Industry & Advocacy News
November 17, 2023
Spotify has officially entered the audiobook market in the United States. Under a new program—which was first rolled out in the U.K. and Australia in October—subscribers to Spotify Premium can stream up to 15 hours of audiobook content every month from a catalog of over 200,000 titles.
We have heard from authors who are understandably concerned about what this may mean for royalties and the audiobook market. As Britain’s Society of Authors noted when the program was introduced there, music streaming has had a “devastating effect … on artists’ incomes,” and a subscription model for books could have a similar impact unless there are adequate payment terms in place.
We reached out to Spotify for more information about how it calculates streaming royalties for audiobooks. The good news is that, at least for now, Spotify is generally paying publishers on a per-book basis as though it were a sale.
Our understanding is that if a customer listens to an audiobook, the author receives the licensing share set under their publishing contract for audiobook sales (typically 25 percent of the publisher’s net receipts). The payment is triggered when a user listens to about 10–20 percent of the book, though some publishers have negotiated different percentage levels, as well as different purchase prices.
We also understand from industry reports that some smaller publishers are participating in the “pooled” income model where they receive a share of Spotify’s total revenue based on consumption, as opposed to payment per each audiobook sold.
How long will Spotify maintain the practice of paying for each audiobook purchase? As a newcomer to the audiobook world, Spotify is trying to gain a foothold in a market long dominated by Audible. There is always the possibility that, once it achieves significant market share, it will attempt to expand the pooled royalty system or impose other unfavorable terms on publishers.
Publishers and agents, however, have expressed strong objections to the “unlimited consumption” and streaming models that would cannibalize audiobook sales and cut into revenues. Spotify will need to continue to make the program attractive enough for publishers to participate.
For now, we will continue to engage with Spotify and publishers on these issues and will provide updates as more information becomes available. Authors experiencing any specific issues should contact the Guild at firstname.lastname@example.org.
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