How does Audible work & its business model

Company: Audible
Founder: Don Katz
Year founded: 1995
CEO: Don Katz
Headquarter: Newark, NJ
Annual Revenue (FY18): $ 2.5 Billion

Products & Services: Online and Mobile Audio Book & Entertainment Streaming Platform
Competitors: Scribd | Audiobooks.com | Alibris | OverDrive | Downpour | Playster | Rakuten Kobo

Did you know that Audible has signed a deal with popular nonfiction writer Michael Lewis, author of Moneyball (2003), The Blind Side (2006), and The Big Short (2010), to create original, exclusive audiobooks for the platform?

About Audible

Audible is a platform that both sells and produces audiobooks and other audio entertainment, such as podcasts, radio and TV programs, and audio newspapers and magazines. Audible is a subsidiary of Amazon.com, Inc.

The company is currently the largest seller and producer of audiobooks in the world and has featured famous vocal talents such as Emma Thompson, Nick Offerman, and more in their exclusive audiobooks. Audible currently has over 450,000 titles on its platform.

How Audible Works

The Audible platform provides users with:

  • Access to thousands of audiobooks, audio magazines, newspapers, radio programs, podcasts, and other audio entertainment
  • Membership that includes:
    • 1 free audiobook and 2 free Audible Originals a month
    • Tons of free content, including audio news, self-help and fitness programs
    • 30% off every title
  • Integration across multiple devices
  • Car Mode for easy listening while driving
  • Offline access
  • Customization of narration speed

Membership

Audible users can subscribe to the platform for one free audiobook and two Audible Originals per month, whether they be podcasts or original audio magazines, along with free content like audio fitness and news programs. Audible members also get 30% off of every title on the platform, and access to other exclusive deals.

Members can choose their two free Audible Originals from a rotating selection of six.

Cross-platform Integration

One of Audible’s appeals is that it’s integrated across multiple devices, so you can switch from a laptop to your smartphone without losing your place. The platform even plays audiobooks on your Amazon Echo device.

Car Mode is an option that allows listeners to easily play, pause, and bookmark the audiobook so they can listen uninterrupted while driving. Some newer car models even allow drivers to control their Audible app from their dashboard.

Offline Access

The app also includes offline access to content by giving users the ability to download titles, so they can still listen even when they don’t have WiFi or data. Users can vary the speed of narration according to their preferences – from half as fast to three times faster than the default speed.

Audible’s Business Model

  • Direct sales/retail
  • Subscription model

A la cart purchases

Audible sells its own content as well as audiobooks and entertainment from other producers. The company is seeking to grow the percentage of exclusive Audible originals on the platform in order to increase its profit margins and expand its market share in the audiobooks sector.

Consumers without a membership can purchase audiobooks on Audible a la carte for prices typically ranging from around $15 to $40.

Subscription Model

Audible charges customers a monthly subscription fee for access to premium features on its platform. As previously mentioned, membership includes several perks like discounted prices, unlimited access to free content, and 2 Audible Originals and an additional audiobook per month.

Audible offers several types of membership plans:

Audible membership plan and its subscription cost

Members receive credits with their membership, which vary in amount depending on your membership plan. You can use your credits toward any purchase of Audible content within a year before the credits expire.

How Audible compares to its competitors

Audible’s top competitors in the audiobook sector include Scribd, OverDrive, and Audiobooks. However, Audible still has significant dominance in the market, as the company generates an estimated $2.5 billion more revenue than both Scribd and Audiobooks, and accounts for 41% of audiobook sales in the U.S.

Additionally, Audible has experienced substantial growth, particularly in the past decade, as membership has consistently grown by double digits each year and the platform now has millions of members (although the exact number is unknown).

Audible’s plan for the future

Audible is looking to expand its share of the promising audiobooks sector by becoming an increasingly dominant producer, rather than simply seller, of audio entertainment.

Audible has even started approaching authors and agents directly to buy audio rights before book proposals have even been submitted to publishers.

Some authors have already signed up to create content just for Audible; David Spade and Michael Lewis have both recently made deals to release Audible Originals for the platform.

This is theoretically a beneficial opportunity for authors, as traditional publishers typically take a large portion of sales. Removing print publishers from the equation should allow them to see a greater percentage of the profits from sales of their audiobooks.

Conclusion 

While there is increasing competition in the audiobooks space, as Google and Walmart have both recently entered the market segment, Audible’s determination to capture more market share by producing exclusive and original content appears to have a high potential for success.

 References & more information

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S.K. Gupta

S.K. Gupta

A management consultant and entrepreneur. S.K. Gupta understands how to create and implement business strategies. He is passionate about analyzing and writing about businesses.

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