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AUDIBLE Case Study

AUDIBLE case study

Overview

Don Katz started Audible, Inc. in 1995. As it is now part of Amazon, Audible no longer discloses revenues separately. As more teachers and parents adopt the concept of audio books, Audible is sure to see its revenues rise as a result. It should be noted that even though they don’t report revenues separately the company operates as an independent entity.

Before starting Audible, Katz was a successful author and freelancer for Rolling Stone magazine and other major magazines. He has several published books in his portfolio.

How the Company Started

Don Katz was jogging and noticed people listening to their Sony Walkman devices and thought there has got to be better technology for listening to music and other audio assets.

The concept came about after Katz was doing research on audio technology for a book he was working on.

The company did receive a round of funding in 2003 from an undisclosed source, according to CrunchBase.com. In 2008, the company was acquired by Amazon.com. The company was a public company (Symbol: ADBL) before being acquired.

Initial Problems

In 1999, the company lost its CEO, Andrew Huffman, due to a heart attack. It hit the company hard but Katz knew that he couldn’t let this stop them in their tracks. He proceeded in bringing his vision to fruition. Katz is now the CEO of the company.

Why it Works

Early on, the company brokered a deal with iTunes. In fact, many analysts believed Apple would be the company that scooped up the company and were surprised in 2008 when they didn’t submit a bid.

A major reason for Audible’s popularity is that it is a subsidiary of Amazon. In 2008, Amazon bought the company. Amazon also has a subscription service that uses Audible as the delivery mechanism. Most devices today are Audible-ready meaning a separate device is not needed to use this service.

The company also developed the technology known as WhisperSync, which allows users to directly download content from the service to their smart device, bypassing having to download it to a computer first and then transferring it to the devices.

The company was there at the forefront of the podcasting movement. Many believe it helped define the movement. It certainly kept in the loop with iTunes during this period.

The company created the Audiobook Creation Exchange (ACX) which gives content creators the ability to connect directly with narrators to produce audios for inclusion to Audible. This has been the means that Audible has been able to expand its library so rapidly.

The company is setting up licenses with content creators all over the world including major publishers such as the New York Times. Large-name actors are being paid to narrate audiobooks, which adds to the appeal of the service.

Audible gives an extensive collection of material to listen to while busy at other tasks, such as working out, commuting or housework, etc.

Promotion:

The company has the Amazon engine as its driving force for promotions as well as the Audible Unlimited service that Amazon provides. This service allows members to use any asset that is included with the service. The company claims to have well over 250,000 assets available with more being constantly added.

Audible also has an affiliate program which serves to drive traffic to the company’s website. Affiliate programs can be quite successful as they get traffic to a website for very little cost.

They have to give up a portion of the profits to the affiliates, but the company would not receive that particular traffic without them. The affiliates are responsible for any costs associated with driving traffic.

Audible offers original programming, such as radio shows. This allows for increasing advertising revenue.

Subscribers can get a trial month of the service. They simply need to have an Amazon account for this to happen. This is a great way to get people hooked on the service and gives them the opportunity to test it out to see if it works for them.

Recently, the company offered a low-end subscription service ($4.95 per month) called Channels, which it calls the service short-form audio. It includes original programming as well as articles that are read aloud. Regular subscribers to Audible ($14.95 per month) will be given access to Channels as part of their service.

The company has also given members the ability to loan an audiobook to anyone, even if they don’t subscribe to Audible. Members can send the book to 1000 people. The only requirement is these people need to have an active Amazon account. This initiative gives them the ability to bring in more subscribers and has been a success.

Features:

Some people feel that the subscription to Kindle Unlimited gives enough audiobooks as part of that service that an Audible subscription is not needed.

Others feel that Unlimited doesn’t give you access to enough and can fluctuate based on whether the author wishes to continue with the program.

How employees are treated can give a partial indication of the success of an organization. Audible has an overall rank of 3.3 out of 5 stars on Glassdoor.com. Katz has a relatively good rating among employees.

Some complaints have to do with how managers rank their employees and working conditions. One user stated the company does not do well in work/life balance which leads to higher stress levels.

Lessons Learned By The Business

  • People loved to be read to when they were kids. The experience that Audible provides is similar to that experience and extends beyond childhood. Audible extends the concept to everyone, not just kids.
  • Katz believes that Audible and other services like it have helped literacy rates rise. He points to studies that show engagement in the brain is actually higher from this type of service than reading itself. It also gives people the time to learn or absorb information, stories, etc., that they wouldn’t otherwise get from not reading due to time constraints imposed. Audible content can be listened to in conjunction with doing other activities, such as exercise, commuting, and even work.
  • Audible has technology that couples text and audio. This helps to accelerate learning. Imagine trying to read through complex literature. Both parents and teachers are discovering this technology help students advance quicker than the standard reading of these advanced texts.
  • Katz stated in an interview that his technology was too early for people to adopt, which is why it didn’t explode at the start. But, he knew the concept would eventually take off and is the reason why he kept driving forward.
  • Being a freelance writer has helped him in pushing his company forward. When freelancing, you need always to be looking for ways to find work and improve your service. This easily extends to a technology company.

How Other Businesses Can Learn From This

Companies should try to envision where the market will be rather than trying to improve a concept bound for extinction. Katz could have easily tried to position his company as an improvement of the Walkman.

Instead, he saw a vision that he carried through to an entirely new concept. This is especially important in the technology world. This requires paying close attention to trends and using that to project a vision.

Filed Under: Business Case Studies, The MMBO Blog

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