Episode 41: Jane Friedman on Spotify Audiobooks and Author Earnings

Jane Friedman is an author with 25 years of experience in the media and publishing industry. She is the co-founder and editor of The Hot Sheet, a paid newsletter about the book publishing industry which was awarded Media Outlet of the Year in 2020 and also offers a free newsletter, Electric Speed, that has more than 25,000 subscribers.

Jane is an avid spokesman in the publishing community. Her expertise has been featured across countless media outlets, including The New York Times, CNN, NPR, and the Washington Post. She joins us on the BookSmarts Podcast to discuss the recent inclusion of audiobooks on Spotify and how that might affect the publishing industry going forward — for better or worse.

To learn more about Jane Friedman, and to subscribe to her newsletters, visit janefriedman.com. You can also follow her on LinkedIn, Instagram, and Facebook.

Transcript

Joshua Tallent
So this week on the Booksmart Podcast, I’m talking with Jane Friedman. Jane Friedman, as I think many of you probably know, is kind of a standard bearer in the publishing world. She’s been in publishing for over 25 years, with expertise and business strategy for authors and publishers. She is the cofounder and editor of the Hot Sheet, which is a paid newsletter for authors and I think an amazing newsletter. I think everyone should subscribe. And she has previously worked for Writer’s Digest, and the Virginia Quarterly Review. Jane, thanks for joining me.

Jane Friedman
A pleasure.

Joshua Tallent
It’s awesome to have you today. So I love the Hot Sheet. I think it’s great. Every two weeks, I’m looking forward to it. I’m like okay, what’s she going to say this time? What’s going on? What’s new? And there’s always interesting articles and discussions and you tend to bring up things that sometimes people are like, this is a massive problem. And sometimes it’s like, oh, this is a really awesome thing. And it’s just really cool to see kind of the back and forth and what’s going on. So a couple of topics, when we were kind of chatting about what to talk about today, a couple of things came up. And I think these are these are all interesting discussions. So let’s start off talking about Spotify. You know, audiobooks, obviously had been a massive change in publishing. In the last couple of years, we’ve seen massive growth in audiobook listening and sales and with all of the subscriptions systems, you know, like Audible. Spotify jumps into it, tell us a little bit about kind of what happened and let’s set the stage for people who may not be following this stuff in detail. And what are kind of the opinions about where Spotify is right now.

Jane Friedman
It’s been known for a long time that Spotify wanted to get into the audiobook space. What’s happened recently for anyone paying attention was not a surprise. We all knew it was coming. They tested the waters, I would say, very gently. This has been at least a year ago, if not a little longer, by opening up just a la carte audiobook sales. They didn’t have any special pricing. There weren’t any discounts if you were a premium Spotify member. It was just another audiobook outlet and I think the hope was, oh, since there are already all these people on Spotify, maybe putting this into their line of sight will generate a bigger audiobook consumer base.

Now, I don’t know if that did but, obviously, Spotify did not want to stop there. That was just kind of the opening salvo. What they really want is what they debuted in November, which is more of what we would consider like a subscription service to audiobooks but not quite. What happens with Spotify is if you’re a premium member, meaning you’re already paying a monthly fee, then you get 15 hours of listening each month, and so that resets, and then you can start over with your 15 hours of consumption. And that’s without paying anything extra. So this is interesting for the audiobook market for one compelling reason, I think, is that it’s really hard to sample audiobooks if you’re a US-based audiobook listener. It’s a little bit different in Europe, I don’t know if we want to get into that. But in the US, if you’re on the audible model, for example, you kind of have to decide each month, if you’ve got your one credit, what’s going to be the credit-worthy audiobook that you’re going to put it on. And people tend to favor the long epic sorts of books.

Joshua Tallent
Get all the value out of that you possibly can.

