Spotify eyes an expansion into audiobooks

In its 2022 Investor Day presentation, Spotify CEO Daniel Ek signaled a desire for the audio streaming company to expand into audiobooks.

The move would comprise a “third vertical” for the company that currently specializes in music and podcasts.

The additional focus on audiobooks does not necessarily come as a surprise – Spotify acquired audiobook platform Findaway in November of last year, when the company noted the audiobook market is expected to grow from $3.3bn to $15bn by 2027.

In a statement published ahead of the presentation, Ek estimated that the “most penetrated audiobook markets” could provide an annual opportunity of $70bn “for us to expand and eventually compete for.”

Noting that audiobooks would provide “healthy margins above 40%” for Spotify, Ek also added: “And just as we’ve done in podcasting, expect us to play to win”.

The audiobook market is currently occupied primarily by companies like Amazon’s Audible, Apple, Google, Storytel, and others.

“The move into audiobooks from Spotify seems an obvious but interesting move,” says Jonathan Harrison, digital strategy and transformation lead at independent UK media agency, the7stars.

“As a consumer it will be a really exciting move. The cost of audiobooks are often comparable to a physical book – having the option to listen as part of a Spotify subscription will be very appealing and likely bring new audiences to the format.”

Charlotte Taylor, head of publishing and audio at Publicis Groupe agency, Spark Foundry, notes that as Spotify continues to accelerate their audio offering, they’re becoming “a holistic one stop shop”.

Taylor is generally optimistic about Spotify venturing into the audiobook market, adding: “Being able to reach this audience when they are fully leaning in will be extremely valuable and I believe there will be a great appetite from advertisers. I am also optimistic that this may attract new advertisers to the audio market, as we saw happen when podcasts launched.”

However, Harrison believes that Spotify should be cautious with how they delve into the audiobook experience, noting that there are stark differences between audiobook and music or podcast consumption.

“The last thing a consumer will want is a story interrupted with poorly placed ads. I can imagine an offering where ad placements are at the start and end of stories, similar to sponsored podcast reads currently. An exciting new opportunity, but one that needs managing carefully on the advertising front.”