How Audible Shortchanges Authors and Reaps Obscene Profits at Rights Holders Expense
Audible uses the same business model as its parent company, Amazon. The low prices consumers get don’t come from Amazon or Audible. The savings come from the squeeze they apply to suppliers. In the Audible store, the content suppliers are the people who write the books and, in the case of royalty share arrangements, the authors plus the narrator producers who narrate the audiobooks.
No matter what price an audiobook sells for, regardless of whether it is returned for a refund, Audible keeps the membership fees it collects.
Ever wonder how many audiobooks you must sell to earn $100?
The answer: lots and lots of them.
Audible prices an 8-hour audiobook at $19.95 – at least for those books produced through the Audiobook Exchange Platform (ACX). It applies different—and preferential—treatment for other audiobooks, such as those produced by its own audiobook imprint, Audible Originals, or those from its sister company, Brilliance Audio, which is yet another Amazon subsidiary.
But most audiobooks reach Audible through its own ACX channel. For these audiobooks, how much of that $19.95 does an author get? If you’ve read my earlier posts then you already know the answer isn’t pretty. It’s $2.59, provided the book isn’t returned for a full refund (in which case the author gets $0), or it isn’t deep-discounted to $4.95 by Audible (in which case the author gets much less than that, $0.64 cents). You’ll also get less if it is an audiobook Whispersync sale on Amazon. Audible keeps most of the proceeds, which they claim is 75% but it’s really 87%. That’s a huge fee for a digital product requiring no storage space, zero upfront investment, and little to no work on their end.
If the author distributes “exclusive”, that means that the author is contractually obligated by Audible to keep their audiobook off any other store other than Audible, which includes Audible’s strange distribution arrangement with its competitor, Apple. That anticompetitive arrangement exists only outside of the EU, because the EU banned this Audible/Apple antitrust behavior in 2017. Yet in the U.S. it is legal. The author gets to keep the grand sum of $4.15, or 21% when they agree to keep their audiobook out of all other stores, libraries, and subscription services. Audible claims their fee is 60% for this, but it’s actually 79%.
Yes, that is messy math. If you haven’t already read my post, Audible’s Messy Math, you’ll want to read it. But first, here’s how many audiobooks you need to sell to make $100, whether on Audible or elsewhere. These are based on the nonexclusive distribution option at Audible (because why should one store prevent us from selling on other stores in the first place?)
You need to sell 39 audiobooks to make $100 on Audible.
You need to sell 10 or 11 audiobooks to make $100 on the other audiobook major audiobook stores, like Apple, Google Play, Nook Audio, and Overdrive (the library channel). True, their fees aren’t exactly great either. It would be nice if one or more of them offered authors a better deal. After all, authors provide and pay for 100% of the thousands it costs to create one audiobook. If other stores sweetened the deal, maybe that would encourage more authors to distribute wide.
Aside from that, the other stores pay approximately 4 times better than Audible.
The other stores don’t allow customers to listen and return audiobooks for a full refund. In fact, Amazon doesn't even allow this for its video content. Yet Audible actively encourages it, except we have no idea how many returns because Audible still doesn’t tell us. They’ve recently introduced something called “qualified returns”, but exactly what that includes and excludes isn’t clear. We are still waiting for Audible to break out total returns, plus the returns by each sales category as we have repeatedly demanded. That would be so easy to do. Unless they have something to hide.
Audible listeners will just change their buying behavior to return within the 7-day window, and authors will still have those returns clawed back from their earnings. Meanwhile, Audible collects its membership revenue, month after month, year after year.
True, you say. But Audible has cornered the market on audiobooks to the point that it’s now a monopoly. It's futile to argue. Besides, you reason, what you lose in price you will make up in volume.
How did they corner the market exactly?
It was us.
We provided the content.
We drove the listeners to their store.
We put up with their onerous contracts, their misleading promises, and their dismissive, abusive treatment that worsens by the day.
The end result is our decreased earnings, which are just the start of the Amazon-style supplier squeeze that is happening to us authors and rights-holders now.
Oh, right. I forgot about that temporary 5% increase in December 2020. I forgot about that yuletide generosity because 5% of nothing, is nothing but an empty gesture.
Audible isn’t the only game in town. But soon it could be, as it tightens its grip on monopoly.
Enjoy your 13%, because it won’t last forever.
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Colleen Cross Bio
Colleen Cross writes financial thrillers and white-collar true crime, drawn from her background in forensic accounting and fraud investigation. She is a CPA with CFO/finance executive experience at large multinational corporations. She follows the money to find the truth. www.colleencross.com
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