In the first of three commentaries on the audiobook sector in the run-up to FutureBook Live, Dominic White of W F Howes looks at the economics of audio.
Five years of double-digit growth has fuelled competition; in the past week alone, several thousand new audiobooks were published, and it’s estimated that nearly 500,000 audiobooks are live on retail sites, most of which were added in recent years. Now the question is not whether you should exploit audio, but why you aren’t already?
Small publishers hold untapped quality and range, but with smaller budgets and resources the economics are more acute. Several indies have scaled back audio ventures this year due to poor return on investment. Consider that the 17% of consumers that are “heavy listeners” (consuming 11+ titles per year) account for two-thirds of sales (according to Nielsen research), and it’s no wonder lower-tier books sell fewer copies, per title, to a growing audience.
Recordings close sales and create risk
Recordings rarely drive sales. But prospective consumers listen to a clip, which often closes the sale, and reviews determine whether you have a long or short tail. There is, therefore, only one way to record an audiobook, and that’s properly. Costs range from the low to mid thousands and cannot be shaved much without undermining sales.
In 2001, we were asked how long we would continue selling cassettes; “no more than five years,” we said. Then solid demand kept cassettes going until 2012. CDs are showing a similar trend of slower-than-expected decline, to the extent that 50% or more of midlist titles’ sales come in CD format to library buyers. Audiobook demographics are diverse, so we need to stay anchored to true demand.
Every audio deserves its own P&L
An audio project involves many extra costs and an often-underestimated overhead of resourcing. Don’t be tempted to think it fits neatly with print processes. Curate only the best “audio-targeted” titles, create a bespoke marketing plan and stay close to the numbers, with a dedicated profit-and-loss for audio, to ensure you are adding, not subtracting, business value.
Some aggregators are luring small publishers with high percentages in return for unlimited streaming models, or pool shares with micro-payments or very poor revenue per unit sold. This undermines more profitable channels and is unlikely to be unsustainable for either small publishers footing the cost, or agents, who could earn more by selling print and audio separately. This poses a bigger question of whether it is wise to participate in audio channels with a lower return than print—isn’t that a failing strategy? Directly publishing is only one option to exploit audio. There is the choice to sub-license the rights, or cut co-publishing deals with a dominant audio specialist to get the broadest possible footprint and reduce the risk considerably. A well-published audio edition will generate value for all the publishing stakeholders as well as benefit volume sales. Finding the right balance of publishing and partnering profitably for your business to play to its strengths will support the pace of industry growth, as well as your bottom line.