Technology continues to influence how audiobook titles are produced, distributed, purchased, and listened to. According to the Audio Publishers Association’s annual sales survey, 76.9% of units sold by the 17 APA member publishers in 2014 were digital downloads. And the APA’s consumer survey, conducted earlier this year by Edison, offers a glimpse at how listeners are getting those downloads: 25% of survey respondents said they currently subscribe to Audible, Audiobooks.com, Scribd, or another audiobook subscription service.
But not all audio subscription services work the same way for consumers or for publishers. A range of different business models and terms-of-sale agreements between publishers and the different services make for some complicated behind-the-scenes economics. Several services have made missteps in gauging consumer behavior, but other companies (such as Epic) are expanding their services or getting ready to jump into the fray (such as Playster, which is still in beta). Most parties involved in the audiobook business agree that if audio subscription services are to grow, it will be necessary, as Hachette Audio v-p, publisher Anthony Goff says, to “find a middle ground that works for the publisher, the digital account, and the consumer.”
Audible, which Amazon bought in 2008, is the clear category leader for audio subscriptions and launched its service “right around the year 2000,” according to publisher Beth Anderson. It has traditionally worked with publishers and other content providers via a revenue-sharing model akin to book publishing. “We pay publishers a royalty for each unit sold,” Anderson explains. For a monthly fee (currently $14.95), Audible’s basic-level members receive a credit for one free book per month and are entitled to a discount on other selections from Audible’s catalogue of 180,000 titles, which also includes content created by the company. Establishing this model in the early days was successful for Audible because “it gave us a critical recurrent revenue stream,” Anderson says, so that more effort could be placed on expanding offerings. In her view, the plan attracted consumers because it “offered a larger selection of content at a much lower price and made it very accessible.” Publishers and authors got “larger audiences and a listening base” from this arrangement, and “everyone was able to earn more revenue all around.”
In recent years, Audiobooks.com and Scribd are among the companies that challenged Audible by launching unlimited Netflix-style audiobook subscription plans for a monthly fee. But both enterprises have hit speed bumps—or in one case, an early dead end. In 2013, Audiobooks.com canceled its “all-you-can-listen” plan and now mirrors Audible’s rates. And Scribd, a service offering unlimited e-books and comics that partnered with Findaway (serving as an aggregator) last year to bring its members 30,000 audiobook titles, announced last month that it was scaling back its unlimited plan and moving to a credit-based model for audio. Though no company has gone into great detail about why it was necessary to alter its audio services, most in the industry believe that the content providers’ terms of sale simply proved too costly, exceeding the revenue that these subscription services received from the low monthly subscription fees for consumers. And just as the voracious appetites of romance readers made Scribd change the way it offered romance e-book titles to customers, listeners’ interest in unlimited audiobooks proved much higher than expected, especially when given the opportunity to graze at an all-you-can-listen buffet, industry insiders speculate. Amazon and some other e-book services have been experimenting with different formulas for paying content providers, but the current terms-of-sale structure (one listener per download, with higher margin for publishers) used by most audiobook publishers is not likely to be overhauled anytime soon. “Creators—authors, narrators—need to be paid for their work,” Anderson says.
While some companies have had problems with the unlimited model, it is far from dead. Epic, an unlimited-subscription e-book service that launched in 2014 and specializes in titles for children up to age 12, introduced 1,000 audiobooks into its product mix in late October. When asked about forging ahead, Epic cofounder Kevin Donahue says, “Our mission is to get kids to read more. We believe that allowing children unlimited access to our library fosters a true sense of exploration and discovery.” As for how Epic plans to succeed, Donahue describes part of the strategy: “From a business-model standpoint, our publishing partners understand what we are offering children and why our approach is important,” he notes. “We work with our publishing partners to create business relationships that work for them, for us, and for our readers—where the goal is to encourage our youngest readers to discover and read books in a way that is conducive to fostering a lifetime love of reading.”
Donahue believes that audiobooks are a good fit for Epic. “We know from research how important it is for children to hear spoken language and have stories read to them,” he says. “We already have more than a thousand Read-to-Me books in our library; adding audiobooks as another format for kids to explore books was a natural extension for us.”
Kindle Unlimited, another division of Amazon, is also having success with unlimited e-book and audiobook subscriptions, and partners with sister company Audible in this area. “We make a couple of thousand titles available to them,” Audible’s Anderson says. “We know that Kindle users are rabid readers and book fans, and we believe that we can bring some of them over to be listeners as well. We are seeing consumers experiment with Kindle, and then join Audible, where they have access to thousands more audio titles.”
On the publishing side, Goff points to the positive and negative considerations of the unlimited subscription model. On the one hand, he says that “this is a relatively new way that consumers, many of them perhaps exposed to the format for the first time, are interested in listening to audiobooks.” On the other, “If the consumers are, or become, heavy listeners, publishers and even the account/subscription service can lose revenue and margin.”
Despite uncertainty about the viability of unlimited subscription models, the audiobook industry remains supportive of attempts to make various models fly. “Our format lends itself to today’s world of smart phones, instant access, and absorbing material on the go,” says Michele Cobb, executive director of the APA. “While there is still some sorting out to do on the business side, we are gratified that more and more people are trying audiobooks and returning to them as a format that excites them.” Anderson has a similar view. Glitches aside, she says, “It’s encouraging that others want to get into offering audiobooks.”
Correction: This article was corrected to remove misinformation about the Oyster subscription service.