The Economics of Audiobooks: A Complex Industry

Special thanks to Maria Issaris, Owner & Founder of AudiobooksRadio, for sharing her expert insights on the audiobook publication process.

Audiobooks are exploding...well, not literally, but in adoption and readership numbers. They offer a convenient alternative to reading, expanding literature’s reach to diverse audiences. The economics of creating, distributing, and monetizing audiobooks is as clear as mud. Here is a quick primer on the how and how much of the digital audiobook marketplace.

Producing Audiobooks: Budget vs. Professional Productions

Like everything else, creating an audiobook can be cheap or very pricey. Professional-grade audiobooks use experienced voice actors, specialized sound engineers, and professional studios, driving average costs up to $10,000 for a single book. Factors like book length, talent fees, and post-production editing add to the expense, with professional narrators typically charging anywhere from $150 to $400 per finished hour. High-profile books often employ multiple voice actors or narrators for various characters, increasing both the cost and the complexity.

On the other end, lower-budget productions or AI-narrated options are emerging. With artificial intelligence’s ability to mimic natural voices, there are now cost-effective alternatives that bypass the need for human talent. This option, while more affordable, is still controversial among readers and authors alike, as AI narration lacks the nuanced performance that professional human voices provide. For many publishers, investing in high-quality human narration remains a preferred approach for titles expected to have a broad reach or significant sales potential.

Digital Rights Acquisition and Management

Audiobook publishing includes intricate digital rights management (DRM) to protect the intellectual property of authors and publishers. Unlike physical books, digital audiobooks are almost exclusively distributed under license rather than outright ownership. This DRM layer ensures that audiobooks are protected against unauthorized reproduction, but it also restricts consumers in ways that traditional books do not. These restrictions impact consumer ownership rights, resale possibilities, and cross-platform accessibility, and they contribute to higher prices to compensate for the licensing complexity.

To add to the challenge, digital rights laws vary internationally, requiring publishers to navigate multiple licensing frameworks when distributing audiobooks globally. Ensuring that licenses comply with different national laws requires administrative work and adds another layer of cost to the process.

Distribution Platforms: Audible and Beyond

Audible, owned by Amazon, dominates the audiobook market and charges creators and publishers significant distribution fees. Audible retains up to 60% of revenue on sales from audiobooks created through their platform, which drastically reduces author and publisher earnings. Other platforms, such as Google Play Books and Apple Books, offer alternatives, but Audible’s market share remains substantial.

However, Audible's dominance and pricing model mean that some authors and publishers are exploring independent distribution to maintain control over pricing and royalties. This shift to a more diverse set of platforms may eventually reshape the industry as competition encourages fairer terms for creators, though Audible remains the primary platform due to its wide reach and integration with Amazon’s ecosystem.

Libraries and Educational Licensing

For libraries, acquiring audiobooks often comes at a premium. Unlike print books, which libraries purchase outright, audiobooks are usually licensed under a time-limited or usage-based model. This means libraries often pay higher fees per title and must renew licenses periodically, which can strain library budgets. For example, some publishers offer only limited licenses allowing 24 or fewer checkouts before the library must renew the title’s license. Educational institutions face similar challenges, as their demand for access to audiobooks for learning materials conflicts with publisher licensing models that limit long-term access.

Recent legal debates have questioned these licensing models, as some states have pushed for mandatory licensing rules for libraries. However, federal rulings, such as the case in Maryland, have so far upheld publishers’ rights to set restrictive licensing terms under federal copyright law, creating ongoing tension between access advocates and the publishing industry.

Revenue Generation: Authors, Publishers, and Platforms

In the revenue breakdown of audiobooks, a considerable portion goes to publishers and distribution platforms, with a smaller fraction making its way to authors. Typically, publishers retain up to 70% of the audiobook’s sale price, while authors receive royalties between 10-25%, depending on the agreement. The large cut taken by platforms like Audible further reduces earnings, leading some creators to feel that their compensation is disproportionately low compared to the value they create.

As competition increases, smaller, independent platforms may offer more favorable revenue-sharing models, incentivizing publishers and authors to diversify distribution. The continued dominance of Audible, however, means that authors who wish to maximize reach often feel compelled to accept these high fees as the cost of entry.

Print and Ebook Format Impact

When a book is available in print, ebook, and audiobook formats, its economic model changes. Print and ebooks are less costly to produce and distribute, and they also typically come with more flexible licensing terms. Audiobooks, by comparison, involve high production and distribution costs, which necessitate higher retail prices. However, publishers often bundle these formats together in deals, offering discounts to encourage cross-format sales, which may help offset audiobook production expenses.

