The site has more details in other articles. They're not worth reading. There's no substance just a lot of charged language. And I'm really annoyed at spending any time at all on reading this.
The narrators don't get paid by the retail price (and the contract doesn't suggest they would). Basically Audible splits the money spent on credits among the books that the credits were spent on in proportion to the number of credits spent on that book, but weighted by the retail price. I.e. a credit spent on a long expensive book pays the narrator more than the same credit spent on a medium length book, even though the credit cost the same to customer.
There's an undocumented revenue floor for price tranche of books. If the revenues per copy would end up lower than the floor in a billing period due to e.g. some promotion that flooded the economy with cheap credits, Audible makes up the difference and pays the narrator at least that minimum amount per copy. Apparently that floor is being hit every time, i.e. Audible is paying them more than they are actually required by the contract. The author thinks this is a smoking gun that proves how they're being cheated, which is an odd take.
Since the credits are far cheaper than the retail prices, it should hardly be surprising that the effective sales price is cheaper than the retail price.
> there's no substance just a lot of charged language.
Yeah, this was my issue with all I could find so far. It seems like 'working as designed'. Perhaps those who publish on audible would like to be able to opt in or out of various sales/credits etc but as a customer I prefer that I can get anything with a credit.
> Basically Audible splits the money spent on credits among the books that the credits were spent on, except weighted by the retail price
Is that all credits in the system (similar to how Spotify was weighting streaming subscriptions (to my understanding)), or per user. I would prefer the money from my credits to go to the books I purchase, not be weighted with purchases by all other users.
The only funky thing is that IIUC the computation of the total income across the whole system is done based on credits sold that month, rather than deferring the income from selling a credit to the month in which the credit is spent.
That funky thing sounds like it would work in authors' favor overall. I would guess there's some percent of credits that are sold but never used. So if Amazon only paid on on used credits, Amazon would be able to keep that money. If Amazon pays out on sold credits, the authors get it. Although the distribution between the authors can be wrong, leading to some individual authors losing out even if authors overall benefit.
Although if Amazon is always paying out some contractual minimum instead of the shared amount, then none of this makes a difference.
I wonder if authors are the ones who pay for the free Audible subscriptions that American Express Platinum card holders get now?
There is a huge a “Hollywood accounting” problem that never really went away (it’s how Warner Brothers markets HBO Max for free, how bands on major labels & even indies never recoup, and now possibly know how Amazon grows audible at no cost to themselves).
Audible is specifically a service where you can get one book per month by paying $15 per month. If you want to sell your book for $50, then you should probably list it somewhere that all sales are for $50. Presumably this author thinks it is worth listing his book on Audible vs. the other ways he could sell it. Alternatively he might just not be very good at math or reading contracts.
It seems pretty surprising to me. When the supermarket offers a discount, they don't then turn to their providers and say "since we sold this at a discount, we're going to pay you less for it".
The terms on which Amazon want to offer Audiobooks are their business, but as I consumer I certainly wouldn't expect them to affect any downline incomes.
> When the supermarket offers a discount, they don't then turn to their providers and say "since we sold this at a discount,
Yes, they do actually. They organize sales and have temporary reduced prices sold to customers and paid to suppliers. That’s why some cereals go on sale and others don’t. It’s not like they decide to take a loss only on Kelloggs cereal. The discount is because they pay less to manufacturers.
Similarly for audible, the contract stipulates this. So I think it would be wrong if Audible unilaterally decided to not pay authors. But they didn’t do that, they have a contract, signed by authors that lets them put books on sale and pay less.
> When the supermarket offers a discount, they don't then turn to their providers and say "since we sold this at a discount, we're going to pay you less for it".
No, they negotiate those things ahead of time. It does t matter though, as there’s a huge difference between an item that is infinitely reproducible and a commodity that has per-unit production costs.
Nah, I disagree with you there. I don't think the nature of the product being sold affects my opinion or expectation of whether or not producers are expected to shoulder the cost of a discount given by a middleman.
For the record, I also disagree with your blanket claim that supermarket discounts are negotiated ahead of time. Some are.
> they don't then turn to their providers and say "since we sold this at a discount, we're going to pay you less for it".
