Spotify, Publishers and (spare a thought for) Authors

Authors don’t get rich from audiobooks. Some rough maths of a traditional audiobook deal suggests they see just seven percent of what the consumer spends on their work. How come? Well, there are four layers of cream removed from the author's milk: a VAT (20%), then the retailer's reported margin (60%), followed by the publisher's take (75%), and finally the agent's (15%). By that point, only sevenpence on the pound reaches the author of the original work.

Fair? One could argue the market is working, as there are more authors producing more books than ever before, with over 1m frontlist titles put on shelves last year. Revenues are swelling too, as in 2022 British bookworms generated a record £2.7bn in income across all formats - a billion more than was spent on music streaming. Then again, compared to the established streaming economics of the music industry, a seven percent take feels unfair, with 15% reaching the singer and songwriter. What’s more, there’s a flourishing DIY sector in music streaming, where platforms like DistroKid (artists) and ReRight (songwriters) can bump that figure up to 40% - albeit with a likely trade off on volume. (Audible's own ACX direct offering resembles this).

The comparison between music and books strikes a particularly resonant note in light of Spotify's recent entrance into the audiobooks market. The big five are all on board:  Penguin Random House UK SIMON & SCHUSTER (UK) LIMITED HarperCollins Publishers Hachette UK and Macmillan. Users can listen for free for up to 15 hours from a library of 150,000 titles from all the major publishers, and purchase an additional 10 hours of listening for  £10.99. This is fabulous news - Audible, an Amazon owned company, needs competition in this market. 

Where it gets tricky is when you try to wedge the long-established model of selling books by the unit into the all-you-can-eat pricing of music on Spotify. My longtime mentor, economist David Safir, explains this by pithily highlighting what makes these two worlds fundamentally different (wise words that appear on the open page of my own book, Pivot: Eight Principles for Transforming your Business published by Simon & Schuster UK and represented by Curtis Brown Group) 

‘While music moves to the rhythm of the composer,                                                          words move at the pace of the reader.’

This brings perspective to the recent criticism from the The Society of Authors (directed towards The Publishers Association) that neither authors nor their agents have been told how the Spotify deal will work. To be clear, this is not Spotify’s fault - they’ve paid handsomely for the content that the publishers own. As I’ve been at pains to point out during the UK’s three-year-long government inquiry into streaming economics, Spotify does not pay artists; it pays distributors, who have contracts with artists–and ditto with authors: so it’s on the publishers to explain if/how authors will be compensated. To my eye, there are three curve balls that publishers need to straighten out with us authors. 

1. What crystallises a royalty event? In music, it’s simple - stream 30 uninterrupted seconds of a song and a royalty is paid (hence why songwriters often put the chorus at the front). In books, the threshold is less clear. What happens if you only stream chapter five of my book? Would that qualify for a royalty? Taking it to the playlist-extreme (like 'beeds on a string' if you've watched the famous scene on Netflix), what happens if you listen to fifteen different authors’ chapter one’s this month, and then the fifteen chapter two’s the next? Depending on the deal the publishers have made, that could mean 15 authors not getting any royalty from your listening. 

2. Carryover minutes? On Spotify, you can top up listening hours for £10.99 a month, and carry these over to the next month. If you were to stream a 16-hour book for 15 hours during the free trial, and then go premium the next month to hear the one-hour conclusion, is it possible to sell the same book to the same listener more than once? Think about it - might the publisher get paid twice now that the subscriber fee’s are coming in, while the author only gets paid once? 

3. Fair Division? Under a stylized version of music’s royalty-pooling model, there are two users of a service: one heavy and one light. The light user’s subscription subsidises the heavy user’s hours - meaning the light user’s subscription fee ultimately pays artists they’ve never listened to. As Spotify proposes a highly-competitive royalty pool to compete for the long tail of publishers, we can envisage a similar dilemma.  If one user listens to one hour a month, and another 15 hours a month, might this also mean that the light listener’s monthly subscription fee is subsidising the heavy-listener's consumption? 

These are just three concerns from a novice first-time author who is out of his depth; the three-stripe industry veteran Jane Friedman, author of the excellent Electric Speed newsletter, could probably name thirty more. 

But, to return to the wise words from David, music is relatively homogeneous, as most songs last the same and all songs are consumed at the same pace. Books, however, are heterogeneous, varying in both length, consumption time and most notably their highly-variable list prices. Moreover, whereas it’s normal for people to listen to music many times over, they typically only listen to a book once. That is, of course, if books are read at all - which touches an inconvenient truth I shared in my opening pages of my book, on the business of breakage, when purchased items go unused: 

So thank you for reading thus far, that’ll be £0.78 please 🙂. I hope this rhelps authors, agents and publishers alike start the conversation and ask the right questions so we can 'weight it all up' as we need this to work.

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