Jane Friedman
Precisely. Spotify and other companies like Spotify, that are interested in the subscription space, have long argued you’re not really getting all of the potential listeners. You’re not giving people the opportunity to try new things, to dip around. It also disadvantages short books, or children’s books and all sorts of other things that don’t merit the credit. So from that perspective, it is a fascinating thing to try to see if you can increase the size of the audiobook consumer market. Spotify obviously has an enormous audience. Generally speaking, I think people feel like these are people who don’t necessarily read books. They might listen to podcasts, though, and there’s kind of some interesting overlap between those audiences.

Here’s where all the questions lie, in my opinion. There’s a lot of concern about how Spotify pays for this listening. Because you know, if people are skipping around listening to 30 minutes here or two hours there, how do you pay the publishers and, of course, the authors for that? Well, some of this is shrouded in secrecy so we can only kind of speculate and read the tea leaves. But based on mainstream media reports, what Spotify has said, what the Authors Guild has come out with, it appears that if you’re with one of the really major publishers like Penguin Random House, then you’re either getting paid or they’re getting paid every time there’s 100% of a full listen, whether that comes from 20 different people or a single person. That is equating to what would be like a full payout a la audible payout, you know, like a conventional payout. Or the full payout is triggered once a certain threshold is met.

There’s essentially a free sample so people might only listen to 2% or 5% and that might not be enough to trigger the full payout. My guess is it’s probably around 10 to 20%, that triggers the full payout whether or not people continue. Again, there’s so much author anxiety around this because we’ve all seen the headlines about what Spotify pays musicians, right? There’s this deep, deep concern that it’s going to upend earnings for everybody.

However, I’m not scared yet, because I think publishers are actually pretty astute on this. They have been very, very cautious about putting any of their books into subscription models digitally, whether that’s Ebook or audio. They more or less don’t put their books into Kindle Unlimited, the Amazon Ebook program. Penguin Random House, interestingly, wouldn’t allow its audiobooks into subscription programs. This doesn’t include Audible, which I don’t really consider a subscription program. But they won’t put it in Everand, for example, they don’t put it in Storytel. They pulled them all out in 2020 because they thought that the model was bad for for earnings. But they changed their mind when Spotify came to the door. Now, why is that? Well, I have to imagine it’s because they’re getting what they would normally get. I’m just speculating but perhaps there was some sort of signing bonus. I don’t know. But again, I’m not concerned now.

There’s this other overarching question here about will this work? Will this work out for Spotify? And there’s some people who feel like, Oh, absolutely. How could it not work out? I just, I’ve got a lot of skepticism of any companies like Spotify, where they think if only we can build the audience, the profits will eventually come, won’t they? And so because they’re not taking in any extra money for this listening, that I’m aware of, but they have to pay for it as if, you know, they they were receiving money. How does that actually go to their bottom line? I guess they assume they’re going to get more people because of this extra benefit and that will cover the costs, or they expect to renegotiate more favorable terms. I don’t know. But I feel like the jury’s still out on whether or not this is going to work out.

Joshua Tallent
Yeah, this is it’s interesting, too. Because I am a Spotify listener. I have a paid account and I tried out the audiobook thing when it first came out and I have Audible as well. I pay for Audible. I’m gonna go compare and look at the list of to read books in my Audible list of the ones I haven’t bought yet and only a quarter of them were available in the Spotify list. So maybe it’s just the timing. Maybe I went too early, hadn’t made the right connections yet to those publishers. But there’s a difference in availability, I think. It is really interesting to me how they are paying out the full payout. That idea of paying in full payout is not what you would expect, especially with other subscription-based services. Compare it to, you mentioned in Kindle Unlimited, that’s by page basically, right? So it’s a very different model.. You get a percentage of how much it’s worth based on the percentage of the book actually read. I’m sure publishers really appreciate that. They’re getting paid the full payout if you had passed that whatever that percentage is, and maybe that’s even negotiated percentage of free listening. But yeah, it’s an interesting model and it really does make me question how much of this can you get away with, right?

