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Amazon is Quietly Working to Explode the Audiobook Market

April 7th, 2013 by · 17 Comments · Amazon, audiobook

new_audible_horizontal._V188360181_[1]Amazon is widely recognized as having ignited the ebook market with the launch of the Kindle Store in 2007, and today I realized that they might be trying to repeat that success with audiobooks.

Earlier this evening I was reading a post by a self-published author, Josh Lanyon. Josh was lamenting about his experience with creating audiobooks via ACX and his general dissatisfaction with the fact that Amazon controls the retail price.

In the post he complains that Amazon is bundling his self-published audiobooks with the Kindle edition of his ebooks and selling them cheap. As he sees it, Amazon is trying to encourage more readers to use Whispersync for Voice:

So…yeah. Cool. Not essential, but a fun little gimmick. I really never gave it a thought because whispersync is not something I particularly need or want or care about.

I should have given it a thought, though, because it creates a problem for ACX customers, and by ACX’s customers, I mean authors and narrators. I mean me. Amazon, in its perennial quest to crush all competition through loss leading, came up with the idea of encouraging readers to try out these whispersynced audio books by knocking the price of audio books down to $1.99 if the (current version) kindle ebook is also purchased.

Naturally Josh sees this as a significant loss of income. But as frustrating as this might be for Josh, there is a larger story here. You see, I double checked his claim, and in doing so I learned there is more to this story than Amazon simply offering discounts.

I went to Amazon, picked an author at random, and checked to see what prices Amazon asked for bundled ebooks and audiobooks.

In the case of Stephen King, the prices were all over the map. Some titles didn’t have a bundle price mentioned, but on the rest of titles the asking price for adding an audiobook to the purchase of a Kindle ebook  varied considerably. The prices ranged from $4.95, $13.95, $17.95, and there was even one for 87 cents.

That’s a big difference from what Josh reported, isn’t it? Rather than simply offering a good deal to customers at the expense of authors, Amazon is charging a variety of prices.

It’s almost as if Amazon is trying to find a better price point for audiobooks.

That, folks, is a far more important detail than it might appear. Right now audiobooks are sold via subscriptions or at a rather high price – often higher than the price of the hardback edition. Everyone accepts that as the norm, but I think Amazon doesn’t.

Thanks to ACX, Amazon has made it relatively easy and inexpensive to produce an audiobook. In fact, the 20 grand that Josh reported having spent on the 12 audiobooks is actually less than it might cost to produce a dozen ebook editions (here’s why).

And now that the production cost and effort is minimized, I think Amazon is trying to find the price point where readers will buy the most audiobooks.

Remember how Amazon was famous for the $9.99 price point for ebooks? That’s the kind of price point that Amazon want to find for audiobooks.

Luckily, Amazon is in a unique position to do so.

Amazon inherited a controlling interest in the downloadable audiobook market when they bought Audible in early 2008. I don’t have data on market share but I have been told that Audible is the downloadable audiobook market.

Update: A friend tweeted that I really should offer more data on the market because there is more to the market than downloadable ebooks. This is true, but there is little public data. The AAP only reports figures for downloadable audiobooks (and not for example CD-based), and the data that the Audiobook Publishers of America has released is unreliable.

There’s little public data on Audible’s revenue, but the latest info from the AAP reveals that the US downloadable audiobook market was worth $87 million in 2012, and that it has seen an annual growth rate between 20% and 30% for the past several years.

Something tells me that a 20% to 30% increase isn’t good enough for Amazon, but I should think that should really come as no surprise.

Amazon has been doing their best to build the audiobook market for a couple years now, first by launching Audible Creation Exchange in May 2011 and then by launching Audible Author Services, which pays authors a dollar each time one of their audiobooks is sold, in April 2012.

Amazon’s investment in audiobooks is having incredible success in creating a larger supply of audiobooks to sell (a reported 10-fold increase in production). I expect that when Amazon does pick a new and lower price point, sales of the self-published audiobooks will go through the roof.

