Spotify Offers Audiobook Service

Spotify Technology said it will offer audiobooks starting Tuesday as the streaming giant aims to expand beyond music and podcasts, reports The Wall Street Journal.

Spotify users will be able to purchase and listen to a catalog of more than 300,000 audiobooks from independent authors and major publishers, including titles by horror writer Stephen King, journalist Malcolm Gladwell and romance novelist Abby Jimenez.

The books will be available on a pay-per-download basis, similar to existing audiobook services such as those offered by Apple Inc. and Alphabet Inc.’s Google. While Spotify is known for its user-specific music recommendations—and is working on building that out for podcasts as well—it will make editorially curated recommendations for audiobooks to start. The company said it will work to add algorithmic recommendations, based on the full scope of a user’s listening habits, over time.

Spotify last fall announced its acquisition of global audiobook distributor Findaway, mounting a challenge to the country’s largest audiobook service, Audible, a unit of Amazon.com Inc AMZN.  The deal closed in June.

Spotify will sell its titles at individual prices and said it is setting those prices and negotiating terms directly with publishers. Audible offers a subscription service where users pay a fee to get access to its 760,000 audiobooks and other content, including its own originals. Audible controlled about 48% of U.S. audiobook unit sales for the monthly period ended mid-April, according to book-audience researcher Codex Group LLC.

Spotify’s vice president and head of audiobooks, Nir Zicherman, said the company is exploring different business models, including ad-supported and subscriptions, as well as exclusive titles. Spotify said the offering, launched in the U.S. only on Tuesday, will eventually roll out to other markets.

Spotify, which has been fighting Apple over its in-app purchase policies, said users will be directed to make audiobook purchases via a web browser instead of inside the app—a move that means Apple won’t be taking up to a 30% commission for downloads.

During Spotify’s investor day in June, Chief Executive Daniel Ek highlighted audiobooks as a key expansion area as part of his vision to grow the company to 10 times its current size. Mr. Ek said he believes the overall audiobook market could drive $70 billion in annual revenue, and margins over 40% for the Spotify unit.