What’s fueling the rapid, global rise of Swedish audiobook provider Storytel? On the eve of the Frankfurt Book Fair, PW caught up with CEO Jonas Tellander to find out.
Storytel reached one million subscribers last August. What can you say about the company’s journey so far?
I have never actively thought about the one million-subscriber number, but more about what we had to do every year to keep doing good stuff. I started the business with my co-founder Jon Hauksson in 2005, but not much happened for the first four or five years. We needed to wait for the iPhone and basically for Spotify to start building audio consumption growth. When you start a company like that, you don’t think about what is in place and what is not in place, you just try to be optimistic that everything will go easy. But now, in retrospect, you can see that the audio trend is indeed a strong thing that has happened everywhere thanks to smartphones and Bluetooth headset speakers—someone with a Bluetooth headset will listen 60% more than people who don’t have it. It really drives the consumption and there is a very strong audio trend.
What made Storytel a market leader?
We were ahead of our time and, once it took off, we were in place and had already learned some things. In 2013, we began to build a consumer brand awareness in Sweden with quite heavy investments in marketing and advertising. Since no one else was doing that, we had the head start we needed. Today, we have something between 70% and 75% market share in Sweden, which is by far the most developed audio market in the world. The Swedish book industry is totally pivoting from being almost 100% physical only six years ago to now being 50% digital. The fiction market, in value, is half digital now in Sweden, despite the fact that the e-book never took off here.
Why hasn’t the e-book taken off in Sweden in the same way than audio?
We have a lot of e-books on the Storytel platform, and our own reader as well, but we didn’t have an Amazon to kick off an e-book ecosystem in Sweden. Instead of that, Sweden had Storytel investing heavily in audio, and that is what people started to pivot to in their reading habits. Also, audio attracted more people because, in the everyday life, audio enables you to listen in many more places than you would be able to read in.
What is the Storytel strategy when it comes to pricing for its all-you-can-listen subscriptions?
What we have done quite well is to sustain a quite high price level on the book streaming services in Sweden. We use a Storytel-to-Spotify price index that shows that we are 70% more expensive than Spotify in the Nordic markets, while in new markets like Spain, Italy and Mexico, we are on par with Spotify and Netflix’s prices. These new markets might take a path similar to the Netherlands, where six years ago our monthly price was 15 euros and it didn’t work. It was premature, so we dropped the price to 10 euros. And, now, this summer we raised it to 12 euros. We expect to see this trend again as the catalogue grows and people become more hooked on audio.
You’re now in 18 territories. Is global expansion is a must for Storytel?
Storytelling is so ingrained in any human being that it is natural to believe that all markets are potentially interested in audiobooks, now that the distribution and accessibility problem has been solved. So we see it as our responsibility to ensure that we can start to build up those markets. What we often have to do from day one in a new territory is to build a content catalogue on our own, since often the publishers haven’t yet seen the value of audiobooks. Then what we typically see is that the publishers start to produce audiobooks. For example, in the Netherlands, six years ago, no publisher wanted to produce audiobooks, now all of them do. Five years ago, publishers produced 200 audiobooks per year in Sweden and now it is 2000 per year.
What about small markets? Does it make sense to go to Iceland and Singapore?
A small market does not deter us. Take Iceland as an example. We launched a year ago and it is actually our fourth largest market by value today with its population of 300 thousand people. And Singapore is many times bigger than Iceland.
Is it a no-brainer that Storytel will eventually enter the US market?
I think it is not, given that Audible is present there, which would make it impossible for us to become the market leader in audio. We typically want to go into markets where we have a realistic chance of being the market leader, which is the case now in a number of our markets. Basically, in the end, you must be able to have a healthy profitable business, and being the market leader helps. We are right now seeing losses, but we now have 20 different languages in our catalogue and we see that we can cross over to many groups. In Germany, for example, we have good traction for our Turkish content. And, in the US, you have Latin-Spanish speakers, communities who speak Chinese, Polish, Italian, Portuguese. There is of course an opportunity to cater those consumers.
Has being Swedish made a difference for Storytel?
I think that being Swedish is a very important factor. Sweden has had the luxury of not being involved in a number of wars that have torn apart many other countries, and this has helped people not to have super confrontational approaches. I think that type of mindset ends up being reflected in the long-term, friendly culture we have developed at Storytel. We don’t go for the final extra little crown in the negotiation. Storytel is never going to be the kind of service that explodes overnight. It is a slow-pace, step-by-step building up of the market, and both the Swedish and the Storytel cultures reflect this mentality.
You once said that “stories help to make the world better”…How?
Well, people are quite stressed out and are not being able to penetrate all of the hard issues and things that are happening in the world. I think what books really do is to slow down the pace a bit. The book has always played a very important role in the world, and it is a little disturbing to see kids watching so many videoclips and adults jumping between stories on social media daily. What the audiobook fundamentally does is to slow you down, and make you focus, and relax. Both print books and the audiobooks have this effect, but the audiobook also has this companionship effect, too you get from listening to the narrator, which is important.
What about you? Do you ever slow down?
I do, I read a lot, actually. I have already I think about 30 books this year.
Did you read, or listen to those 30 books?
About 70% of them I read on the Storytel Reader, but I also listened to some audiobooks. I enjoy that a lot. It gives me time to reflect on Storytel’s development, and on how we can put the different pieces in place to be strong five years from now.
Carlo Carrenho is the founder of PublishNews in Brazil and Spain and works in business development at Word Audio Publishing International in Sweden.