Why No Text-to-Voice for Ebook Readers?

Ebook readers generally lack robust text-to-speech features, which some attribute to publisher reluctance to allow AI-generated narration that could compete with paid audiobooks. Legal debates around whether text-to-voice constitutes a new format or is simply a reading aid add to the complexity. Publishers fear that offering free text-to-speech would diminish the value of professionally narrated audiobooks, impacting revenue and diminishing the market for human narration.

As AI advances and the audiobook market grows, balancing user demand for accessibility with the economics of professional production remains a key challenge for the future of digital reading and listening.

An Audiobook Publisher's Checklist

What does it look like to publish an audiobook? Below is a woefully inadequate partial checklist a prospective publisher has to confront just to get content out. It does address advertising, book tours, dealing with talent, contractual and legal representation, and all of the detritus that bedevil today's commercial enterprises.

1. Rights and Licensing for Audiobook Production

Ensuring the proper rights and licensing for an audiobook is essential to avoid legal issues and ensure smooth distribution. Here are key rights considerations for authors, publishers, and producers:

Audio Rights

• Secure Audio Rights: If producing an audiobook from an existing written work, obtain the necessary audio rights from the author or publisher. This includes permission to adapt the written material into an audio format.
• Exclusive vs. Non-Exclusive Rights: Decide whether the audiobook will be distributed exclusively through one platform (e.g., Audible) or across multiple platforms (e.g., Audible, Google Play, Apple Books). Exclusive agreements may offer certain financial incentives, but non-exclusive rights provide broader distribution.
• Regional Licensing: Determine if you need regional or international rights for distributing the audiobook in specific countries. This is particularly important if you intend to release the audiobook worldwide, as rights can vary by region.

Royalty Agreement

• Royalty Structure: Establish a clear royalty structure with the author and other stakeholders, specifying payment terms for audiobook sales or streaming. Royalty agreements should outline how much the author, publisher, narrator, and producer will earn from each sale or listen, and should account for platform-specific differences in royalty rates.

Music and Sound Effects (SFX) Copyright

• Clearance of Music and SFX: Incorporating music or sound effects enhances the audiobook experience, but these elements require careful copyright management. Using copyrighted music or SFX without proper licensing can lead to legal complications and substantial costs.
• Create Custom Audio Elements: Often, it is more cost-effective to commission a composer to create original music or sound effects specifically for the audiobook. This ensures a unique listening experience and simplifies licensing and copyright control.
• Use Open Access or Royalty-Free Libraries: Many sites offer royalty-free or public domain music and sound effects, which are free to use or available for a one-time fee. Platforms like Free Music Archive, YouTube Audio Library, and Freesound provide a range of options that may suit the audiobook’s tone without requiring ongoing royalties or complex licensing.

By securing the proper rights, establishing clear agreements, and handling music and sound effects appropriately, authors and publishers can avoid potential licensing issues and create a smooth path for audiobook production and distribution.

2. Manuscript Preparation

Preparing a manuscript for audiobook production involves adapting the content for audio-only consumption, with special attention to clarity, flow, and engagement. This step ensures the material translates well into a format that’s compelling for listeners. Here are the key aspects of preparing a manuscript for audio:

Editing for Audio

• Review for Readability and Flow: Since audiobooks are listened to rather than read, passages should flow smoothly when spoken aloud. This involves refining complex sentence structures and rephrasing overly dense sections for clarity. The goal is to create a seamless auditory experience that enhances listener engagement.
• Adapt Non-Verbal Content (Diagrams, Pictures, Tables, Pie Charts, Case Studies): For books containing visual elements, it’s crucial to assess the intent of each element and find a way to communicate it effectively in audio form. Rather than simply omitting these elements, consider creatively describing them. For instance:
• Incorporate Audio-Descriptive Techniques: When editing for audio, consider borrowing techniques from audio description, often used in broadcasting for visually impaired listeners. Audio description enhances the listener’s experience by vividly describing essential elements of the content that would otherwise be missed. It adds texture and context to non-verbal content and can keep listeners engaged, particularly in materials like graphic novels or community-focused works.

Content Revisions for Clarity and Engagement

• Modify for Length and Audio Engagement: Not all written content translates effectively into audio. Remove or modify sections that are overly technical, repetitive, or tangential to the main narrative. Long footnotes or endnotes can be rephrased or omitted unless they add significant value to the listener.
• Adapt to Maintain Listener Flow: Some visual novels and graphic novels have a style and rhythm that can translate well into audio when thoughtfully adapted. The process requires capturing the essence of visual storytelling through sound, narrative pacing, and descriptive language.

