Audiobooks Will Be the Next Pillar of Spotify’s Business
Spotify is set to make audiobooks the next pillar of its business after music and podcasts. This was confirmed by the CEO of the company, Daneil Ek, during his Spotify’s Investor Day 2022 remarks. This was Spotify’s first investor day since going public in 2018. The audiobook vertical by Spotify is expected to be a destination for creators. The company had announced the agreement to acquire Findaway, an audio tech company, late last year. Spotify had also recently announced that it expects to reach $100 billion (roughly Rs. 7,780 crore) revenue annually in the next 10 years.
The music streaming giant Spotify will make audiobooks the next major vertical of the company. Ek stated, “Today, the global size of the book market is estimated to be around $140 billion (roughly Rs. 10,89,700 crore). That’s inclusive of printed books, e-books and audiobooks, with audiobooks having only about a 6-7 percent market share.” Ek also added that the audiobook industry had the potential to reach up to $70 billion (roughly Rs. 5,44,830 crore).
In November 2020, Spotify also made a major push to have more audiobooks on its platform by buying US-based audio tech company Findaway as it tries to recreate its success with podcasts. According to Ek, the company is “still waiting for this deal to close.”
As mentioned earlier, the audiobook vertical from the music streaming company is expected to be a destination for creators. Ek said that the company expects audiobooks to have healthy margins, above 40 percent and to be accretive to business. The company plans on attracting both creators and users to the audiobooks vertical to increase engagement.
Spotify recently announced that it expects to reach $100 billion (roughly Rs. 7,780 crore) revenue annually in the next 10 years and promised high-margin returns from its costly expansion into podcasts and audiobooks. To reach its ambitious goal, Spotify would need to make its revenue grow nearly 10-fold from its 2021 revenue of $11.4 billion (roughly Rs. 88,660 crore). Apart from that, Chief Executive Daniel Ek also forecast gross margins to jump to 40 percent and operating margins to 20 percent in the same time.
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