Spotify wants to apply its freemium model — which allows people to choose between paying for the service or having their experience punctuated by ads of varying quality — to audiobooks.
“We have moved from a music discovery and playback service to a full-fledged platform where artists and creators can create, participate and earn,” said Spotify CEO Daniel Ek.(Opens in a new window) during the company’s annual Investor Day on June 8. “A platform powered by subscriptions, ads and creator service models, applied to music, podcasts, audiobooks and more.”
That expansion hinges on Spotify’s acquisition of an audiobook distribution platform called Findaway. The deal was announced in November 2021 and Spotify initially thought it would close before the end of the year, but The Verge notes(Opens in a new window) that the antitrust division of the US Department of Justice has yet to approve the acquisition nearly seven months later.
That didn’t seem to dampen Ek’s enthusiasm. “While it’s early days,” he said, “we expect audiobooks to also have healthy margins, over 40% and a big contributor to the business. And here again we will apply the same distinctive foundations of ubiquity, personalization and Freemium to attract creators and users alike and drive engagement.”
The plan to apply Spotify’s existing business practices to audiobooks wasn’t exactly shocking. But it will be interesting to see how people react to inserting ads into their audiobooks. I suspect it would be more shocking to hear a personalized ad in the middle of 1984, say, than to hear a new Squarespace ad in literally every podcast.
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Investors might view audiobooks as “a $70 billion dollar annual opportunity for us to expand and ultimately compete,” Ek said before expressing Audible’s grip on the market. “And just like we’ve done in podcasting, we expect to play to win. And with one big player dominating the space, we believe we’ll expand the market and create value for users and creators alike.
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