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An ear for downloads

For Audible CEO Donald Katz, there's money to be made in offering the sounds of "history in the making."

For years, the best-seller list on Audible.com, a Web merchant that sells downloadable audio books and periodicals, was a predictable affair.

You had your high-end thrillers such as "The Da Vinci Code," the hot self-help and business how-to tomes of the moment, and the odd chunk of Tom Clancy and Stephen King.

Those authors have had some curious bedmates lately, however, sharing the list with names such as Condoleezza Rice and Donald Rumsfeld.

Audible began a curious experiment in public service and alternative business promotion early this year by offering free recordings of major testimony from the 9/11 Commission hearings. The downloads were a hit and have prompted further free pieces of history-in-the-making, including top speeches from the Democratic National Convention. Or you can spend $5 and get an unabridged audio version of the 9/11 Commission Report, knocked out by Audible's crew of professional readers in one weekend.

The public service phase has marked an encouraging new chapter for the Web merchant, which launched in 1997 and went through several years of financial hardship before cashing in on the boom in portable digital audio players.

With a rapidly growing customer base, major partners such as Apple Computer, and a continuing decrease in the amount of time the average person has for reading, CEO Donald Katz is feeling pretty good now that he had the right idea all along.

"I was an author for 20 years, and just for the books my friends were writing, I couldn't get to everything," he said. "I realized I could boost my consumption heavily if I took advantage of some of my idle time, and that's how Audible came about."

Katz recently spoke with CNET News.com about public service, the iPod and other matters.

Q: You've expanded the range of what Audible does this year with the free downloads, starting with the 9/11 testimony. What was your thinking behind offering those?
A: What we basically realized when Richard Clarke did his 9/11 testimony was that if our mission is in fact to provide consumers with the most compelling, the most informative audio...then this was something that was particularly dramatic and historically important, to say nothing of creatively evocative. It was the kind of thing that was clearly much too long for a radio station to play. And it seemed like this was the kind of audio Americans should be going home from work listening to on their iPods. We decided to put it up simply as part of our service to the community and our mission.

The New York Times ran a little story saying basically that Audible was offering history in the making...and suddenly we got 100,000 downloads.
At the time, The New York Times ran a little story saying basically that Audible was offering history in the making...and suddenly we got 100,000 downloads, including a lot of people who didn't know about Audible going in.

And did those people stick around and buy paid Audible content?
It was business-efficient in the sense that people were learning about Audible and grateful for us culling this material. We went on to offer the Reagan funeral orations, the Democratic convention speeches, and people really appreciated all of it and stuck with us.

To me, it's an inflection point for the Internet and Audible. Two years ago, we could not give away anything for free. The whole ethic of the Web was that everything should be free, and Audible was always dedicated to the kind of content that people habitually pay for--books, magazines, business information. We always worried that once we gave away audio for free, it was much harder to ever convince someone the other stuff was worth paying for. That's no longer the case now that the Web has matured and there's a pretty clear separation of premium content.

Does this change what Audible is? You're becoming something of an outlet for unfiltered news.
I don't know if I'd call us a news service. Having come out of a journalistic background, I don't see us doing that mission of capturing all things and culling what's real news. I think our mission is a little bit different.

But it's true that there's more to Audible than downloading "The Da Vinci Code." We have 37 different recurrent products that are published by us--print publications like The New York Times, The Wall Street Journal, Scientific American--that you can get periodic audio digests we create. And you can get the major NPR (National Public Radio) programs time-shifted to your listening schedule. That treasure trove of shorter content is probably the underappreciated part of what we do. We're offering people a way to stay profoundly informed on aspects of culture, politics and business.

You've survived at this longer than 99 percent of the Web content pure plays I can think of. What's your secret?
Our secret has been to have a good product and try to make it better every month. So we were able to sustain ourselves as digital audio players have actually become as ubiquitous as we expected they'd be all along. We just never stopped making our service better, as we've reached this inflection point now where iPods, PDAs, smart phones and other audio-capable devices are really reaching a level of ubiquity.

Speaking of iPod, you managed a feat that's escaped a lot of other companies--by getting access to the players and iTunes. How'd you do it, and how important has it been for Audible?
I think it's had a tremendous effect. The iPod is kind of emblematic of the birth of the mobile digital media era. We invented the first digital audio device and brought it to market in 1997. You would have thought that in a year or two, the digital Walkman would have been everywhere because of Moore's Law. That didn't happen, and the iPod became this magical brand opening up people's eyes.

Apple gets dinged sometimes for not partnering in certain spaces, but they've certainly partnered well with us.
Part of it was that we have a level of service and a level of product and a customer base where frankly we just met Apple's standards. Apple gets dinged sometimes for not partnering in certain spaces, but they've certainly partnered well with us. And there's just the fact that Steve Jobs gets literate listening. When we first talked, it was about great spoken performances of books.

Digital rights management has been a pickle for a lot of digital download services. Why did Audible decide to handle that by developing its own file format?
When we started working on this in 1995, digital rights management wasn't even in the lexicon. Neither was MP3. We did it because I made my living through my writing for 20 years, and I saw this as a tremendous channel for distribution for the creative class. But it probably couldn't exist if there wasn't some way to have people pay for the content. We invented it out of necessity.

We just always figured we'd need to invent on behalf of the consumer as well as the intellectual-property rights holder. The Audible format made that content much more usable than some of the DRM schemes invented by music rights holders who didn't really ever want this to happen. We were always ready to adopt a superior platform; it's just that no one ever made one.

Is your main challenge now a behavioral one--getting people to think about their gadget of choice as more than a music player?
Communicating to the people getting these devices is a classic challenge, and we're attacking that in a lot of ways. Devices coming out from Rio and Creative come with all sorts of Audible offers; we have deals with retailers like Amazon.

Once you can engage people enough to ask a basic question--Do you have enough time to read everything you want to read?--it's a pretty quick sell. Everybody says "no." Everybody has aspirations to consume more than they have time for. Then the testimonials of Audible customers knocking off three or four books a month, simply because they use the time they're stuck in traffic or working out on a StairMaster, pretty much seals the case.

Speech synthesis technology keeps improving--do you worry about there being a time when people won't need to pay for someone to read The New York Times to them, because a machine will do it for them?
I'm as much of a futurist as anyone when it comes to having faith in technology moving forward, but I can't think of any technology that's advanced slower than text-to-speech technology. From a consumer standpoint, the difference between DecTalk, which came out something like 19 years ago, and the latest technology is very small. It's very complicated technology, and you need massive processing power to get anything like a reading experience that's palatable for more than very short periods of time.

One last question I have to ask, even though it's in your FAQ. Why no Harry Potter books?
Five years ago, the issue was that we had no Tom Clancy. It's just a process with certain big authors you have to work on. I'm always hopeful. But in that particular case, there are some fears of technology that we need to keep working to address. In this realm, Harry Potter is about the only thing you see significantly pirated. The rest of the stuff, people are really happy to get from us.

I hear Steve Jobs saying what I've been saying for a long time, which is that the realm of piracy will diminish most profoundly when the consumer perceives a great product at great prices from good people with well-meaning aspirations. There's a real relationship between the content offered by services like iTunes and Audible and the diminishing piracy in those areas.