Along with the Storytel Q1 2018 financial report today comes news that the Swedish audiobook company is about to elevate its ebook arm from a sideshow to mainstream.
Storytel Reader is an e-reading device that will be launched in Sweden, Denmark and Finland shortly, with other Storytel markets to follow.
Storytel CEO Jonas Tellander explained,
Our goal is to get e-book reading in Sweden to take a step in. The combination of Storytel service and Storytel Reader is a real highlight for anyone who is tired of binge watching TV shows in the bedroom. Now people can read again at bedtime, just like people did before entering television streaming services.
What’s most significant about this move is that the ebook e-reader is just that. An ebook device. Storytel says it will add audio at some stage, but the decision not to launch without an audio facility shows a clear commitment to developing the ebook side of the Storytel business.
It’s two years almost to e day since Storytel acquired the successful Danish ebook service Mofibo, but since then ebooks have ticked over quietly in the background, leaving the big question, when would Storytel start taking ebooks seriously?
It seems the time has come.
Part of the problem will have been that publishers already had ebook outlets in hand before Storytel launched in its myriad markets, and of course it’s difficult to make an impact with ebooks in countries where Amazon is already established.
But therein lies the beauty of Storytel. The Stockholm based audiobook firm has operations not just in Sweden but also in Norway, Finland, Iceland, Denmark, Netherlands, Spain, Poland, Russia, India, United Arab Emirates and Turkey, and launches imminent in Bulgaria and Italy.
Of those just four – Spain, Netherlands, India and the pending Italy store – have to compete with the Kindle store. While Google Play and Apple offer ebooks in some of these countries neither are taking the global ebook markets seriously, leaving an open goal for savvy operators like Storytel.
The e-reader news comes as Tellander reports a successful Q1 for Storytel, with subscribers at 577,900 at end of March, with 800,000 targetted for end 2018.
Streaming sales are up 43% year on year and on target to hit 1000 MSEK by year’s end.
Most significantly international streaming hit 46% of total streaming revenues and is on target to surpass 50% before the year is over.
There’s no mention in the report of Tellander’s plans to alter the royalty structure for Storytel, but a report in the Swedish publishing industry journal Svenk Bokhandel earlier this month suggested that will change at the end of the year, when Storytel will , says Tellander, make
a transition to time-based consumption.
Currently Storytel pays out on a fifths model, whereby a given title is divided into five parts and each part consumed clocks an equal part-royalty.
This inevitably encourages shorter titles, because the length of the audiobook has no impact on the payout. Conversely the model acts as a deterrent to longer audiobooks.
And in a page from the Kindle Unlimited playbook, some publishers have been gaming the system by splitting longer books into separate titles to maximize compensation.
Tellander told Svensk Bokhandel this was the model he would have preferred to have started with thirteen years ago. Now it seems the new system will come into play from 1 January 2018.
Just what the details of the new model are, and how publishers will respond, remains to be seen.
For most Storytel countries the publishers will not have a lot of choice, with Storytel the predominant audiobook player and in a position to dictate terms.
But on the other hand for most publishers in most countries audiobook streaming offers an additional revenue stream they didn’t have before and Storytel will be the choice between x-percent of something or one hundred percent of nothing.
While Amazon’s Audible is bigger and has far deeper pockets, it is Storytel that has the global vision and is making all the running right now in the international audio arena (Amazon is expected to launch in India any time), and the roll-out of a full Storytel ebook service across the Storytel markets is great news for authors, publisher and readers alike.