Late last year, Spotify began offering 15 hours of monthly audiobook listening to Premium subscribers in select markets, including the US. Now the company says the new service is the second-largest audiobook provider behind Amazon-owned Audible — something Spotify CEO Daniel Ek said was notable “given how entrenched the legacy players are.” During its Q4 2023 earnings call with investors, the company also offered a look at how Spotify customers are consuming audio recordings, including sharing information that suggests books reach a different set of listeners than Audible or on other platforms.
“The exciting part is that we’re able to bring a whole new audience to audiobooks. So, internally and externally, I think the biggest surprise has been the kind of titles that resonate with consumers. These are not the normal titles that traditionally do well,” said Ek.
“It’s a lot of fun. It’s a lot about culture,” Ek noted. “It’s also welcoming a lot of younger authors, as well as younger authors, given the model where you can take a chance on a new book without … consuming the titles, which I think has led to safer bets,” he added. “So we’re seeing a very, very interesting trend around content consumption, which is … I think addictive across the entire book industry.”
On Audible, subscribers can either access a limited selection of audiobooks and original books, or they can pay more to receive a monthly credit to purchase an audiobook from an expanded selection of best sellers and new releases. This model encourages users to spend their credit on top performing titles or titles from well-known authors. However, under Spotify’s plan, users only have a certain number of monthly hours available to listen to audiobooks. This led them to explore lesser-known titles and those from emerging writers, Spotify explained. They are also interested in listening to audiobooks on topics that align with music, such as entertainment and culture, for example.
Investors had plenty of questions for Spotify about its new audiobook offering, prompting Spotify to share its overall impressions of how both consumers and publishers have adapted to the new format. On the latter, Spotify said publishers and writers were excited about the innovation its subscription offers and were “very open-minded” about trying new things. (Some writers and agents, meanwhile, are pushing back against Spotify’s entry into this market, saying the company isn’t transparent about compensating creators.)
Additionally, consumer engagement with the feature has been strong, Spotify shared, though without specific metrics.
However, the streamer stopped short of offering details on how the addition of audiobooks adds to its bottom line, saying it was too early to tell yet. Instead, Ek pointed out that, in general, the more loyalty to the platform, the better Spotify’s value proposition is for consumers. The company had added 28 million users in the quarter, the second biggest gain in the company’s history. The service now has 602 million users, of which over 236 million are paid subscribers with access to the audiobooks service.
The company declined to answer specific questions from investors about the impact of audiobook consumption costs on margins, but said Spotify is expected to see gross margins improve through 2024.
An experiment in what’s next for the format was hinted at in a question about Spotify’s popular Daylist, a personalized audio playlist that tries to predict your mood at various points throughout the day. People are coming to Spotify specifically for the feature, increasing searches for the term “Daylist” by over 2,000%, the company said. Now it looks like Spotify may be thinking about how to translate Daylist’s success into new formats.
“I’m really proud of the team and the things they’re doing in this department,” said Ek, of the team behind the feature. “And I wouldn’t be surprised if we see a lot more innovative things come out of that — both on the music side, of course, but later also reflected on the audiobook side of the podcasting side,” he said. suggested.
