In the week leading up to Christmas, in between batches of holiday baking, I found myself checking social media frequently to assess and respond to growing confusion about what kinds of deals Spotify has struck with publishers for audiobook payments. The source of the confusion lies in the following:
- A New York Times op-ed published on Dec. 13 warned that Spotify’s payments for audiobooks threaten to impoverish authors. It misleadingly claimed that authors are paid in full only if users finish the book.
- Bloomberg published a “scoop” (sub required) on Spotify’s deal with Macmillan, reporting that authors will receive a full royalty for each “unit” listened to in aggregate. That means if a bunch of people listen to just 5 or 10 or 40 minutes of your audiobook, you’ll ultimately get paid for that time once it accumulates to the full listen mark. (Under other publishers’ terms, consumption must reach a certain percentage of the book before payment is triggered; under Macmillan’s deal, no minute ultimately goes unpaid.) In tandem with that article, a group of authors announced the formation of the Coalition of Concerned Creators, demanding transparency from Spotify about how authors are compensated.
Yet we already have a pretty clear idea of how authors are compensated. The Authors Guild issued a useful and transparent statement in mid-November about the general terms of these Spotify deals, but a specific subset of commentators won’t actually believe it. Instead, they seem determined to conclude that Spotify could never pay fairly and is ultimately ripping off authors. (In response to the Bloomberg article, the Authors Guild updated their statement, so it’s worth revisiting.)
I’m afraid my annoyance at all this is hard to hide. It’s not that I believe Spotify prioritizes doing right by authors or the publishing industry—I’m sure it’s as self-interested as any company and must look for ways to make its subscription service profitable. But as someone who has been following the digital subscription space for nearly 10 years now, it’s clear to me that authors aren’t getting a bad deal with Spotify. Sure, that could change, but it would require publishers to agree to a bad deal. And why would they? Here’s a comprehensive look at why some negative commentary doesn’t pass the sniff test.
Book publishing has been notable in its success in navigating digital subscription models and profiting off digital books. Spotify is just the latest player in the subscription space; publishers have been negotiating these deals for years now. Remember Oyster? (Probably not, because it ultimately failed.) Generally, Oyster had to pay full price for books borrowed through its service because that’s the only way that Big Five publishers could be persuaded to participate. Full payments were triggered when a certain percentage of the book was read, and that’s the model that has predominated with comparable services, like Everand (formerly known as Scribd). Everand has survived and become profitable, but you won’t find the current bestseller list well represented there because publishers are quite shrewd about what goes into these services. Also, the more you read in Everand, the more you hit hidden limits of what’s available for you to read. Everand cannot remain in business without limiting in some way what readers can consume; otherwise their payments to publishers would outpace subscription fees paid by readers.
Then there’s Amazon’s Kindle Unlimited. Big publishers largely don’t participate in Kindle Unlimited, but when such titles do go into that plan, it’s believed they’re paid comparably to a full ebook sale once a certain percentage of the book is consumed—just as it works in Audible with audiobooks. Self-publishing authors, on the other hand, are treated differently; they get paid by the page read within a pooling model, where the pool of money is probably connected to subscriber revenue. (With Amazon, who knows?) But whatever the case, there is a limited amount of money to go around.
It’s the pooling model that’s largely seen as disadvantageous, especially for creators. Self-published authors in Spotify earn based on a pooling model only if they agree to make their titles available to Spotify premium subscribers in the first place. Alternatively, indie authors can have their audiobooks sold à la carte in Spotify and earn 50 percent royalties instead of streaming or in addition to streaming.
For publishers, the pooling model has seen some success and decent earnings. Storytel, the predominant audiobook subscription service outside of the Anglophone market, pays in this manner. While Scandinavian authors have enjoyed increased earnings during the era of Storytel—and have been eager to have their titles in such services—it’s hard to say whether that dynamic would play out the same way in the English-language market or in the US, the world’s biggest book market. We shall see, because some publishers are on the pooling model with Spotify. The company told the Bookseller (sub required): “There is a pooling model for a segment of our partners, and generally it’s partners who are slightly smaller scale. … Some people, particularly larger providers, wanted to do something different.” Of course they did—they’re not fools.
