Internet by Audible. The exclusive agreement between the two companies expired at the end of June, freeing Random to license its content to other digital delivery services, while Audible can now seek distribution agreements with other publishers. There are about 100 titles in the Random House Audible imprint.

While Audible is preparing to launch its German operation, MediaBay said last week that it has begun digitizing its spoken-word content, which includes 25,000 hours of audio books and 50,000 hours of radio shows. Once the content is digitized, the company expects to make it available for download on a variety of Internet music services and content stores, as well as through its own Web sites at www.audiobookclub.com and www.radioclassics.com. MediaBay executives hope that the move into digital delivery will make the struggling audio company profitable.