Home » Community » Articles » BookSmarts Podcast (ep. 41): Jane Friedman on Spotify Audiobooks & Author Earnings

Jane Friedman is an author with 25 years of experience in the media and publishing industry. She is the co-founder and editor of The Hot Sheet, a paid newsletter about the book publishing industry which was awarded Media Outlet of the Year in 2020 and also offers a free newsletter, Electric Speed, that has more than 25,000 subscribers.

Jane is an avid spokesman in the publishing community. Her expertise has been featured across countless media outlets, including The New York Times, CNN, NPR, and the Washington Post. She joins us on the BookSmarts Podcast to discuss the recent inclusion of audiobooks on Spotify and how that might affect the publishing industry going forward  for better or worse.

To learn more about Jane Friedman, and to subscribe to her newsletters, visit janefriedman.com. You can also follow her on LinkedIn, Instagram, and Facebook.

Can you talk about Spotify’s addition of audiobooks?

It’s been known for a long time that Spotify wanted to get into the audiobook space. What’s happened recently for anyone paying attention was not a surprise. We all knew it was coming. They tested the waters, I would say, very gently. This has been at least a year ago, if not a little longer, by opening up just a la carte audiobook sales. They didn’t have any special pricing. There weren’t any discounts if you were a premium Spotify member. It was just another audiobook outlet and I think the hope was since there are already all these people on Spotify, maybe putting this into their line of sight will generate a bigger audiobook consumer base.

Now, I don’t know if that did but, obviously, Spotify did not want to stop there. That was just kind of the opening salvo. What they really want is what they debuted in November, which is more of what we would consider like a subscription service to audiobooks but not quite. What happens with Spotify is if you’re a premium member, meaning you’re already paying a monthly fee, then you get 15 hours of listening each month. That resets and then you can start over with your 15 hours of consumption, and that’s without paying anything extra.

This is interesting for the audiobook market for one compelling reason: it’s really hard to sample audiobooks if you’re a US-based audiobook listener. It’s a little bit different in Europe, I don’t know if we want to get into that. In the US, if you’re on the audible model, for example, you kind of have to decide each month. You’ve got your one credit. What’s going to be the credit-worthy audiobook that you’re going to put it on? And people tend to favor the long epic sorts of books to get all the value out that you possibly can. 

Spotify and other companies like Spotify, that are interested in the subscription space, have long argued you’re not really getting all of the potential listeners. You’re not giving people the opportunity to try new things, to dip around. It also disadvantages short books, or children’s books and all sorts of other things that don’t merit the credit. So from that perspective, it is a fascinating thing to try to see if you can increase the size of the audiobook consumer market.

Spotify obviously has an enormous audience. Generally speaking, these are people who don’t necessarily read books. They might listen to podcasts, though, and there’s kind of some interesting overlap between those audiences.

What are the current opinions regarding Spotify’s audiobooks?

Here’s where all the questions lie, in my opinion.

There’s a lot of concern about how Spotify pays for this listening. Because if people are skipping around listening to 30 minutes here or two hours there, how do you pay the publishers and, of course, the authors for that? Well, some of this is shrouded in secrecy so we can only kind of speculate and read the tea leaves. But based on mainstream media reports, what Spotify has said, and what the Authors Guild has come out with, it appears that if you’re with one of the really major publishers, like Penguin Random House, then you’re either getting paid or they’re getting paid every time there’s 100% of a full listen, whether that comes from 20 different people or a single person. That is equating to what would be like a full payout a la audible payout, like a conventional payout, or the full payout is triggered once a certain threshold is met.

There’s essentially a free sample so people might only listen to 2% or 5% and that might not be enough to trigger the full payout. My guess is it’s probably around 10 to 20% that triggers the full payout whether or not people continue. Again, there’s so much author anxiety around this because we’ve all seen the headlines about what Spotify pays musicians, right? There’s this deep, deep concern that it’s going to upend earnings for everybody.

However, I’m not scared yet, because I think publishers are actually pretty astute on this. They have been very, very cautious about putting any of their books into subscription models digitally, whether that’s Ebook or audio. They more or less don’t put their books into Kindle Unlimited, the Amazon Ebook program. Penguin Random House, interestingly, wouldn’t allow its audiobooks into subscription programs. This doesn’t include Audible, which I don’t really consider a subscription program. But they won’t put it in Everand, for example. They don’t put it in Storytel. They pulled them all out in 2020 because they thought that the model was bad for for earnings. But they changed their mind when Spotify came to the door. Now, why is that? Well, I have to imagine it’s because they’re getting what they would normally get. I’m just speculating but perhaps there was some sort of signing bonus. I don’t know. But again, I’m not concerned now.

