The final speech at today’s London Book Fair Digital Minds Conference came from Don Katz, founder and CEO of Audible, which nowadays is an Amazon subsidiary. His topic: ‘The future of content business models’.
Its customers pay a mixture of monthly subscriptions and a la carte purchases for audio-books, getting an average of 15 books a year from the company. The company’s technology investment has been long-term: it had a digital audio player four and a half years before Apple made its first iPod, according to Katz.
“46% of the members had never bought an audio-book before, which implies more growth to come,” he added, saying that Audible’s membership is growing by 40% year-on-year.
The company invests heavily in technology and in customer care – Katz said the latter is crucial for any startup – as well as in marketing to consumers. “72% of our rights are globally cleared,” he noted. “That’s a really great thing to have.”
“Audible has succeeded in part because of its relationship to how people look at time,” he continued, noting that hundreds of millions of people spend hundreds of millions of hours a week driving to work alone – Audible’s core target audience.
“If you ask people if they would be happier, more successful in their economic lives, more interesting at the dinner table if they read more books, they tend to say yes. It’s just there’s only so much time.”
So, to the challenges. The main one is “there is simply not enough audio, there is not enough audio-books, even though it’s clear to us that every good book… should be in audio”. 80-90% of frontlist books don’t go to audio, according to Katz. “If a member runs out of sci-fi, we lose a member, so it’s a bad thing,” he said, pointing out that Audible’s customers “go deep” into publishers’ catalogues, given the chance.
Hence Audible’s move into audio-book production – it’s now one of the biggest producers of this content – but he said it’s still been frustrating trying to up the number and quality of audio-books – especially when the rights exist but are lying dormant.
“When a right is created, it’s supposed to be exploited,” he said. “One of my recommendations is to step that up.”
Audible has just announced a $20m Audible Author Services fund which will pay authors who sign up $1 for each download, which Katz said hopes will get the company engaged with authors. “It’s nothing to do with the royalty stream: it’s over and above”.
Why do something like this? First: “It’s just the right thing to do.” Second: “Authors clearly can help themselves in ways you never could before because of the digital era.” Katz talked about authors building mailing lists and Twitter followings.
“The idea of this self-reliant author who really gets what can be done is incredibly compelling,” he said. “I think it’s kinda over to sit above the marketplace and not row with the others trying to sell books… It’s part of the new thing. Whether or not the publisher and the agent step up too is clearly another question, here’s another way the author can make a difference.” And Audible wants to reward them for this.
Katz said he hopes the new fund will also wake up publishers and agents who aren’t investing in turning books into audio-books.
“Everything in publishing is controversial, and I expect this to be too,” he admitted, before adding that “technology changes everything” – and has done through time, for example the effect that moveable type had on culture, turning books into a business.
“Usually invention is outside the standing content community of the moment, and usually resisted… and then eventually accepted,” he said. An example: the efforts the movie industry put into trying to squash video recorders and paid cable TV between 1970 and 1973 – with both later becoming cash cows for the industry.
Katz also talked about digital piracy, which has just as disruptive an effect, but had a silver lining for his company when it took hold in the music industry. “Piracy actually helped Audible, because it taught people how to download,” noted Katz.
“Business models can really, really change. When we came to England in 2004, 2005, we were told we’d have to make it an entirely a la carte business… because Brits would not do subscriptions.” Whereas now the UK is at the forefront of subscription models in various entertainment markets.
He finished with a piece of advice for publishers looking to negotiate the shifting digital markets. “If I was in traditional publishing, I’d step up the editorial services big-time… I’d exploit every right we had all over the world, and do away with territorial rights altogether, because they just don’t work.”