Not necessarily because of sales, but one of my parents' neighbours (he was previously a fairly senior guy at a flour manufacturer) spoke from experience of big supermarket retailers "renegotiating" unit price after the fact (and after delaying payment until duress) under the threat of removing all their products from sale if they don't accept.
Aldi has such a good relationship with suppliers, because--despite driving rather hard bargains up front--they do stick to what they agreed to pay and don't pull shenanigans.
> Apparently that floor is being hit every time, i.e. Audible is paying them more than they are actually required by the contract. The author thinks this is a smoking gun that proves how they're being cheated, which is an odd take.
You think it is fair that Amazon sets an arbitrary low price, and then makes the authors take the cost. That's an odder take. If Amazon wants to sell their tokens at price X, have a campaign or whatever, that's a cost they should take. Not just dictate what the price should be and pay royalties based on that.
And why shouldn't Audible set the price? No one signed up as a creator on Audible thinking they'd get let out of the credits system. That system is Audible's business model. It's how they sell so many books.
I've bought many audiobooks for one credit that I never would have bought at list price. Most creators' net revenue from me would be zero if I had to pay the full list price.
If you want to sell your book for $25, then putting it on a site where people get one book per month for $15 is stupid. They are literally agreeing to sell it for less than the list price in order to have access to Audible's customer base--many of whom are there specifically as subscribers to get one book for $15 per month.
Without having read the whole page, I understand form your summary that:
A) amazon alone decides when to float credits and their price
B) authors are promised a certain rate (40%) of the price, but in reality this credit system destroys that %% completely
C) in the end amazon makes always a >60% profit off each book, irrespective of the price sold.
D) Their incentive is thus to sell as many units as they can, underprice all competitors with cheap credits, and overall corner the market to make sure producers can't get around them.
Total monopolistic practices with abuse of market power. In a competitive environment no producer would accept this.
> Total monopolistic practices with abuse of market power. In a competitive environment no producer would accept this.
Hasn't Audible's business model been basically unchanged since its inception? Everyone who puts their books on their knows the price of a credit, which is normally like $15, and so knows they'd get at best $6 per book sold on there. How would Audible become a monopoly if people didn't like those odds?
Furthermore, I don't see much of a "moat" here. Suppose there was a company called BetterBooks, which had the same business model and price per credit, but gave 60% commission instead of 40%. If publishers were genuinely unhappy with $6/book, they could list it on BetterBooks and get $9/book instead. The quality of books on Audible would drop, and nobody would buy them.
Their existing market power means that by not being on audible you’re walking away from most of your potential readers. That bit doesnt seem too bad…
But then - they offer you a very low percentage if you sell your book anywhere else… and a not so terrible % if you go with them (not great, but not terrible).
For an individual seller it is worth taking that deal. So they do. But the consequence is that no other market can achieve comparable power.
Hence it’s an abuse of market power. Individual publishers choices won’t stop it- only government intervention. And further it would need to have international cooperation.
Which also explains why they’re lazy about fixing trivial temporary errors whether they are gaining or losing money — they own the market, and don’t need to worries about pennies.
> But then - they offer you a very low percentage if you sell your book anywhere else… and a not so terrible % if you go with them (not great, but not terrible).
Audible's network effects can only be dislodged by people not listing their books on Audible at all; so this shouldn't have much of an effect.
> For an individual seller it is worth taking that deal. So they do. But the consequence is that no other market can achieve comparable power.
Right; so the approach would be for BetterBooks, before launch, to talk privately to a large number of publishers, with an offer like, "You agree to drop Audible and only go with us for 3 years, if we can get 60% of publishers to agree to do the same." If Audible's deal is really as horrible as this person is making out, it should be easy for any individual publisher to agree to that; and easy to get 60% of publishers on board. Then when BetterBooks launches, they have loads of great titles which Audible is lacking.
> Audible's network effects can only be dislodged by people not listing their books on Audible at all; so this shouldn't have much of an effect.
This isn’t quite right and misses most of what’s going on.
Since a book that’s exclusive to A can’t appear on B - B can never get any network effects and thus can’t compete with A.
And if B did begin to get any network effects - through an innovative technique ( Eg when book depository made ground by offering free shipping) — A would take notice and simply buy B before it was a big enough threat.
Hence again - individuals and normal market forces can’t displace an established monopolist.
