Publishers’ rationale, PRH CEO Nihar Malaviya says, is compensation ‘commensurate with what we’re getting from the marketplace.’

By Porter Anderson, Editor-in-Chief | @Porter_Anderson

See also:
UK: Society of Authors Questions Spotify’s Publisher Deals
UK and Australia: Spotify Opens ‘Audiobooks in Premium’
In England: The Society of Authors’ CEO Nicola Solomon is Retiring

Now Reported To Offer 200,000+ Titles

In its announcement that the United States market’s premium-level subscribers now have access to its new offering of the company says is now more than 200,000 audiobooks, industry observers have seen both a potential boon for the audio format and what appears to have been a change in stance on subscription by several of the world’s largest publishers. Below, we have commentary from Penguin Random House worldwide CEO Nihar Malaviya.

As Publishing Perspectives readers will recognize from our October 3 story, the basic offer in the States mirrors the one rolled out last month in the UK and Australia, with premium subscribers getting automatic access to 15 hours of listening monthly. Media messaging points out that Britney Spears’ The Woman in Me from Simon & Schuster, which Circana has tracked as having sold 418,000 print copies in its first week, and Jesmyn Ward’s Let Us Descend, also from Simon & Schuster, which the Aspen Words Literary Prize has just longlisted.

In its new announcement this week on the US expansion, Spotify makes these points:

• “The Spotify Premium audiobook catalog includes  more than 70 percent of bestselling titles, including books from the Big Five publishers and many independent publishers and authors.
• Users “find audiobooks in the home feed of the Spotify app or by searching for favorite books; those not sure where to start and find an editorially curated selection of popular titles in Spotify’s ‘audiobooks hub.'”
• Users track their listening hours in the settings of the app.

Spotify also reports surveying more than 1,000 US respondents, that effort producing several observations from the company, which generally follow the surveyed results of the States-based Audio Publishers Association.

According to Spotify’s media messaging:

• Gen Z and Millennial respondents to Spotify led in audiobook listening, with 72 percent of 18-to-34-year-olds saying they listen to audiobooks
• Relaxation (63 percent) and comfort (51 percent) are the top emotions respondents said they associate with audiobook listening
• Some 46 percent of audiobook listeners asked by Spotify said they consume audiobooks while traveling or on vacation
• Nearly a third (26 percent) of those asked said they’ve listened to an audiobook set in a location to which they were traveling
• The top genres people told Spotify they prefer to consume via audiobook are comedy and/or humor (31 percent), fantasy (28 percent), business and/or leadership, (28 percent), self-help (27 percent), and true crime (27 percent)
• A reported 41 percent of audiobook listeners responding to Spotify said they prefer audiobooks over physical books because of cognitive benefits such as improving memory or keeping their minds active

Because there are indications from other survey work in international publishing markets that male consumers are often more amenable to audiobooks than to print or digital reading of other formats, it would be helpful if Spotify would include gender data in future audiobook survey work.

Malaviya: ‘Brings More People Into the Reading Ecosystem’

Because the major publishing houses have historically been resistant to subscription programs, there was some consternation in October as the initial rollout of Spotify’s audiobook offer was understood to include work from the UK’s Big Four houses.

In our Publishing Perspectives Forum at Frankfurter Buchmesse on opening day, October 18, our heavily attended opening headline Executive Talk featured Nihar Malaviya, the newly confirmed permanent worldwide CEO of Penguin Random House.

We asked Malaviya about the participation by PRH in Spotify’s subscription offer, inquiring what might have changed to make the company feel that it’s now appropriate to go forward with Spotify as it’s doing.

“From our perspective,” Malaviya said, “our stance is still very consistent.

“We have been against unlimited-access subscription. For example, obviously one of the bigger retailers in the audiobook marketplace—doing a great job developing the audiobook market—is Audible. And Audible is, effectively, from a consumer perspective, a subscription. It’s a different form of subscription from what Spotify is, but it’s still a subscription.”

In the United States, Audible’s subscription format uses a credit that a consumer uses to choose one audiobook per month. A consumer can buy three credits more at a rate less than the monthly US$14.95 monthly single-credit subscription charge, but each credit represents a single audiobook and so a consumer is paying a discrete fee for each audiobook purchased, which is different from the unlimited usage approach that Audible has taken in several other world markets.

“It’s a model where the compensation that we’re receiving—and, most importantly, that our authors are receiving—is basically commensurate with what we’re getting from the marketplace overall.”Nihar Malaviya, Penguin Random House

“So we’ve participated in various different subscription models, and this was, from our perspective, a limited-access subscription model. And at the same time, it’s also a model where the compensation that we’re receiving—and, most importantly, that our authors are receiving—is basically commensurate with what we’re getting from the marketplace overall. From both of those two perspectives, that’s what made us comfortable in participating in this specific offering.

“Of course, the audiobook market overall has grown, has developed, thanks to, obviously, all the work that everyone in the industry has done to create audiobooks, as well as the great work our retail partners have done to really popularize the format.

“Spotify does have hundreds of millions of paying subscribers around the entire world. And there’s a chance, of course, that their entry” into the audiobook marketplace “does reach people who are not currently listeners. That brings new people into the reading ecosystem. So there’s a potential there.”

Asking for clarification in a follow-up question, we ended up with a good laugh. We compared the Spotify subscription structure to metered-usage subscriptions like that piloted by Niclas Sandin’s BookBeat in Norway and others. The Penguin Random House criterion, by contrast, we pointed out, is a model that essentially pays a publisher an agreed amount per audiobook—as would happen on the open market—rather than per time spent or other metrics?

“I can’t go into the exact arrangements because of confidentiality,” Malaviya said.

Then, with a glint in his eye, he added, “But yes, we are basically interested in models where we’re getting paid.”

UK Authors’ Concerns

Keeping one more element of the Spotify subscription story in view, you may recall that one of the concerns arising around the earlier news that Spotify would open its new program in the United Kingdom had to do with that country’s alarms raised by the 12,400-member trade union, the Society of Authors, about a reported lack of communication with authors and agents prior to these announcements.

As the society’s media messaging has put it, “As far as we are aware, no authors or agents have been approached for permission for such licenses, and authors have not been consulted on license or payment terms. “Publishing contracts differ but in our view, most licenses given to publishers for licensing of audio do not include streaming. In fact, it is likely that streaming was not a use that had been invented when many such contracts were entered into.”

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More from Publishing Perspectives on audiobooks is here, more on subscriptions is here, and more on digital publishing is here.

Our 75th Frankfurt coverage from our Frankfurt Book Fair Magazine, which was available throughout the trade show in print, is also available for your free download.

The magazine has interviews with fellows and grant-program recipients from international publishing markets, as well as programming articles from our Publishing Perspectives Forum at Frankfurt including our Executive Talks with Penguin Random House worldwide CEO Nihar Malaviya and Nanmeebooks’ Kim Chongsatitwana; highlights of key events at the 75th Frankfurter Buchmesse; and coverage of Frankfurt’s upcoming guest of honor programs (Italy, the Philippines, the Czech Republic) and this year’s Guest of Honor Slovenia.

There’s also news of literary agents and agencies; award-winning books from guest of honor markets; focus articles on artificial intelligence, sustainability; and a forthcoming effort to get more Korean literature into world markets; as well as 75th-anniversary “Frankfurt Moments.”