Spotify’s Findaway audiobook store is ending 20 percent off sales on its own platform

Findaway, a Spotify-owned audiobook retailer, will no longer accept a 20 percent royalty cut for titles sold on its DIY Voices platform, as long as sales are made on Spotify. In a company blog post published Monday, Findaway said it would “pass on cost-cutting efficiencies” through its integration with the streaming service. Last summer, Spotify completed the purchase of Findaway for $123 million in an effort to solidify its position in the audiobook business.

While it’s free for authors to upload their audiobooks to Findaway’s Voices platform, the company normally uses an 80/20 pricing structure — with Findaway charging a 20 percent fee on all royalties earned. But that compensation is coming after sales platforms take their own 50 percent discount off the list price. So under the old revenue split, an author who sold a $10 audiobook would have to give $5 to Spotify and $1 to Findaway. But in the future, that same author will no longer have to pay Findaway’s $1 distribution fee when selling through Spotify.

Margins on audiobooks are exceptionally high, much to the chagrin of authors. For example, Audible accounts for 75 percent of retail sales (although it only takes 60 percent with an exclusivity contract). Many authors share royalties with their storytellers and have to pay production costs – meaning they get an even smaller share of the royalties.

Spotify and Findaway’s move is likely an attempt to attract more indie authors from Audible, which is currently the biggest competitor. But Spotify’s audiobooks business – which launched last fall – has a long way to go. Unlike music or podcasts, most audiobooks on Spotify must be purchased individually and sales are limited to the web version. Even CEO Daniel Ek admitted that the current process of buying an audiobook through Spotify is “pretty horrible.”

Currently, Amazon-owned Audible controls the lion’s share of the audiobook market (one estimate is 63 percent). But critics have accused the company of taking advantage of authors because of its exceptionally high revenue split.

“Audible pays 40%. Almost half. For reference, most physical stores take up about 50% of a retail product. Audible pays indie authors less than a bookstore, when a bookstore has storefronts, sales staff, and warehouses to deal with,” author Brandon Sanderson wrote in a blog post last year. Sanderson made headlines after taking his books off the Audible platform and opting to sell them on Spotify and Speechify instead.

Unlike Audible, Spotify does not sign exclusivity contracts with authors and has not announced any plans to do so. But the company isn’t done with its plans for audiobooks just yet. In an email announcement, Audiobook’s chief of communications, Laura Pezzini, wrote that Spotify expects to launch even more features for independent authors in the future. “We at Spotify are just at the beginning of our journey to support independent authors – we have many plans to help authors expand their reach, maximize their revenues and ultimately build a strong audiobook business.”

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