Why aren't online audio books more popular?

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June 13, 2000
Web posted at: 8:42 a.m. EDT (1242 GMT)

by Jennifer Greenstein

(IDG) -- Comedian Robin Williams plopped into the chair next to Tonight Show host Jay Leno one night in April to talk about his latest gig. "It's Audible-dot-com," Williams explained slowly. "It's a different show [every week], made for the Web, for people to download, and you can load that on your computer, and from there load it to an MP3 player," he explained to a befuddled Leno.

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He finally hit on a description that made sense to his host: "It's basically radio," he said of the project, a weekly half-hour of Williams' humor and observations designed to lure listeners to Audible's 22,000 hours of audio content. "Radio!" replied Leno, brightening. "Now I understand."

The back-and-forth banter between Williams and Leno illustrates what makes spoken-word audio on the Web so promising -- and so frustrating. The concept of downloadable audio shows and books is still foreign to the general public. Thanks to the MP3 craze, "most kids are very comfortable" downloading files, says Williams. "But adults are like, 'Owww, I can't do this!'"

The Internet is in many ways a natural fit for audio books, a low-profile but growing sector of the book business. But books aren't the only spoken-word fodder: sites like Audible are offering series like Robin Williams' project, newspaper articles and author interviews. But so far, spoken-word digital audio remains a nascent field. Besides Audible, which has been offering audio books for download since 1997, MediaBay.com, Audiohighway.com, Voquette and MP3Lit.com have staked out a claim. When Audible struck alliances this year with two of the biggest forces in the book business, it signaled a major leap forward for the fledgling field of digital audio books.

Audio books are an expanding business, with estimated sales of about $2 billion in 1998, up 10 percent from the previous year, according to the Audio Publishers Association. The Internet is expected to turbocharge that growth. Publishing on the Web saves manufacturing, storing and shipping costs, which ultimately means lower prices for consumers. And publishers can instantly change prices in response to the market. Downloadable books also solve one of the industry's biggest headaches: returns. Bookstores now send unsold stock back to the publisher for full refunds. But if there's no stock, there are no returns.

Because these sites have licensing deals with traditional audio publishers, they have titles you'd actually want to hear. On Audible, listeners can hear bestsellers like Frank McCourt's Angela's Ashes, John Grisham's The Brethren and Mary Higgins Clark's We'll Meet Again. MP3Lit has excerpts from Toni Morrison's The Bluest Eye (a recent Oprah Book Club selection) and Dave Barry's Dave Barry Turns 50.

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Audible, which attracted a $5 million investment from Microsoft, last month paired up with the nation's biggest trade publisher, Random House, to create an Internet-only imprint for audio books. Audible also forged a deal to become Amazon's exclusive supplier of downloadable audio books. (Amazon paid about $20 million for a 5 percent stake in Audible, while Audible will hand over $30 million for advertising and promotion on Amazon's site.) Audible claims only 18,300 customers -- but that number has increased more than 40 percent in each of the last two quarters. And besides its splashiest offering, the Robin Williams project, Audible has supplemented its books with content: stories from the Wall Street Journal and Forbes, National Public Radio programs like "Marketplace" and "Car Talk," and excerpts from industry and company reports by J.P. Morgan. (Audible's offerings also include content from The Standard.) Revenues are still small, about $500,000 in the first quarter of this year, but the company raised $33.5 million in its July 1999 IPO.

Rival MediaBay, founded in 1993 as a direct-mail audio book club, jumped into the digital download market early this year. The site, which is rapidly adding to the 3,000 hours of content it currently sells, is trying to entice listeners with digital excerpts from Time and People ($1 per article) and daily horoscopes (free). "Downloads are a big area of opportunity and focus," says MediaBay CEO Michael Herrick. "We expect it to be a very large portion of our business in the very near future." MediaBay has a powerful asset: 2.3 million customers who could conceivably switch to the Internet instead of ordering audio books by mail. MediaBay has just agreed to become the exclusive provider of spoken-word content for Voquette, a directory of audio on the Web, which should boost traffic to the MediaBay site (and its sister site, Audiobookclub.com). Voquette and MediaBay would split the revenue their cobranded site generates.

Audiohighway.com offers digital audio books for free -- with consumers getting a dose of advertising with every download. Customers typically hear about 8 minutes of advertising during a 2-hour book. The site offers 1,000 hours of spoken-word audio for download, in addition to its music. But COO Grant Jasmin says ad sales have so far been disappointing: "Advertisers understand radio. They don't understand audio on the Web yet."

Upstart MP3Lit sees itself as "the antithesis of status quo audio publishing," says CEO Gary Hustwit. The site gives away five minute to 15 minute doses of fiction, poetry, essays and interviews from established authors like John Grisham and Maya Angelou as well as lesser known artists like DJ Spooky. Salon paid $5 million for MP3Lit in May. "We're producing books that [MP3] users want to listen to," says Hustwit, which could prove to be a smart way to introduce audio content to an audience already comfortable downloading from the Web. Most of the site's visitors are between the ages of 18 and 35, a demographic that has not traditionally been the core audience for audio books. MP3Lit's e-commerce arm, LoudBooks.com, launches this summer.

The biggest drawback to digital spoken-word audio content is that customers need special equipment and computer savvy to listen. Three percent of U.S. households own an MP3 player, according to Forrester Research, and pocket PCs are growing in popularity, but both are still a far cry from reaching the penetration of cassette and CD players. Downloading spoken-word audio files can be time-consuming. A four-and-a-half-hour version of Angela's Ashes takes more than an hour to download from Audible using a 28.8Kbps modem.

Some publishers see sound quality as a major hurdle. Maja Thomas, executive director of Time Warner Audio Books, says, "I have listened to clips on the Web, and I have not been impressed by the quality." Time Warner is considering offering audio books on its new Net-only imprint, iPublish, which launches next year. (Simon & Schuster's audio division is taking a wait-and-see posture.)

What the Internet offers is access to new customers who are comfortable with the technology. More than 75 percent of Audible's customers say they hadn't bought an audio book before. Whether current fans of audio books will move to the Internet is an open question. An industry survey found the average age of audio-book fans is 43 -- not the most tech-savvy demographic. Craig Black, publisher of Blackstone Audio Books, says few of his customers have shown an interest in downloads. "It's going to take some time," says Black, who will be offering 50 titles for download next year. "It might take eight to 10 years before we see more than 50 percent of sales on the Internet."

Williams sees the potential for spoken-word audio -- as well as its uncertainty. "This is kind of an experiment, like everything else on the Web," says Williams, who likes to riff on the fact that Audible paid him in stock options. "Having equity in an Internet company, it's like having Confederate currency," he says. Its value depends on who wins the war.

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