Jane Friedman
Now, I should add the caveat that Spotify says that some publishers or maybe many, because there’s so many publishers out there, of course, that they’re on the pooling model which is what they call the model where you get a percentage of the income that’s coming in. But also it raises the question of percentage of what? You’re not getting extra money here. So I can imagine smaller publishers, university presses, independent houses, etc. Authors too, I might add, if they’re coming through Findaway Voices, which is owned by Spotify, they’re getting the pooling model payments. But for the big books that people are going to want, like the Britney Spears memoir, I have to imagine that as a Big Five big New York House, they’re getting the full payout, because why would they compromise on that?

Joshua Tallent
Exactly. Yeah, that makes sense. Okay, well, that’s an interesting thing. We’ll have to keep an eye on it. I’m really interested to see. Honestly, it’d be great if I could drop my Audible subscription and just pay for Spotify.

Jane Friedman
I have a question for you as a Spotify user, because I’m not and plus you’re an Audible user so this makes it all the more fascinating. I’ve often wondered if the fact that Spotify doesn’t allow you to basically, reaccess that audio book. If you’ve listened to 10 or 15 hours. If you want to listen to it again, you’re gonna have to burn up more hours. And I just, I always thought that some audiobook listeners actually like revisiting some of these books

Joshua Tallent
I have never revisited an audiobook. Actually no, that’s not true. I relistened to Dune recently, because I wanted to do it again for preparation for the new movie coming up. But that’s odd for me. I typically have so many things I want to read. I don’t have time to go back and listen to something I’ve already read before. I guess the other question here, too, is how many hours do you actually listen to an audio book? I think in a general month, I probably would listen to 15 hours or less, for sure, so it fits well. But if you’re a really hardcore listener. I’ve got a guy doing some work on our house right now. And he’s got audiobooks he’s listening to right now. And he’s just constantly listening. I’m sure he goes through a lot more than 15 hours. Maybe there is some repetition there as well. That’s an interesting question. I’m probably not the best person to ask that. But yeah, that’s a good question. So okay, so another topic that I think has come up recently in the Hot Sheet that’s another interesting one for you is author earning surveys. You reported on the Authors Guild, and an author earning survey that they did in 2022. In the past, maybe you’ve been a little critical of those because of kind of predetermined results may be coming out. So tell me a little bit about kind of the history of these Author Guild author earning surveys, and what you’ve seen this latest time around.

Jane Friedman
So the Authors Guild, as well as the Society of Authors in the UK, they tend to run these really broad author earnings surveys that get into a lot of granular detail with royalties especially and just also income from other sources like freelancing, teaching, etc. Historically, the problem with these surveys is that they’re sending them to all of the memberships, sometimes they partner with other organizations to get a different demographic, like self-published authors, for example. But they’re like pulling in people who aren’t even expecting to earn a living from book sales alone or from advances and royalties. So you’re getting all of the, you know, creative writing professors, or journalists or hobbyists, and then they’re coming up with this figure of whether earnings have increased or declined, and there’s not a lot of nuance, let’s say, to whose incomes are increasing or declining. So the latest one that they did. Now, I don’t know if they’ve always had this granular detail or not, but with 2022, they started looking really carefully. Okay, are you traditionally published? Are you self published? Do you consider yourself full time or not? Now, this is a self identification, like they don’t have any quality. They can’t really like qualify and double check on the accuracy. They’re just trusting people to categorize appropriately. They also looked at genre, how many books they had out and a lot of other factors that are really important to determining whether earnings are increasing or not.

