June 30, 2022
On June 16, Spotify finalized its acquisition of Findaway, a digital audiobook creation and distribution platform used by many independently published authors with a vast catalog of titles. The deal is a key part of the streaming app’s plans to expand by selling audiobooks.
Spotify is making its move during a time of unprecedented growth in the U.S. audiobook marketplace. Audiobooks currently account for approximately nine percent of total U.S. book sales, but they have experienced double-digit growth every year for the past nine years, including a 13 percent increase between 2020 and 2021.
Spotify’s foray into audiobooks gives authors, particularly those who publish independently, the potential to reach a greater audience. Spotify is the biggest music streaming service in the world, with 31 percent of the market and 162 million monthly listeners. It is also the most widely-used podcast platform, so subscribers are already used to listening to the spoken word on the app. Spotify’s size and distribution reach make it a viable competitor to Amazon’s Audible platform, which controls more than 41 percent of U.S. audiobook sales according to the Codex Research Group.
As of now, Spotify has indicated that it will focus on à la carte audiobook sales as opposed to an exclusive subscription model, as it uses for music and podcasts. Given the “big five” publishers’ opposition to distributing their audio catalogs under subscription-based terms, it seems unlikely that Spotify would make a subscription-based service the primary model for its audiobook business. Moreover, Findaway would almost certainly lose popularity with independent authors were Spotify to go in that direction.
However, subscription-based listening is an option in addition to à la carte sales on several major audiobook platforms, so we can expect to see some version of a subscription program alongside the audiobook marketplace. Spotify could change current Findaway terms to entice smaller publishers and independently published authors to take audiobook deals on a subscription basis and even start including audiobooks in premium subscriptions with the goal of pushing the audiobook market to a primarily subscription model.
Switching to a subscription model for audiobooks could hurt authors and small publishers, depending on the terms. Subscription-based music platforms like Spotify have already decimated musicians’ incomes: According to the Music Workers Alliance, with whom we work together on a variety of creator-related issues, Spotify pays recording artists an average of only $0.0038 cents per stream. At this rate, it takes around half a million streams per month for an artist to make the federal minimum wage.
We have already seen that authors’ royalties similarly plummet under subscription-based models, including when textbook publishers started their own subscriptions services and moved to pay authors a percentage of the pool, as well as in other cases where publishers licensed books to subscription services. We would strongly oppose any effort to make subscription services the norm for e-books and audiobooks.
We will be watching closely to see how Spotify handles audiobook sales and works with independent and traditional authors. Once we have more concrete details about Spotify’s terms and payment models, we will analyze and report them. We hope Spotify will be willing to work with us to avoid the frustrations many of our members have had with ACX, especially in regard to transparency in terms, sales-reporting, and income.