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17 Comments so far ↓

  • Robert Nagle

    You didn’t mention 2 important parts: 1)Amazon pays approximately double the royalties for exclusive audiobooks and 2)Audible’s DRM for audiobooks seems to have won some acceptance from readers. That’s surprising because consumers have generally rebelled against DRM for music.

    I recently produced an audiobook (actually an audio play), which ironically enough I sold on the author’s website bundled with the ebook for $3. http://www.ghostlypopulations.com/2013/03/march-sale-interview-with-the-sphinx-audio-play-is-now-half-priced/ But actually I first submitted the audiobook through CDBaby, which distributed it to Amazon, Google Play emusic and itunes. What I found strange was that cdbaby and itunes sells it for $3.99, google play sells it for 6.99 and Amazon sells it for 8.99. I can’t explain why Amazon chose to price it at 8.99 except that they didn’t want people to distribute their audiobooks through cdbaby or tunecore.

    But it’s a great idea to bundle audiobook and ebook together — especially if none of it has DRM. Believe it or not, bandcamp can sell ebook files with the audio files — except that you need to upgrade to the premium account to delete free previews.

    I ask content creators and readers/listeners to think about buying from indie publishers. It’s fairly easy for publishers to sell non-DRM files directly to consumers. Iambik in particular has been producing some incredible audiobook titles at reasonable prices http://www.iambik.com/ .

    And folks, if it’s really crucial that you have easy access via your mobile devices to the audio files, just upload the mp3s to Amazon cloud player (they give you a few gigs for free) or to Google cloud player (they let you upload 20,000 songs for free) . That’s essentially the same as listening to something via the Audible app on your iphone.

    • Nate Hoffelder

      It’s not double. The royalty scheme is also rather complicated (and beside the point), so I left it out.

    • Logan Kennelly

      Robert, I am normally very much in the anti-DRM camp. I sometimes pay a premium to get the DRM-free copy, or simply go without something I want because of it.

      But I subscribe to Audible.

      For me, the reason is very simple. Typically, DRM is applied to a new medium when transitioning away from the old DRM-free (or laughably weak DRM) formats. With the new format, I am expected to pay the same (or slightly more) while giving up rights. With Audible, their subscription prices typically work out to 16–22% of the DRM-free price. As a customer I am given something in exchange (drastically cheaper prices), and I can justify it by using the savings to buy DRM-free copies of the best products in the future, if desired.

      It looks as though the retail prices of eBooks may be coming down though. Some of the more popular titles can be purchased as MP3 on CD for about $15 (new) these days, and hopefully it’s only a matter of time before a download, DRM-free audiobook service becomes somewhat competitive with Audible. (I have no problem with their service, but I’d like to see competition and a market where owning, rather than renting, is only a marginal increase in price.)

      Nate, your article is either really timely for me or there has been a recent change. I just noticed today that buying the Kindle and Audible version together result in drastically reduced prices over buying the Audible version separately. Just going through a handful of titles in my wish list, it appears as though the “Whispersync discount” is approximately 40% over the Audible price.

      I don’t know if Amazon is taking a huge loss to promote an interesting service that hasn’t been very popular, or if their contracts allow them to make up the difference by cutting out some of the author’s share (for example, by paying the author royalty on only one of the purchases).

  • April L. Hamilton

    I hope you’re right, Nate. Audiobooks are my favorite format for “reading” novels because they allow for multi-tasking. I listen to audiobooks while driving, exercising, or doing mindless household chores that don’t require any brain work. It’s also great being able to pop in the earbuds at home, in a another room, when the kids are watching TV or playing XBOX. If it weren’t for audiobooks, I don’t think I’d be able to read novels at all at this stage of my life. Getting the time, quiet and focus all in the same place at the same time is hard when you’re a single parent who also works fulltime.

  • Sarah Ettritch

    It’s worth mentioning that ACX has made it easier for Americans to produce audiobooks. ACX doesn’t work with the rest of the world. As to whether ACX has made it inexpensive, that only applies if you use the royalty sharing option. If you don’t, good narrators don’t come cheap. It can cost more to produce an audiobook than it did to publish the corresponding eBook.