Of course, as predicted, or as I would predict, anyway, the top headline for the 2022 survey was “Author Incomes are Declining”. However, I actually had a two hour conversation with Peter Hildick-Smith who actually helps the Authors Guild with this particular survey, creating the questions, figuring out where to send it and then parsing the results. And we looked at the really, really specific, nitty gritty stuff of what if you’re a traditional author of a certain age? What if you’re a self publishing author of a certain age? What if you’re writing in romance? What if you’re writing literary? What if you consider yourself full time or not? And if you start to get into it, actually incomes are increasing for certain types of authors. Self publishing authors, for example, if they’ve released a title within the last year, they have a slightly increased chance of earning more than a traditionally published author. Also, no surprise, romance authors are most likely to see increased earnings, or be making a living. Now, what I thought was really just super interesting was that traditionally published authors outpace self published authors on things that are not book related, which makes total sense, because they kind of have like, the cachet, or the connection.

Joshua Tallent
Or the publicity arm of the publisher helping get it in front of people.

Jane Friedman
Yeah, exactly so they’re able to really get that money stream going from speaking or lectures, whatever. But if you look at the self published authors, it’s almost always about book sales, making the living off of the books. Again, exactly what I would expect, since self publishing authors tend to emphasize putting out rapid releases or publishing to market and making sure that the audience is going to be there when the book releases.

Joshua Tallent
Is the potential difference in royalty also a factor in that as well? I mean, traditionally published author might be getting like, you know, 20% 15% 10% of the total book sales, not 70.

Jane Friedman
Yes, absolutely. So this survey, as far as what I saw, was only measuring dollars. It wasn’t looking at unit sales. I think that is playing a role as well. The other thing that came out of this was Peter Hildick-Smith had some comparisons to the prior survey. This is one of the other issues with the surveys. You’re not necessarily comparing the same cohort over time. Who knows what the mix might be from survey to survey. He did try to make these adjustments, and look at it on an apples to apples basis, and what he found was, if you are one of the top selling authors, at least as the survey might determine, just for the sake of argument, let’s say a John Grisham-like figure, you probably saw your income decline in the last five years, and if you were on the long tail, you probably actually saw a small increase or more opportunity and I think that points to just something that online retail and Amazon and the self-publishing market has brought us which is the ability for anyone to get their work discovered. I think the challenging nature of being a very traditional author who might not be online, who might not have much of a platform of younger authors, and maybe, they don’t care. They’re past the point where they’re gonna go get on Tik Tok, and try and sell more books.

Joshua Tallent
That makes sense. That’s interesting. I’d be really interested to see if they continue the survey in the future, if they keep those cohorts together because that’ll be really interesting to see how those groups over time are able to change. And if they can even keep those numbers, that’ll be something much more detailed, much more interesting. Well, I really appreciate this conversation, Jane. This has been great. I think we were going to potentially talk about balloon books and self pub partnerships and you’re gonna have an article about that in the next Hot Sheet. And what I’d like to do is just tell everybody, go subscribe. Subscribe to the Hot Sheet. Get yourself on that list. It’s a really good newsletter that I think provides a lot of background and a lot of news about what’s really happening in the industry. And from a maybe from a self-published author perspective, or from an author perspective, would you say it’s been kind of focused on that part of the market in some ways?

Jane Friedman
Definitely author focused, and I try to do pretty even mix of self published and traditionally published because I think authors tend to be affected by the same trends and publishers respond to what Self Publishers are doing, as the Blue Books article will show.

Joshua Tallent
Yeah, it’s a great, great opportunity to kind of learn more about what’s going on and I really appreciate that. So Jane, before I let you go, tell people where they can find out more about you and where they can subscribe to the work that you’re doing.

Jane Friedman
Best place to go is my main website. That’s JaneFriedman.com. There, you’re gonna find links to the Hot Sheet and everything else that I offer.

Joshua Tallent
That’s great, and we’ll put a link in the show notes. Thank you so much. I really appreciate you joining me today. And that’s it for this episode of the Booksmarts Podcast. If you like what you’ve heard, please leave a review or rating in Apple or Spotify or wherever you listen to the podcast. And also please share it with your colleagues and friends. If you have a topic suggestions or feedback about the show, you can email me at Joshua@firebrandtech.com. Thanks for joining us and getting smarter about your books.