Industry & Advocacy News

Information for Authors about Spotify’s New Audiobook Service

Finances & Compensation The Publishing Industry

November 17, 2023

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This article was updated on December 22.

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 the UK’s Society of Authors and others have noted, 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.

How Spotify Pays Publishers for Audiobook Streams

We reached out to Spotify for more information about how it calculates streaming royalties for audiobooks, and we have queried several publishers on their deals. While it appears that every publisher negotiated a different deal, with different book prices and triggers for payment, Spotify is generally paying larger publishers on a per-book basis, as though it were a sale. The publishers for their part have mostly reported that they received good deals. We understand from industry reports that some smaller publishers are instead 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.

Self-published authors also have a range of deals depending on the entity they originally signed with (many signed with Findaway, for instance, which Spotify acquired last year). It appears that many existing Findaway contracts are being paid through a pool, and this number may increase as agreements are renewed. As far as new indie author contracts go, Spotify seems to be pushing the “pool” payment model (similar to Audible Unlimited). We are in touch with several indie authors who will report to us on their earnings so that we can evaluate if they are being paid fairly.  

The traditional publisher deals vary by how much of a book a customer must listen to before triggering the per book payment. We understand that the deals negotiated by most of the large book and audiobook publishers provide for payment of a per book fee when the customer has listened to 20 percent or so of the book, in some cases as low as 10 percent. Recently, Bloomberg reported that under Macmillan’s Spotify deal, the company only gets paid the fee when 100 percent of a book has been listened to or partial reads add up to 100 percent. That means that it could take several streams to trigger payment for a single sale, but it also means that the under 20 percent “reads” count towards a payment, and it is possible that Macmillan negotiated a higher per book price.

In all events, traditionally published authors will generally receive only 25 percent of what the publisher earns—the typical audiobook licensing share under traditional publishing contracts.

An Evolving Landscape

How long will Spotify maintain the practice of paying for streams as book purchases? 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 and indie authors.

Publishers and agents have expressed strong objections to the “unlimited consumption” and streaming models that would cannibalize audiobook sales and cut into revenues, we expect that Spotify will need to continue to make the program attractive enough for publishers to participate. On a positive note, there are reports that the Spotify audiobook listener thus far do not overlap much with Audible listeners, and the hope is that audiobooks may find a new, different audience though Spotify.

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  staff@authorsguild.org.