Spotify is changing from an all-you-can-eat smorgasbord to a place where you need to pay extra for some items on the menu.
On Tuesday, Spotify launched audiobooks for purchase in the US. Listeners can browse a library of 300,000 titles from publishers large and small in a new audiobooks hub, as well as in Spotify searches.
But unlike music or podcasts, Audiobook titles have a lock icon next to them.
Spotify will ask you to pay up each time you want to listen to an audiobook. After an unspecified free preview, you'll need to click a link directing you out of Spotify's app to its transactional website. There, you'll purchase the title upfront, regardless of whether you're aor you listen to Spotify free with ads. Spotify didn't respond to messages seeking specifics about free previews, publishers involved and other details.
The move broadens Spotify beyond tunes to yet another variety of audio. As culture at large has shifted to streaming as the most common way people listen to music, Spotify has emerged as the world's dominant music service, with 433 million total listeners worldwide.
For the last three years, it has aggressively expanded into podcasts, reframing itself as the world's go-to service for audio more broadly.
Audiobook streaming is the next frontier in Spotify's quest to be your go-to place for all kinds of audio.
The format, though less popular than music and podcasts in the US, is growing. Audiobook revenue for publishers increased 25% last year to $1.6 billion, according to the Audio Publishers Association trade group. In the last decade, the number of audiobooks has exploded: The APA counted 73,898 titles published last year, more than 10 times the number of titles in 2011.
Despite the hype around live audio chatrooms like Clubhouse during the pandemic, audiobooks are far more popular, according to market research company Forrester.
"We believe that audiobooks in their many different forms will be a massive opportunity," Spotify CEO Daniel Ek said in June to investors and analysts. "Just as we've done in podcasting, expect us to play to win."
Amazon's Audible, the market leader in audiobooks, is the player Spotify must beat to win. In August 2020, Audible rolled out a cheaper subscription plan, a shot over the bow of Spotify, and it has spent much of the last few years widening its own catalog to include a selection of more 8,000 podcast-like originals and other programming, sometimes unrelated to books.
With Spotify's launch Tuesday, the two are racing to dominate audio beyond music.
But in widening to audiobooks, Spotify is making the biggest change to how you must pay to listen. Spotify's catalog of music and podcasts has been an all-access playground for a decade.
Even the person spearheading the audiobooks initiative has "gated content" in his title.
"We want to be the company that brings audiobooks into the future," Nir Zicherman, Spotify's global head of audiobooks and gated content, said in a press briefing about the launch Monday. One area that's "ripe for innovation" is the business model of audiobooks, he said.
Instead of innovating the model at launch, Spotify is rolling out the most traditional one there is, what's known as a la carte purchases. Spotify chose that as he first step because it's the "best way to begin activating audiobooks and learning from how people interact" with them, he said.
Audiobooks brings Spotify into individual title purchases -- essentially, opening a store and asking you to pay title by title, or a la carte. Spotify didn't provide any pricing specifics for the audiobook titles.
Spotify's tradition for years has been an open catalog that users could hear nearly without limits. Premium subscriptions strip out ads and include other perks, like downloads, but on the whole, the library hasn't had any restricted sections.
Paywalls on Spotify have some precedent, but they're rare. In 2017, music labels renegotiated their licenses with Spotify to include a clause giving them and artists the option to make a new album available only to Spotify's paying subscribers for two weeks. (Singles needed to be available to all Spotify listeners.) But it was unusual for artists or labels to actually do that. Even artists like in protest for how it compensates artists, now make their music available widely on Spotify without limit.
Spotify has also begun an initial run of selling concert tickets directly, also by linking out from its app to a transaction website.
But a la carte purchases are the main way people pay for audiobooks in the US, while subscriptions are the standard internationally. And while podcasts on Spotify and elsewhere can be free for listeners because of revenue from advertising, sponsorship and other forms of making money, audiobooks come from a history of being sold in the way as regular books.
Audiobooks "have been successful on that model for 20 years," said Michele Cobb, executive director of the Audio Publishers Association. Podcasts entered as a free product, and they have been dipping into a variety of models as the industry developed. But ultimately, both of them are creatively similar.
"If you listen to a short segment with no advertising, [it] could be impossible to distinguish" between podcasts and audiobooks, she added. "It's not a surprise that they would explore each other's models as they figure out how to exist in the same spaces."
Spotify newest innovation is the way you pay for it, but you're the one footing the bill.