Clear Copyrighted Material for Audio Use

• Review Quotes, Excerpts, and Other Copyrighted Material: Any copyrighted material, such as lengthy quotes or third-party excerpts, must be cleared for audio use. Audiobooks often require separate licensing for content that’s legally protected, so verify permissions to avoid any legal complications during production.

By carefully adapting non-verbal elements, incorporating audio-descriptive techniques, and ensuring smooth narrative flow, manuscript preparation can transform complex written works into an engaging and accessible audio experience. This approach keeps listeners immersed, allowing them to fully appreciate the content, whether it’s a novel, case study, or graphic novel adaptation.

3. Narration

Narration is a critical element in audiobook production, often making the difference between a successful and an unsuccessful release. Selecting the right narrator(s), establishing clear direction, and ensuring alignment with the book’s tone and style are essential steps in creating a compelling audiobook experience. Research shows that a narrator’s voice and style significantly influence listeners' purchasing decisions, underscoring the importance of this step.

Narration Selection and Performer Direction

• Casting the Narrator: Selecting a narrator with the right voice, skills, and connection to the material is perhaps the most impactful decision in audiobook production. Consider whether the material is best suited to a single narrator or multiple narrators (e.g., a full-cast recording for multi-character scenes). Building a strong relationship with the narrator allows them to capture the energy and essence of the book, which in turn resonates with listeners.
• Narrator Performance and Direction: Providing clear direction is essential for aligning the narration style with the book’s intended tone and emotion. This process may involve discussing character motivations, narrative pacing, and stylistic nuances with the narrator(s). A well-directed narrator can bring out the book’s depth, making the listening experience memorable and authentic.

Narrator Contracts

• Contractual Agreements: Draft a contract that covers payment terms, royalty or residual agreements, and usage rights for the audiobook recording. It’s important to outline expectations regarding retakes, session hours, and exclusivity if applicable, to avoid misunderstandings and ensure the production stays on schedule.
• Rights and Residuals: Specify rights and residuals if the audiobook will be distributed across multiple platforms, or if the narrator is entitled to additional royalties for ongoing sales. Clear agreements support a long-term professional relationship, which can be valuable for future projects.

Recording Style and Tone

• Decide on Style, Tone, and Pace: The chosen style—whether dramatic, conversational, or neutral—should align with the book's genre and tone. For example, a thriller may benefit from a tense, controlled delivery, while a children’s story may work best with an animated, lively tone. Setting expectations for tone and pacing before recording begins ensures the narration fits the book's mood and keeps the listener engaged.
• Promo Clips and Voice Demos: The narrator's tone and style are essential selling points for the audiobook. Promo clips or demos are often the first interaction potential listeners have with the audiobook, so it's crucial to select segments that showcase the narrator’s voice in a way that will attract the target audience. Since research indicates that listeners are less likely to purchase if they dislike the voice or delivery style, these clips should be carefully chosen and recorded to maximize appeal.

By investing in the right narrator selection, performance direction, and recording style, audiobook producers create an engaging experience that captures the listener’s interest. When the narration style aligns with the book’s content and effectively conveys its energy, it can lead to higher listener satisfaction and increased sales.

4. Audio Production

• Recording Studio: Book a studio with professional audio equipment, or set up an equivalent home studio if budget permits.
• Sound Engineering: Hire or assign a sound engineer to manage audio quality, including noise reduction and sound balancing.
• Post-Production Editing: Edit audio files for continuity, remove errors, and optimize sound quality.
• File Formatting: Format files in appropriate quality for each platform (e.g., 192kbps for Audible).

5. Quality Assurance

• Proof-listening: Perform thorough listening sessions to catch any errors, inconsistencies, or mispronunciations.
• Final Approvals: Get final approval from stakeholders (e.g., the author, editor) on the quality and accuracy of the narration.

6. Metadata and Cover Design

• Title, Description, and Keywords: Create engaging metadata to help with discoverability on platforms.
• Cover Art: Design cover art that meets the specific platform requirements (typically square format).
• Copyright and Attribution: Include necessary copyright information, and attribute the narrator and publisher.

7. Digital Rights Management (DRM)

• DRM Implementation: Decide whether to use DRM for added security on audiobook files.
• Platform-Specific DRM: Familiarize with DRM requirements on various platforms like Audible or Apple Books.

8. Distribution Platform Selection

• Platform Agreements: Review and sign agreements with chosen platforms (e.g., Audible, Google Play, Kobo).
• Exclusivity Decisions: Decide if the audiobook will be exclusive to a single platform or available across multiple.
• Distribution Channels: Consider alternative channels like direct sales on a website or independent audiobook services.

