Its books are never out of stock By Jefferson Graham, USA TODAY LOS ANGELES - Audible.com has some of the most loyal fans on the Internet. There just haven't been enough of them for the provider of audio book downloads to turn a profit.
Don Katz, CEO of Audible Inc., in the company's Wayne, N.J., headquarters.
By Jeff Zelevansky, AP
But Audible, founded in 1997, is poised to make money this year because of the increased penetration of MP3 players such as the Apple iPod and a recent Audible deal to sell book downloads at Apple's iTunes Music Store. Audible also is close to proving that digital media can be more than just stealing music, movie and TV files in dorm rooms and dens.
Audible will sell what's expected to be the year's literary equivalent of a blockbuster movie - Bill Clinton's My Life. The company will make it available on June 22 at 3:01 a.m. ET.
Unlike a conventional bookstore, where as many as 10,000 buyers might show up for a best seller, Audible CEO Donald Katz says, "We will never be out of stock."
That's because Audible needs only one copy of a book on hand - a digital file that is copied by customers to PCs and moved to MP3 players or CDs.
Clinton, in his first public appearance for the book, will deliver a keynote address tonight in Chicago at BookExpo America, a gathering of 25,000 book sellers. Audible will offer the speech free as a download by midnight ET. This follows another recent freebie: former counter-terrorism official Richard Clarke's testimony to the Sept. 11 commission. That produced 100,000 downloads and many new customers, Katz says.
The $800 million audiobook market has been growing steadily. Revenue is up 15% this year from 2003, says the Audio Publishers Association. But the idea of downloading a book "was ahead of its time" when Audible struggled through its early years, says Mark Argento, an analyst with securities firm Think-Equity Partners.
There were too few MP3 player owners, he says. "The turnaround came last year, with the smash success of the iPod. Now, the story starts to get really interesting."
Audible's annual revenue has grown to $19.3 million last year from $9.1 million in 2001. Argento projects 2004 revenue will grow to $30.6 million. The company has 115,000 subscribers. Argento sees the number growing to 500,000 by 2006.
Katz is a former journalist (Esquire and Rolling Stone) and non-fiction author (The Big Store: Inside the Crisis and Revolution at Sears). He says Audible's short life has been anything but a cakewalk. It went dark for three days after the Sept. 11 attacks because its servers were stored near the World Trade Center. They had to be reclaimed and moved.
ALL ABOUT AUDIBLE
Founded: 1997 Based: Wayne, N.J. Sells: Spoken-word digital downloads. Offers more than 6,000 books, 22,000 radio programs and audio editions of newspapers and magazines. Best sellers include The Da Vinci Code and Plan of Attack. Prices: $14.95 for one book a month; $19.95 for two books. Buyers also can shop a la carte: The Narrows by Michael Connelly is $24.95 at Audible for the unabridged version, vs. $25.15 for audiotapes at Amazon.com. Discounts: Audible takes $100 off the price of an Apple iPod or offers a free Creative Nomad MuVo MP3 player with a 12-month subscription. Capacity: Digital audio can fit an average of 315 books on a 15-gigabyte $299 iPod portable or 51/2 books on the 128-megabyte MuVo.
"I was worried we'd decimate our goodwill with customers and that they'd never return," Katz says. "But the business eventually bounced back."
The same goes for Audible's stock. It once sold for as much as $15.50, but had to leave the Nasdaq exchange when shares fell to a low of 30 cents.
Shares now sell for more than $4 and will be moving back to Nasdaq later this month. They closed Wednesday at $4.03.
Microsoft and Amazon were early investors, though Microsoft later bailed out. But new money came from Germany's Bertelsmann - which owns publishing company Random House and BMG Music - and from equity fund Apex Venture Partners.
Fans never stopped believing. With Audible, "I feel like the world has been opened up to me, as it never has been before, and I am reveling in it," Sherry Gomes says.
Gomes, blind since age 5, had to bring sighted friends to bookstores to read the back of audio book covers.
"With Audible, I can browse," says Gomes, 47, who lives near Denver. She uses software on her PC that reads aloud text from Web sites and e-mails. "I can look at the catalog, read the plot summaries - even listen to a sample of the book if I like. I have access to books I never knew or dreamed could be available."
Audible has many titles sold by competitors. But there are some holes in its catalog. For every best seller such as Dan Brown's The Da Vinci Code and Bob Woodward's Plan of Attack, there are missing best sellers from publishers who haven't opened to digital distribution. They include the Harry Potter series and Mitch Albom's The Five People You Meet in Heaven.
That hasn't bothered David Campbell of Pittsburgh. The hospital administrator goes way beyond his $19.95 subscription to add 10 to 12 books monthly, which he listens to on his combination cell phone-personal digital assistant. He never runs out of books.
Campbell never liked audiotapes or CDs because he didn't want to carry a lot of media around. The unabridged Da Vinci Code, for example, is on 11 cassettes. Instead, he downloads books and listens on the way to work, around the house and before going to sleep.
"Audible has allowed me to be a reader again," says Campbell, 37.
Audible has seen competitors come and go. It now has the field mostly to itself. A new start-up, Serenade Systems, is testing a service offering mostly radio content such as National Public Radio and BBC shows. Serenade won't sell books when it launches this summer.
Although thousands of dot-coms have gone bust, Katz says Audible is still in business for several reasons, including the Apple deal and greater acceptance of MP3 players.
"We were really tenacious," he says. "And we weren't going to turn over."
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