Spotify makes audiobooks free to paid subscribers

Spotify plans to offer subscribers up to 15 hours of free audiobooks each month, an attempt to better compete with Amazon.com-owned rival Audible and find a path to profitability.

The streaming company said Tuesday that it would make a selection of more than 150,000 titles available to premium users as part of their existing subscriptions in the U.K. and Australia and expand the program to U.S. listeners later this winter. Among the audiobooks it plans to make available are bestsellers such as Jennette McCurdy’s memoir, "I’m Glad My Mom Died," and award-winners such as Min Jin Lee’s novel "Pachinko." 

Spotify said it aims to expand the audiobook market, create a better user experience than existing platforms and make its subscriptions more valuable to users by offering audiobooks alongside its extensive music and podcast catalogs. The Wall Street Journal earlier reported that Spotify was in talks with publishers to introduce the offering.

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Spotify, which first moved beyond nonmusic content with podcasts, wants to become the singular destination for all things audio. It learned with podcasts that forays into fast-evolving formats can be risky and expensive.

It is betting that offering audiobooks—initially at no additional cost—will convince subscribers to stick around longer. Amazon’s Audible is among the largest audiobook platforms.

"We know that by adding more value into our ecosystem it’s a better proposition for our users and subscribers," said Spotify finance chief Paul Vogel. 

Under the new offering, Spotify premium users will be able to listen to up to 15 hours a month as part of their existing subscription, and can purchase 10 more listening hours for $10.99 if they exceed that allotment. 

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Spotify has signed agreements with all five major publishers, including Penguin Random House and Simon & Schuster, as well as hundreds of independent publishers. It said it expects to consistently have more than 70% of the top bestselling titles available. 

Spotify subscribers will be able to divide up their listening allotment across several titles simultaneously. Depending on their arrangement with Spotify, publishers and authors will be paid based on either the percentage of a book that users listen to or the number of hours they spend listening.

Spotify entered the audiobook business a year ago, initially offering a catalog of more than 300,000 titles from independent authors and major publishers on a pay-per-download basis. Vogel said the company learned from that a-la-carte strategy that when users listen to audiobooks, they spend more time on the service. 

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Chief Executive Daniel Ek has said Apple’s App Store policies have hampered the rollout of Spotify’s initial audiobook offering. Spotify directs users to make purchases through a web browser instead of inside the app, to avoid Apple’s 30% commission. App-store policies have been a point of contention between the two companies for years.

For publishers and authors, Spotify represents another major platform beyond market leader Audible to not only distribute audiobooks but also find potential new listeners. Spotify has 220 million subscribers across the globe—including younger audiences that haven’t been as exposed to audiobooks as older generations, Vogel said.

"I’ve always seen growth when there is choice for consumers," said Chantal Restivo-Alessi, chief digital officer for HarperCollins. "This gives us another avenue for discovery, which may result in audiobook consumption but may also result in book sales."

Restivo-Alessi, who is also CEO of international foreign language at the publisher, said she had seen the appetite for and success of audiobooks in Germany for many years, and always thought there would be a broader opportunity in the medium for Spotify. HarperCollins, like The Wall Street Journal, is owned by News Corp.

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Spotify in July said it would raise the price of its premium individual plans in major markets around the world for the first time, by $1, to $10.99 a month. Analysts and music and audio executives anticipate further increases on the horizon, especially as Spotify sweetens what is offered. 

"Podcasting is a bigger business now than when we weren’t a part of it," Vogel said. "We think we can do the same thing with audiobooks."