9. Marketing and Promotion

• Pre-Launch Strategy: Build hype with teaser clips, social media posts, or author interviews.
• Pricing Strategy: Determine the price for different platforms, keeping in mind royalties and platform fees.
• Promotion on Platform: Use platform tools (e.g., Audible’s “New Releases” feature) for visibility.
• Cross-Promotion: Promote across author’s existing print and ebook channels for readers who may prefer audio.

10. Library and Educational Licensing (Optional)

• Library Distribution: License the audiobook to libraries, typically through services like OverDrive or Hoopla.
• Educational Licensing: Explore licensing to educational institutions, which may involve separate contracts and terms.
• Usage Restrictions: Decide on usage restrictions for library versions, such as the number of allowed checkouts.

11. Revenue and Royalties

• Royalty Splits: Finalize how revenue will be shared among the narrator, publisher, author, and platform.
• Advance Payments: Consider offering advance payments if the audiobook is expected to generate significant revenue.
• Revenue Tracking: Set up systems to track royalties and sales across platforms.

12. Optional Accessibility Features

• Closed Captioning for Accessibility: Consider providing a transcript or closed captions for hearing-impaired users.
• Language or Format Variants: For a broader audience, consider different language versions or abridged editions.

13. Legal Considerations and Compliance

• Content Compliance: Ensure content adheres to platform guidelines and regional laws (e.g., regarding explicit material).
• Author Consent and Copyright: Obtain explicit author consent, especially if alterations were made to the audio format.
• Platform Compliance: Confirm all files meet the technical and legal requirements for each platform.

Audiobook Ownership Kinda Stinks

Audiobook ownership models often fall short providing true ownership, flexibility, and usability for listeners. Here’s a look at the main issues from the listener’s perspective and some potential ways to improve the experience.

1. Restricted Ownership and Access Control

Issue: Unlike physical books or MP3 music downloads, many audiobooks are tied to a specific platform (e.g., Audible, Google Play). These digital rights management (DRM) restrictions mean that listeners don’t truly “own” the audiobooks; they license them. If they switch platforms or discontinue a subscription, they may lose access to their purchased content.

Remediation:

• DRM-Free Audiobook Options: Publishers could offer a DRM-free option that lets users download and store audiobooks as MP3 or FLAC files. Companies could still implement light DRM for subscription or rental models but provide a "full purchase" option for true ownership.
• Cross-Platform Portability: Audiobook providers could work together on an industry standard for audiobook ownership, enabling cross-platform playback. This could involve a licensing system that allows listeners to access their purchased content on multiple platforms, much like how digital movies are handled through services like Movies Anywhere.

2. Limited Access to Bookmarked or Annotated Content

Issue: Audiobooks currently offer minimal options for bookmarking, note-taking, or annotating passages, making it difficult for listeners to review or revisit favorite sections.

Remediation:

• Enhanced Audiobook Apps: Audiobook apps could implement advanced features such as bookmark management, annotation, and highlighting. Syncing these features across devices would make it easier for listeners to capture insights and access them later, similar to the digital experience offered by Kindle e-books.
• Personalized Audiobook Clips: Allow listeners to create short clips of memorable sections and save them to a personalized library within the app. This would let users capture quotes or passages they can review anytime.

3. Lack of Resale, Gifting, or Lending Options

Issue: Physical books offer a tangible item that can be resold, gifted, or lent. Current audiobook licensing doesn’t allow for reselling or gifting, and lending is typically limited, which can be frustrating for those wanting to share an audiobook experience with friends or family.

Remediation:

• Digital Gifting Options: Implement an option for listeners to “gift” audiobooks they’ve purchased by transferring the license to another user. This would mimic the gifting potential of physical media.
• Secondhand Marketplace for Digital Content: Develop a marketplace where users can sell or exchange licensed audiobooks with other listeners. This could be regulated so that ownership is properly transferred, and a small royalty could be given to publishers on each resale, encouraging more flexible use.

4. Dependence on Subscription Models for Ownership Discounts

Issue: Subscription models like Audible’s credit system create value only if users consistently consume audiobooks. However, those who use audiobooks occasionally may find these subscription fees prohibitive, and discounts tied to subscriptions can feel limiting.

Remediation:

• Pay-as-You-Go Pricing Options: Platforms could offer “credit-free” purchasing options that maintain the subscriber discounts or a loyalty program where frequent listeners earn points redeemable toward future purchases.
• Flexible Subscription Plans: Implement low-cost or occasional-listener plans that still grant discounts without requiring a full subscription, appealing to infrequent audiobook listeners.

