In an effort to expand beyond music, Spotify has been investing hundreds of millions to build out its podcasts business. Now the company has set its sights on another form of audio, with today's acquisition of digital audiobook distributor Findaway.
Spotify declined to share the financial terms of the deal, which is expected to close in the fourth quarter of 2021, subject to regulatory review and approval.
Founded in 2004, Findaway's core focus has been on bringing more audiobooks to listeners worldwide.
It today operates a collection of brands and products led by its large audiobook distribution business that connects content creators with reseller partners like Apple, Google, Scribd, Audible, Nook, Rakuten Kobo, Chirp, Storytel (a Spotify partner), Overdrive, Audiobooks.com and dozens of other global brands.
Other brands under the Findaway umbrella include Findaway Voices, which connects authors with professional narrators; Audioworks, which sees the company producing audio for top publishers; Playaway, which brings preloaded audiobook products to libraries and schools; Orange Sky Audio, which works to bring a more diversified audio catalog to listeners; and AudioEngine, which offers tools and technology that allow developers to integrate a broad catalog of audiobooks into their own platforms.
Spotify is bringing in Findaway's full team of around 150, it says, and then plans to build on Findaway's existing investments in the audio industry. It also plans to bring expanded access to audiobooks to Spotify's 381 million monthly active users.
"With this acquisition, the plan is to accelerate into the audiobooks space by expanding our platform," said Nir Zicherman, Spotify's head of Audiobooks. He explained that today, Spotify users tend to go to other platforms to access audiobooks, and it wants to enable that consumption to take place with Spotify's app itself. Initially, that may see Spotify users leveraging the company's new Open Access Platform technology (OAP) to authenticate with existing credentials to access audiobooks from Findaway and other audiobook partners, like Storytel.
More broadly, however, OAP offers the flexibility for publishers to determine how their content is sold that works with their own business models, meaning they may introduce a variety of new ways consumers could unlock and listen to audiobook content on Spotify going forward.
The first integrations of OAP are expected to arrive early next year, said Spotify.
"As an industry, we think there's massive potential and growth ahead for audiobooks," Zicherman noted. "Combining Spotify and Findaway and their amazing team and their amazing tech, the idea is to realize that future faster than we ever could as separate companies."
According to research estimates, the audiobook industry is expected to grow from $3.3 billion as of 2020 to $15 billion by 2027, which is why Spotify believes Findaway is worth the investment. The company also noted that it sees the Findaway deal as the beginning of its ambitions in the audiobooks space, so it may choose to expand the team further in the future.
Spotify plans to have Findaway continue to run its various brands and services much as it does today, with the same staff and partners, operating from its Cleveland-area headquarters. This approach is similar to how Spotify handled its acquisition of podcast creation platform Anchor, which continued to offer distribution to other platforms -- including Spotify's competition.
The company has signaled its interest in audiobooks ahead of today's announcement. In January, it began testing the format with a handful of classics, like “Frankenstein,” “Jane Eyre,” “Persuasion” and others, narrated by celebs. It had also previously offered the first “Harry Potter” book with chapters narrated by stars like Daniel Radcliffe, David Beckham and Dakota Fanning.
And in May, it announced a partnership with audiobooks platform Storytel to allow Spotify users to access their audiobooks through Spotify's app, also powered by OAP. (The company wouldn't say if the deal with Findaway grew out of similar partnership discussions, but that seems a likely possibility.)
Today's acquisition doesn't signal a shift away from Spotify's commitment to podcasts in order to chase a new area of audio investment, we're told.
"Podcasts will remain a critical part of our focus as a business," said Zicherman. "This is an expansion into a new content type that we know our consumers want, and, in many cases, are already listening to. We want to bring that on platform so they can enjoy it on Spotify, as well."