Don’t be afraid of audio – just watch your financial back

What happens when audiobooks stop being publishing’s “next big thing” and simply become a mature part of the business?

For publishing consultant Carlo Carrenho, the answer is not to become more cautious about audio – but to become much more precise about how its growth is measured. Consumption matters, but so do revenues, profitability and the value publishers actually capture from each format.

Carrenho, a Brazilian-Swedish publishing consultant and contributing editor at Publishing Perspectives, has followed the evolution of digital publishing and audiobooks across international markets for years. Based in Sweden, he has also had a front-row view of one of the world’s most mature audio markets.

On September 29, he will join Michele Cobb, partner at Forte Business Consulting, at the fourth Media Transformation Summit, a free online event by Publishing Signal, powered by knk. Their session, Audio After the Boom: What Streaming, New Business Models and Mature Markets Tell Us About What Comes Next, will explore how streaming, Spotify, new entrants and changing economics are reshaping the audiobook business as the market matures.

In the run-up to the event Carrenho spoke about what publishers should actually be measuring, what the Nordics can teach other markets and why the next phase of audio growth may require publishers to rethink the audiobook itself.

Audiobooks have spent years being treated as one of publishing’s clearest growth stories. But as the category matures, growth itself becomes a more complicated question. What should publishers be measuring now to understand whether audio is still expanding the market — rather than simply redistributing listening, revenue or attention among existing users and formats?

Carlo: Publishers should always measure growth in terms of both consumption and revenues. They need to look at how demand is developing, but also at how much value they are actually capturing.

One important metric is how much publishers earn per book. That matters particularly in digital formats, especially audiobooks and streaming subscription models, where the value per book can be much lower than in print.

And this is where cannibalization comes in. Whenever a new format appears, there will be some cannibalization. The issue is not cannibalization per se, but whether it has a negative effect. It can be offset by growth, so publishers need to watch how each format is developing and what value they are getting from it. In Sweden, so far, cannibalization has not had a negative effect, but it is something the market continues to monitor closely.

So, in a mature market, publishers need to follow the growth or decline of each format while paying particular attention to profitability in the newer ones.

The audiobook market is developing at very different speeds across countries. When publishers look at mature markets such as the US, UK or the Nordics for clues about what comes next, which lessons are genuinely transferable—and which ones become misleading when applied to markets with different pricing, reading habits, platform structures or levels of audio adoption?

I think the main lesson from the Nordics is that it is worth experimenting carefully, because it can eventually pay off. Publishers there were initially open to selling audiobook rights, then started producing audio themselves, and they were also relatively quick to embrace subscription models. They were willing to try new things — not naively, but while watching how the market developed.

So, the main lesson is that experimentation can work. And here I am talking not only about audio as a format, but particularly about subscription models.

Because the Nordic market is so much more mature than most others, it also gives the rest of the world a chance to observe how these changes affect publishing more broadly.

One clear example is rights. In the beginning, it was relatively common to sell audiobook rights. Today, audio has become so important that publishers are much more likely to keep those rights and publish the audiobooks themselves. And when acquiring rights from foreign publishers, they increasingly want audiobook rights included.

There are also consequences on the creative side. Writers start writing for audio, and that can be quite different from writing for print because the dynamics are different. That can influence commercial fiction significantly, and even literary fiction.

If the easy phase of audiobook growth came from converting more titles into audio and bringing more listeners into the format, where do you see the harder next phase coming from? Is the bigger opportunity in new audiences, new markets, different pricing and subscription models, better discovery—or in rethinking what an audiobook product can actually be?

Carlo: I think we need to understand that audiobook listeners are not the same audience as print readers, and that audio products are not the same thing as recorded print books.

Audio is much more than simply converting print books into audiobooks. Podcasts are proof of that. People are listening to more and more audio that is not necessarily a book, and for listeners, the distinction between an audiobook and a podcast may already matter much less than the publishing industry assumes.

China is an interesting example. There, people tend to think in terms of audio products and hours of content rather than numbers of titles in a catalogue. That suggests that some of the categories we inherited from the print world may not make much sense in audio.

The same applies to the audience. Of course there is overlap, but audiobook listeners are not simply print readers using another format. Audio creates a different experience and can reach a different audience. That is very different from what happened with ebooks, which changed the format without fundamentally changing the reading experience.

So, I think the opportunities ahead will come from understanding both the specific audience for audio and the much broader range of audio products that can exist.

I am particularly interested in seeing how the distinction between audiobooks and podcasts develops, because for consumers that distinction may already be losing its relevance.

If there’s one idea you hope people take away from your session, what would it be?

Carlo: I think the main idea I’d like people to take away is: don’t be afraid of audio, even when it becomes more than 60% of the units sold in a country. And don’t be afraid of subscription, even when it represents more than 98% of revenues.

Sweden shows that this can happen and things can still be okay. Print is still doing well. Audio is simply a very different format — a completely different animal — and its growth can be very positive because it reaches new audiences, including people who may struggle with reading because of dyslexia or simply because they lack time.

The Nordics also show that audio can grow substantially without hurting the overall market, and that subscription can coexist with other formats and business models.

But you have to be careful. You need to understand the economics and how much you are getting for each listen.

So, my message is really: don’t be afraid. Audio can broaden access to content and make consumption more democratic while the market remains healthy.

Go for it — just watch your financial back.