5. Lack of Audio Customization

Issue: Audiobooks are usually recorded at a fixed pace, tone, and style, which might not suit every listener's preference. There’s minimal flexibility for changing the narration style, such as adjusting speed or voice.

Remediation:

• AI-Driven Narration Customization: Enable listeners to select the pace, tone, or voice style, with AI-generated options that adjust to each listener's preferences. Platforms could offer customization settings within the app to suit different contexts (e.g., faster speed for study mode, slower for leisure).

Audiobook ownership has a long way to go before it services the listenership with the blanket ownership and host of services currently available to print-media consumers. For audiobooks to achieve the market penetration they are poised for, some basic changes have to be made in the pipeline, including ownership rights, and transferability of digital content. Until then, sales remain artificially constrained by historic limitations.

State of the Digital Content Market

1. Audiobooks: Audiobooks currently make up around 10-15% of the total U.S. publishing market, having experienced double-digit growth rates annually over the last decade. In 2023, the U.S. audiobook market generated approximately $2 billion in revenue, a significant increase that reflects growing consumer demand and expanded catalog availability.
2. Print Books: Despite the growth of digital formats, print books remain the largest segment in the publishing market, comprising approximately 60-65% of overall revenue. Although there has been a slight decline in print sales, the segment remains stable, particularly within niche categories like children’s literature, cookbooks, and collector’s editions.
3. E-books: E-books account for about 20-25% of the overall market, with growth leveling off in recent years. E-book sales saw substantial growth initially but have since plateaued as consumers increasingly favor audiobooks over e-reading for digital formats. However, e-books remain a reliable source of revenue for publishers, appealing to dedicated e-readers and those seeking affordability and convenience.

1-Year Projection (2024)

• Audiobooks: Audiobooks are expected to continue growing at a 15% annual rate, with projected revenue reaching approximately $2.3 billion. This growth would increase their market share to around 12-18% of the total publishing market by the end of 2024, driven by innovations such as AI-narration and enhanced catalog offerings.
• Print Books: Print book sales may experience a slight dip but are projected to hold around 55-60% of the market. Print remains the format of choice for many traditional readers, and this loyalty is expected to keep the segment relatively stable in the short term.
• E-books: E-book sales are anticipated to remain flat, maintaining their 20-25% market share. While some growth may occur through bundling e-books with other digital formats, the e-book segment is likely to stay secondary to audiobooks and print.

3-Year Projection (2026)

• Audiobooks: With sustained double-digit growth, the audiobook market in the U.S. is projected to reach around $3 billion by 2026, representing roughly 15-20% of the total market. As the format attracts more listeners and improves in quality and accessibility, audiobooks could become an increasingly mainstream option.
• Print Books: The print segment is expected to see a gradual decline in market share to about 50-55% of total publishing revenue by 2026. As digital formats expand, particularly in categories where print holds less exclusive value, print’s relative share may continue to erode slowly.
• E-books: E-books are likely to hold steady at 20-25% of the market, with a modest resurgence possible if publishers experiment with bundling and improved e-reader technology. The segment remains stable, though unlikely to see significant gains against the more rapidly growing audiobook sector.

5-Year Projection (2029)

• Audiobooks: By 2029, the audiobook segment could comprise nearly 25% of the publishing market, with annual U.S. revenue estimated to exceed $4 billion. This would make audiobooks a major player, particularly appealing to younger generations and those who prioritize multitasking.
• Print Books: Print’s market share is expected to decline to approximately 45-50% by 2029 as digital formats grow. Although print will likely remain important, especially in certain niches, its dominance in the publishing industry may continue to diminish as audiobooks and e-books capture more of the market.
• E-books: E-books may remain around 20% of the market, as they have settled into a niche appealing to specific consumer demographics. As a steady revenue source, e-books will continue to be relevant but secondary to audiobooks and print in terms of overall growth potential.

Audiobooks are poised to play an increasingly dominant role in the publishing market, with the potential to reach 25% of the market share by 2029. This rapid growth suggests that publishers and platforms would benefit from investing in audiobook innovations, such as AI narration and personalized listening experiences. For consumers and publishers alike, the continued rise of audiobooks signals a shift in reading habits, with financial implications favoring those who capitalize on the format's popularity and versatility.

Print books, while still representing a substantial portion of the market, are likely to see a gradual decline in share as digital audio expands. E-books are projected to maintain their existing market position, providing consistent revenue without major growth, as audiobooks emerge as the leading digital format for consumers. Together, these trends outline a future where audio could become a central pillar of the publishing landscape, reshaping revenue distribution across formats.