Findaway, an audiobooks retailer under Spotify’s ownership, has announced that it will waive its 20 percent royalty cut on titles sold via its DIY Voices platform as long as the transactions take place on Spotify. According to a blog post from the company on Monday, Findaway aims to “transfer cost-saving benefits” stemming from its incorporation with the music streaming giant. Last year, Spotify acquired Findaway for $123 million, in a move aimed at strengthening its presence in the audiobooks industry.
According to Findaway, this adjustment enables Spotify to offer the most competitive royalty rates available to authors who sell their audiobooks using the Findaway Voices service. As a result, Spotify is now targeting independent authors with the prospect of greater earnings, in an effort to attract them to its platform. Typically, Findaway operates on an 80/20 pricing model, where they take a 20 percent cut of the royalties earned by authors who use their Voices platform. However, this fee is applied after sales platforms have taken their own 50 percent cut from the list price. Under the old structure, if an author sold a $10 audiobook, they would pay $5 to Spotify and $1 to Findaway. Going forward, authors will no longer be charged the $1 distribution fee to Findaway for sales made on Spotify. As a result, authors can expect to retain a greater share of the revenue from their audiobook sales on Spotify.
The profit margins for audiobooks are particularly high, much to the frustration of authors. Audible, for instance, typically takes a 75 percent cut of retail sales (although this percentage can be reduced to 60 percent with an exclusivity agreement). In many cases, authors split royalties with their narrators and must also pay production costs, resulting in an even smaller percentage of royalties being received.
By introducing this change, Spotify is enhancing its appeal to authors who are looking for a more attractive platform. Spotify states that it is just at the outset of its efforts to assist independent authors and has a vision to assist authors in expanding their audience, optimizing revenue and building a flourishing audiobooks industry. Today’s announcement is a step towards realizing this objective.
The move is also aimed at luring more independent authors away from Audible, which currently stands as its main competitor. However, Spotify’s audiobooks business, which was launched in the autumn of last year, still has a long way to go. In contrast to music or podcasts, most audiobooks on Spotify must be bought individually, and sales are limited to the web version of the platform.
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