Spotify-owned audiobook seller Findaway will no longer take a 20 percent cut of revenue from titles sold on the DIY Voices platform — as long as sales are made on Spotify. In a company blog post published Monday, Findaway said it would “pass cost-saving efficiencies” from its integration with the streaming service. Last summer, Spotify finalized its $123 million purchase of Findaway in an effort to boost its position in the audiobook business.
Although it’s free for authors to upload their audiobooks to Findaway’s Voices platform, the company typically uses an 80/20 pricing structure — with Findaway taking a 20% fee on all royalties earned. But these fees come after Sales platforms drop 50 percent off the list price. So under the old revenue split, an author who sold $10 of an audiobook would have to give $5 to Spotify and $1 to Findaway. But going forward, that same author will no longer have to pay Findaway the $1 distribution fee when making a sale through Spotify.
The margins for audiobooks are exceptionally high, much to the chagrin of authors. For example, Audible takes 75 percent of retail sales (though it will only take 60 percent with an exclusive contract). Many authors share royalties with their narrators and have to pay a production fee – which means they get a smaller share of the royalties.
Spotify and Findaway’s move is likely an effort to lure more independent authors out of Audible, which is currently its biggest competitor. But Spotify’s audiobook business — which it launched last fall — still has a long way to go. Unlike music or podcasts, most audiobooks on Spotify must be purchased individually, and sales are limited to its web version. Even CEO Daniel Ek admitted that the current process of buying an audiobook through Spotify is “pretty awful”.
Currently, Amazon-owned Audible commands the lion’s share of the audiobook market (one estimate puts it at 63 percent). But critics have accused the company of taking advantage of authors for exceptional revenue sharing.
Audible pays 40%. Almost half. For a frame of reference, most brick-and-mortar stores take about 50% off the retail product. Audible pays freelance authors less than any bookstore would, when a bookstore has storefronts, sales staff, and warehouses to handle,” writer Brandon Sanderson wrote in a blog post last year. Sanderson made headlines after he pulled his books from Audible’s platform and opted to Sell them on Spotify and Speechify instead.
Unlike Audible, Spotify doesn’t sign exclusive contracts with authors — and hasn’t announced any plans to do so. But the company hasn’t finalized its plans for audiobooks. In an email announcement, Audiobook’s head of communications, Laura Pezzini, writes that Spotify expects to release more features for independent authors in the future. “We at Spotify are still at the very beginning of our journey to support independent authors — we have many plans for how we can help authors expand their reach, increase revenue, and ultimately build a strong audiobook business.”