Spotify’s Play for Audiobooks: Challenging Amazon’s Audible Dominance

In the fast-paced world of digital content streaming, Spotify, once synonymous with music streaming, is embarking on a new venture that could disrupt the audiobook industry. Spotify, known for its user-friendly interface and vast music library, has decided to expand its horizons and delve into the world of audiobooks.

With this strategic move, the company aims to challenge Amazon’s Audible service, which has long been the undisputed leader in the audiobook market. In this article, we’ll delve into Spotify’s foray into the audiobook space, examine the challenges and opportunities it faces, and discuss the potential impact on the audiobook industry.

The Audiobook Market Landscape

Before putting the spotlight on Spotify’s entry into the audiobook market, let’s backtrack and understand the landscape Spotify is stepping into. Audiobooks have witnessed a remarkable surge in popularity over the past decade, evolving from a niche market to a mainstream form of entertainment and education.

According to the Audio Publishers Association, audiobook sales in the United States reached a record $1.3 billion in 2020, representing a substantial growth trend. Similar to how the pandemic increased the usage and subscription rates of Saas technology in businesses of all sizes and industries, the audiobook witnessed the same trend. Maybe because people had to find a new hobby they couldn’t go to the local gym, bar, or brunch spot with friends.

The global audiobook market, according to WordsRated, grew by more than 10% giving it a market value of $5.3 billion in 2022, and is projected to reach upwards of $35 billion in 2030. But if you know me, I hate predictions, as no one on the planet has a crystal ball to see in the future to know for certain what they are going to have for dinner tomorrow, let alone how big an industry will get over the next 5-10 years.

At the forefront of the audiobook industry stands Amazon’s Audible, a subsidiary of Amazon.com. Audible has cemented its dominance in the market by offering a vast collection of audiobooks, exclusive content, and a user-friendly platform that seamlessly integrates with Amazon’s broader ecosystem. This has made it challenging for competitors to gain a significant foothold in the audiobook space.

Personally, I would say Amazon Audible currently has a monopoly on the audiobook market. Similar to how they are accused of alleged monopoly practices which the FTC chair, Lina Khan is currently fronting in a filed lawsuit with the picture being painted that Amazon uses this power to overcharge consumers, hobble competitors, and exploit sellers on the marketplace.

In 2022 Audible had a 63.4% market share in the USA. The audiobook powerhouse generated $1.6 billion in revenue in 2021, with $1 billion of this made by Audible sales. And wouldn’t be surprised if this was higher in 2022. According to Omdia, and reported in the Financial Times on a similar topic, the overall audiobook market made $4.8 billion in revenue globally in 2021.

As of May 2023, the monthly users of Audible were at 27.3 million. But to put these massive numbers in perspective that anyone could be proud of achieving, it makes up 4.2% of Amazon’s book publishing arm. Still a fair bit off the classic book in hand or 1,000 books in ya Kindle.

Spotify’s Audiobook Aspirations

Spotify’s decision to venture into audiobooks is not entirely surprising given its history of diversifying its content offerings to stay relevant and hit bigger revenue targets. While music streaming remains its core business, Spotify has been expanding its portfolio by incorporating podcasts and other audio content. The largest example of this was the Joe Rogan Experience podcast, a reported $200 million deal to become exclusive to the platform.

This strategic shift towards audiobooks seems to align with Spotify’s vision of becoming the ultimate destination for all forms of audio entertainment. The Swedish-based company announced its foray into audiobooks in early 2021, initially rolling out the service to a limited audience in select markets. This move was solidified with the purchase of Findaway in the same year for north of $120 million.

The platform offers a wide range of audiobooks across various genres, aiming to cater to diverse user preferences. Spotify has also made strategic partnerships with several publishers and authors to secure exclusive audiobook content. This means, for you as a premium listener, that you can instant access more than 300k audiobooks in your app without any extra charge.

Although the caveat is you can only listen to 15 hours per month. That’s 30 minutes a day. Or if you want to sit in a room for 2 days in a row and power through several books, you can purchase another 10 hours for your monthly subscription price.

Last year, the founder and head honcho, Daniel Ek said he expected audiobooks to have profit margins of “above 40 per cent”. With another comment from him in 2022 saying “Just as we’ve done in podcasting, expect us to play to win… with one major player dominating the space (Audible), we believe we will expand the market,”.