> Since a book that’s exclusive to A can’t appear on B - B can never get any network effects and thus can’t compete with A.
Indeed, and it should probably be illegal for a company with a monopoly to buy exclusivity as Amazon is doing. But even if the Justice Department took interest and Audible switched to (say) 35% across the board, that wouldn't by itself be enough to dislodge Audible's network effects.
That's why I described a plan of attack which wouldn't involve the Justice Department: Rather than starting B and asking publishers to list on both A and B, start B and ask publishers to list only on B (or at least, not on A). That would jump-start the network effects on B.
It would require publishers to accept lower profits for a few years while B was getting established and A lost brand; but if the pricing really rises to the level of abusive (as opposed to just less than they think is fair), publishers should be willing to do that.
> And if B did begin to get any network effects - through an innovative technique ( Eg when book depository made ground by offering free shipping) — A would take notice and simply buy B before it was a big enough threat.
Well yes, which is why such acquisitions should be prevented.
Ok I think we’re agreement on some fundamentals here about market manipulation and monopolies etc.
Regarding your idea of a scheme to sneak up on and out-fox the market leader… by simply enacting a secret conspiracy amongst a quorum of suppliers:
I do love and admire the idea, I think it’s good stuff and could for example be an interesting movie.
(Actually- one with a similar plot was filmed in my home town when I was a child- some minor prospectors set up an arbitrage situation that turned a monopolistic evil gem dealer against himself… great stuff, and the mayor of my home town got a cameo in one scene).
Bit in reality - outside of fiction - as an actual serious method for unseating a monopoly, I don’t think the shot is even on the board. I don’t know enough laws to see which ones it would break, but I expect there are dozens. But without pondering legalities, fundamentally I see it failing because the conspiracy, among competing suppliers, is effectively a non-iterated prisoners dilemma. It’s better for any semi popular author/publisher to rat on the conspirators and secure a higher exclusive deal from A, than to be online with the B group.
But the first problem is that to fulfill the claim that the existence of such a remote possibility demonstrates that there is “not much of moat” is where I think it really falls down. If you have a technique for achieving a coup like this without getting out the wallet, then please by all means prove me wrong and simply step forward and achieve this scheme. Schemes that have the predicate “If only and not until everyone agrees to do “X” then it would benefit us all” - is generally not sufficient all by itself to bring about the agreement. It takes capital and lots of it.
if it was easy as you say… it would take a massive investment - and that’s a demonstration of a moat right there.
But it wouldn’t be that easy - because Amazon can afford to give better deals to the top 1% of popular authors and thus the cost to achieve what you’re saying would be far higher.
> A) amazon alone decides when to float credits and their price
Yes.
> B) authors are promised a certain rate (40%) of the price, but in reality this credit system destroys that %% completely
No. They are not promised a rate of the retail price. They are promised a share of the net sales of credits, proportional to how many of the credits were spent on their books. They should know the key parts of the business model here: Audible sell the credits for significantly cheaper than the retail price, and the narrators are being paid based on the actual amount spent on the credits not based on the retail price.
> C) in the end amazon makes always a >60% profit off each book, irrespective of the price sold.
No. The minimum revenue per-book guarantee is being hit every single month. So the narrators are being paid a bigger share than the contract promised, and Amazon is paying that difference from their cut.
> D) Their incentive is thus to sell as many units as they can,
And since the earlier points were incorrect, this conclusion doesn't actually follow.
The narrators don't get paid by the retail price (and the contract doesn't suggest they would). Basically Audible splits the money spent on credits among the books that the credits were spent on in proportion to the number of credits spent on that book, but weighted by the retail price. I.e. a credit spent on a long expensive book pays the narrator more than the same credit spent on a medium length book, even though the credit cost the same to customer.
There's an undocumented revenue floor for price tranche of books. If the revenues per copy would end up lower than the floor in a billing period due to e.g. some promotion that flooded the economy with cheap credits, Audible makes up the difference and pays the narrator at least that minimum amount per copy. Apparently that floor is being hit every time, i.e. Audible is paying them more than they are actually required by the contract. The author thinks this is a smoking gun that proves how they're being cheated, which is an odd take.
Since the credits are far cheaper than the retail prices, it should hardly be surprising that the effective sales price is cheaper than the retail price.