There’s this other overarching question here about will this work? Will this work out for Spotify? And there’s some people who feel like, “Oh, absolutely. How could it not work out?” I’ve got a lot of skepticism of any companies like Spotify, where they think if only we can build the audience, the profits will eventually come, won’t they?

Because they’re not taking in any extra money for this listening, that I’m aware of, but they have to pay for it as if they they were receiving money. How does that actually go to their bottom line? I guess they assume they’re going to get more people because of this extra benefit and that will cover the costs, or they expect to renegotiate more favorable terms. I don’t know. But I feel like the jury’s still out on whether or not this is going to work out.

I should add the caveat that Spotify says that some publishers are on the pooling model, which is what they call the model where you get a percentage of the income that’s coming in. But it also raises the question of percentage of what? You’re not getting extra money here. So I can imagine smaller publishers, university presses, independent houses, etc. Authors too, I might add, if they’re coming through Findaway Voices, which is owned by Spotify, they’re getting the pooling model payments. But for the big books that people are going to want, like the Britney Spears memoir, I have to imagine that as a Big Five New York House, they’re getting the full payout, because why would they compromise on that?

Talk about the history of the Author Guild’s “Author Earning Surveys” and what you’ve seen this time around

So the Authors Guild, as well as the Society of Authors in the UK, they tend to run these really broad author earnings surveys that get into a lot of granular detail with royalties especially and just also income from other sources like freelancing, teaching, etc. Historically, the problem with these surveys is that they’re sending them to all of the memberships. Sometimes they partner with other organizations to get a different demographic, like self-published authors, for example. But they’re pulling in people who aren’t even expecting to earn a living from book sales alone or from advances and royalties. So you’re getting all of the creative writing professors, journalists or hobbyists, and then they’re coming up with this figure of whether earnings have increased or declined, and there’s not a lot of nuance to whose incomes are increasing or declining.

The latest one that they did. Now, I don’t know if they’ve always had this granular detail or not, but with 2022, they started looking really carefully. Okay, are you traditionally published? Are you self published? Do you consider yourself full time or not? Now, this is a self identification, like they don’t have any quality. They can’t really like qualify and double check on the accuracy. They’re just trusting people to categorize appropriately. They also looked at genre, how many books they had out and a lot of other factors that are really important to determining whether earnings are increasing or not.

Of course, as predicted, or as I would predict, anyway, the top headline for the 2022 survey was “Author Incomes are Declining”. However, I actually had a two hour conversation with Peter Hildick-Smith, who actually helps the Authors Guild with this particular survey, creating the questions, figuring out where to send it and then parsing the results. And we looked at the really, really specific, nitty gritty stuff of…what if you’re a traditional author of a certain age? What if you’re a self publishing author of a certain age? What if you’re writing in romance? What if you’re writing literary? What if you consider yourself full time or not?

If you start to get into it, actually incomes are increasing for certain types of authors. Self-publishing authors, for example, if they’ve released a title within the last year, they have a slightly increased chance of earning more than a traditionally published author. Also, no surprise, romance authors are most likely to see increased earnings or be making a living.

Now, what I thought was really just super interesting was that traditionally published authors outpace self-published authors on things that are not book related, which makes total sense because they kind of have the cachet, or the connection. They’re able to really get that money stream going from speaking or lectures, whatever. But if you look at the self published authors, it’s almost always about book sales, making the living off of the books. Again, exactly what I would expect, since self publishing authors tend to emphasize putting out rapid releases or publishing to market and making sure that the audience is going to be there when the book releases.

Is the potential difference in royalty also a factor?

Yes, absolutely. So this survey, as far as what I saw, was only measuring dollars. It wasn’t looking at unit sales. I think that is playing a role as well.

The other thing that came out of this was Peter Hildick-Smith had some comparisons to the prior survey. This is one of the other issues with the surveys. You’re not necessarily comparing the same cohort over time. Who knows what the mix might be from survey to survey. He did try to make these adjustments, and look at it on an apples to apples basis, and what he found was, if you are one of the top selling authors, at least as the survey might determine. Just for the sake of argument, let’s say you’re a John Grisham-like figure, you probably saw your income decline in the last five years, and if you were on the long tail, you probably actually saw a small increase or more opportunity.

I think that points to just something that online retail and Amazon and the self-publishing market has brought us which is the ability for anyone to get their work discovered. I think the challenging nature of being a very traditional author who might not be online, who might not have much of a platform of younger authors, and maybe, they don’t care. They’re past the point where they’re gonna go get on Tik Tok, and try and sell more books.