Challenges Faced by Spotify

– Competing with Audible’s Dominance: Arguably the biggest challenge Spotify faces is breaking Audible’s stranglehold on the audiobook market. Audible’s extensive library, established user base, and integration with Amazon’s ecosystem makes it a formidable competitor that is going to be tricky to dethrone. Convincing Audible’s loyal users to switch to Spotify may prove to be an uphill battle. But on the other hand, people might be primary Spotify users and are excited to get rid of the Audible app.

– Building a Comprehensive Library: Building an extensive library of audiobooks takes time and effort. Spotify will need to secure licensing agreements with publishers and authors to ensure a wide selection of audiobooks across genres. Audible’s head start in this regard gives it a significant advantage. Spotify have confirmed they will pay royalty fees to the bigger publishing houses such as Penguin Random House, Hachette, and HarperCollins.

– User Experience: Audiobook listeners are accustomed to Audible’s user-friendly interface and features. Spotify will need to invest in creating an equally seamless and enjoyable user experience to entice listeners away from their current audiobook platforms. Personally am excited to see how this looks alongside the music and podcast functionalities.

– Marketing and Branding: While Spotify is a recognized brand in the music streaming industry, it may need to work on establishing itself as a credible audiobook provider. Effective marketing and branding efforts will be crucial in gaining the trust of potential audiobook listeners.

Opportunities for Spotify

– Synergy with Existing User Base: Spotify boasts over 345 million monthly active users globally. Leveraging this massive user base, the company can cross-promote its audiobook offerings to its existing music and podcast listeners, potentially driving adoption and engagement.

– Personalized Recommendations: Spotify’s data-driven recommendation algorithms have been a cornerstone of its success in the music streaming industry. By applying these algorithms to audiobooks, Spotify can offer personalized recommendations, enhancing user satisfaction and retention.

– Exclusive Content: Exclusive content has proven to be a compelling strategy for attracting users to a platform. Spotify’s partnerships with authors and publishers to secure exclusive audiobooks could give it a competitive edge.

– Global Reach: Spotify’s presence in over 90 countries provides an opportunity to introduce audiobooks to a global audience. Localized content and languages can further expand its reach and appeal.

The Potential Impact on the Audiobook Industry

Spotify’s entry into the audiobook industry has the potential to disrupt the market Audible has been the champion in for so long. While Audible remains a formidable competitor, competition is healthy for any industry, as it often leads to innovation, better pricing, and improved services for consumers.

Here are a number of potential impacts of Spotify’s move on the audiobook industry:

– Increased Competition: Spotify’s presence will undoubtedly intensify competition in the audiobook market. This may force Audible to innovate and improve its services to maintain its dominant position.

– Expanded Audience: Spotify’s existing user base provides an opportunity to introduce audiobooks to a broader audience, potentially attracting new listeners to the medium.

– Lower Pricing: Competition often leads to price wars, which could benefit consumers. Lower subscription fees or promotional pricing may become common as Spotify and Audible vie for users.

– More Exclusive Content: The battle for exclusive audiobooks could lead to more high-quality content being produced, benefiting both platforms’ users.

– Enhanced User Experience: The competition between Spotify and Audible may drive both companies to invest in improving their user interfaces and features, ultimately benefiting listeners.

What does this mean for the future of audiobooks?

Spotify’s foray into the audiobook industry marks an exciting development in the world of digital content streaming. While Amazon’s Audible continues to dominate the audiobook market, Spotify’s entry has the potential to disrupt the status quo, benefiting consumers through increased competition, improved services, and potentially lower prices.

Spotify’s massive user base and data-driven recommendation algorithms offer unique advantages that could help it carve out a significant share of the audiobook market over time. As the battle for audiobook supremacy unfolds, one thing is clear: the audiobook industry is in for an exciting and competitive future.

If you’re questioning how Spotify can pull it off, take a look at the limited series on Netflix titled ‘The Playlist’ on Netflix. Although you might argue it’s not 100% accurate, I’d be amazed if you don’t think it doesn’t show the tenacity and forward thinking of how Daniel Elk and his team went on to create what so many people love today, which was once seen as an illegal, black market. Does anyone remember the stories of waiting to burn CDs or risking viruses on a computer for the simple pleasure of saving a few quid and getting 50 songs?