Thursday, January 31, 2008

Amazon Acquire the Audio-book Market?

Today we read about the biggest digital news to hit the news for many months. Surprisingly it wasn’t top to the industry news but its implications will be huge for many. Amazon has bought Audible for $300 million. We must also remember that Amazon last May acquired Michigan audiobook publisher Brilliance who had a catalogue of over 1,000 audio titles and releases 20 to 40 new titles a month.

Amazon's subsidiary CustomFlix supports both standard CD and mp3-CD audiobook formats in its "disc on demand" service which produces audio titles on CD on demand. The question it raises is when this model will flip into audio downloads. We questioned last May whether Brilliance bought for it content and list? Does this now make Amazon a publisher and fill in the last space in the value chain?

We also questioned whether Amazon wanted to continue referring audio customers to Audible.

The fact that Audible invested so heavily in developing its DRM technology and getting it accepted in so many platforms and that it has an exclusive agreement with iTunes until 2010 must have been a ‘no brainer’ for Amazon. The fact is digital audiobooks are Audible. Some may say that they have restricted the growth of audio, that there business model based on the old book club approach is wrong, but come what may, they are the digital audio download market today.

So were does this marriage leave the market? It certainly now belongs to Amazon. The relationship with iTunes is very interesting for Mr Jobs and Mr Bezos. What will happen next – the Kindle be an audio player too? Where does Amazon’s stand on MP3 and DRM music sit alongside Audible’s propietory DRM strength?

Only time will tell but Amazon are unlikely to walk away from the DRM strength of Audible and their marketing and buying audiobook clout has just increased ten fold.

The audio industry has to either fold under the Amazon umbrella, or adopt a different approach to DRM. It could be bold and follow music, it could adopt watermarks or it could face the realities of the marriage and hand over audiobooks to Amazon to run on their terms. We hope bold is the answer.