PRH, the most conservative of the Big Five when it comes to subscription services, reached a deal with Spotify. In January 2020, Penguin Random House pulled its audiobooks from all subscription services. PRH has been the most vocally anti-subscription, at least during the era of CEO Markus Dohle. (Dohle departed PRH in late 2022.) He didn’t believe subscription services would boost earnings and remained firm on keeping PRH out of that game—which meant pulling titles that were available in Everand, Storytel, and others. Now that PRH is obviously allowing titles into Spotify, I find it hard to believe this would be on terms any less favorable than what PRH receives from Audible’s credit-based model. And in fact, the Financial Times reported (sub required) exactly that when the Spotify deal was announced: “Spotify’s payment rates will be similar to Amazon’s, requiring a certain threshold of listening time to qualify for payment, one person familiar with the matter said.”
So author confusion is to be expected, given the varied coverage and deals that Spotify has negotiated. That said, demanding that Spotify offer transparency may not be tenable. A good first step for authors is to demand transparency from their publishers (or ask their agents) if they have concerns—and also take a look at their contract to see what is and isn’t allowed. However, the most common arrangement with Spotify if you’re with a major publisher seems to be a full royalty payment upon a certain threshold of listening (around 10 to 20 percent)—which is exceedingly common with Spotify’s competitors—or a full royalty payment once a full “unit” of listening is reached, which means no minute goes unpaid. I don’t know which is better because I don’t know how many people listen to a small portion without continuing, but I don’t think either arrangement amounts to a bad deal for publishers or authors. (For more insight into the behavior of audiobook listeners, read this article about swappers, repeaters, and superusers.)
Bottom line: Given that digital audiobooks represent some of the best profits and growth for publishers over the last decade, surpassing ebook sales in some cases, it’s hard to imagine any of them just said, “Sure, Spotify, we’ll take a mediocre deal”—especially since publishers have been holding all the cards on this for years. Would they really reduce their profits on audio, if that is indeed happening? Do they see huge sales potential via Spotify and believe they’ll make up for reduced profits in sales volume? That seems unlikely to me because publishers have for so long tried to preserve the value of the book, even to their own detriment at times, as with high ebook pricing. Or perhaps Spotify paid publishers a nice signing bonus that authors will never see a penny of. (I have no reason to think that’s happened, but I’m trying to imagine any and all scenarios.) It’s possible this could be a limited-time deal or experiment that publishers may decide not to renew, depending on how things go. Whatever the case, I don’t see publishers as desperate for new places to sell or distribute audiobooks, and I don’t think they need Spotify. Spotify needs them.
Big picture, the proponents of unlimited subscription services like Storytel argue these platforms do not cannibalize sales and are mainly additive. In unlimited subscription models, the large majority of consumption lies in backlist, which is one reason Scandinavian authors like them. Readers who find a new author they love will binge the author’s entire backlist. In the US, at least through Audible, the dynamic is reversed: The majority of consumption lies in the frontlist. Because Spotify is not an unlimited subscription service (premium subscribers must pay to continue listening for every hour beyond 15 hours), it could suffer from being in the mushy middle: not attractive for people who want unlimited listening month after month, and not attractive for people who want to continue accessing and listening to their audiobooks after purchase.
Jane Friedman has spent her entire career working in the publishing industry, with a focus on business reporting and author education. Established in 2015, her newsletter The Bottom Line provides nuanced market intelligence to thousands of authors and industry professionals; in 2023, she was named Publishing Commentator of the Year by Digital Book World.
Jane’s expertise regularly features in major media outlets such as The New York Times, The Atlantic, NPR, The Today Show, Wired, The Guardian, Fox News, and BBC. Her book, The Business of Being a Writer, Second Edition (The University of Chicago Press), is used as a classroom text by many writing and publishing degree programs. She reaches thousands through speaking engagements and workshops at diverse venues worldwide, including NYU’s Advanced Publishing Institute, Frankfurt Book Fair, and numerous MFA programs.