    • Nate Hoffelder

      ACX is closing on 2 years old but it’s still US only? Now that is odd.

      I will admit that I had assumed it was an international program. I wonder why Amazon has kept it limited? Language support, perhaps?

      • fjtorres

        As you pointed out, Audible is a small operation. (~$80M a year in sales)
        For all the talk of Amazon subsidizing their units, the reality is the units don’t have blank checks but are expected to be mostly self-funding.
        So:
        1- Small market in the US
        2- Small market elsewhere
        3- Still searching for optimum price points
        4-Want to grow content availability without flooding the market

        I’m guessing they don’t have the capacity to deal with two many low-volume sellers so they’re slowly ramping up their capability with the market. The bundle discounts are a (pricey) way of growing the market through Kindle but they have to be careful; audiobooks are an inherently smaller market so the lessos from one format are not going to transfer cleanly to the other.

        In other words: they’re being cautiously expansionstic. :)

        • fjtorres

          BTW, one way digital audiobooks is distinctly different from ebooks is that digital audio distributed on CD can be ripped from the disc media (I know folks who check the CDs from the public library, rip them and return them) and can be resold.
          So there is strong incentive to buy the physical media even when using the digital files.
          The emergence of MP3-on-CD falls into this usage model and this means that, even more than with ebooks, digital audiobooks need to be cheaper than their physical-equivalent.

  • Ian Small

    The US audiobook market is actually significantly larger than the listed $87 million but I don’t think Amazon’s strategy in this latest initiative is to expand the market. Amazon’s market share through it’s acquisition of Audible (including Audible’s ongoing partnership with Apple) is large enough for them to know the existing (or potential) consumer’s price sensitivity. Therefore I don’t believe the various prices listed are a price test, I’d assume it merely comes down to margins on royalties. This is an added value feature for their flagship product that is selling a format at devalued price point. That’s a strategy to sell shares, not books.

  • Becca

    While I generally support indy publishing, I am very cautious about indy audiobook publising. While a good narrator can make a mediocre book fun to listen to, a bad narrator can ruin a good book. Too many amateur narrators are, in my opinion, unlistenable.

  • pidgeon92

    Bad narrators are just awful. The nice thing about downloadable audiobooks is that you can sample prior to buying, and therefore know if the voice is appealing. There are several that I have sampled and subsequently purchased the ebook instead as the narration was not very good.

    I am a big fan of the way Audible is structured, with membership and the credits system. The vast majority of audiobooks can be had on Audible for one credit, and I have the two credit per month plan for ~$23. Combine this with the offers that Audible frequently has (use 4 credits, get a $10 account credit; get 3 ebooks for 2 credits, etc.) you can accumulate a good sized library relatively inexpensively.

  • Morgan

    It’s frustrating that Audible isn’t available directly to us Canadian authors. We have to go through audiobook publishers and then get a cut of their royalty. Also, they’re curated, which means more gatekeepers.

    • Patti

      Hi Morgan,

      I asked just yesterday about ACX becoming available to Canadians and apparently they are working on it, and put me on an email list. That is certainly closer than they were last year when I inquired, so maybe sooner than later? Contact them and ask to be put on the list and hopefully by more of us showing interest, we can accelerate that process! Cheers…

  • The Badass Bulletin: 14 April 2013 » Badass Book Reviews

    [...] Amazon is Quietly Working to Explode the Audiobook Market (via The Digital Reader) [...]

  • Xendula

    Ever since Amazon started bundling audiobooks with their ebooks, I have been buying them when they are around $2, up to “even” $4 for authors and narrators I love. If they weren’t bundled, I simply would not buy them and stick with the ebook only.
    Having both the ebook and audiobook version allows me to not interrupt my book if I need to do mundane things like shopping, driving, running, etc.

    I agree with some of the above posters in that a bad narrator can ruin a book completely – if I could stick to only Tavia Gilbert and Lorelei King and never had to listen to another one, I would. They are the very best, and by searching for them, I discovered great authors and their series that I would not have otherwise known about.

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