Short-Changed? Spotify's Push Into Audiobooks Sparks Money Concerns Among Authors

Spotify Technology SA’s big leap into audiobooks is facing a backlash from US authors who fear they’ll be short-changed by the streaming giant. Spotify began offering complimentary audiobooks to millions of customers in October as part of their monthly subscriptions. All of the so-called Big Five publishers signed on, with Penguin Random House LLC saying it was “excited” to place titles on the service. 

But not everyone in the book industry is thrilled, including Bradley Tusk, a New York-based venture capitalist, author and bookstore owner whose political advocacy firm Tusk Strategies is rallying authors who worry that the shift to streaming will make it even more difficult to earn a living. 

“I’ve seen this movie enough times,” Tusk said in an interview. “If, at the beginning of the cycle, we can say and do something about it, we can solve it before it becomes an intractable problem. That’s what we’re trying to do.”

(Tusk also ran the 2009 mayoral campaign of Michael Bloomberg, the owner of Bloomberg LP.)

“Although we can’t get into the current deal specifics, our book publishing partners each negotiate licenses with Spotify and tell us our payout model is consistently competitive with other audiobook offerings,” a Spotify spokesperson said in a statement. “Publishers have expressed that they are pleased with the results they are seeing since the introduction of audiobooks on Spotify, providing incremental value for their authors.”

A new group organized by Tusk, the Coalition of Concerned Creators, is demanding more transparency from Spotify, particularly about how authors will be paid. To kick off the campaign, author Kim Scott published an opinion column in the New York Times on Dec. 13 titled Remember What Spotify Did to the Music Industry? Books Are Next. 

In the piece, she warned that, on Spotify, authors will generally get paid only if people listen to their entire book — rather than receiving a full royalty payment for every partial listen, as they typically would on other audiobook services.  

Many of Spotify’s subscribers are under 35 years old, she added, a demographic that comprises the largest number of audiobook consumers. By giving them 15 hours of free listening each month, “some in this group will transition from paying for audiobooks to listening to a portion of those audiobooks as part of their existing Spotify subscription.” 

The end result, she suggested, will be less money for authors. 

So far, the publishers haven’t responded to the column, nor have they revealed many details about how the audiobook compensation is structured, making any broader claims about the streaming service’s impact on the book industry difficult to assess. 

Bloomberg News has obtained the details of one agreement. In a note to writers, Macmillan Publishers Inc. wrote that authors will receive a full royalty credit for each unit listened to, so long as, in aggregate, they achieve a complete listen of their work. For example, Macmillan explained, if an audiobook is 100 minutes long, a full listen could be achieved by either one Spotify subscriber listening to 100 minutes, or five customers listening to 20 minutes each. 

Under Macmillan’s terms, new listener minutes for every title will be tallied up each month to come up with the total number of units consumed, and the resulting payment will be calculated using a discount off a digital list price.  

Macmillan declined to comment. 

Not all book publishers on Spotify are using the same compensation model, according to a person with knowledge of the deals. 

Tusk’s opposition to Spotify follows similar calls from a UK-based group, Society of Authors, which issued a statement in October demanding more details on the arrangements with publishers.

“The streaming of audiobooks competes directly with sales and is even more damaging than music streaming because books are typically only read once, while music is often streamed many times,” they wrote.

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