This article was originally published in the London Book Fair Show Daily, 16 April 2015.
"We deal with a highly differentiated product. There are hundreds of varieties, and within each variety, there are large ones, small ones, ones just in, and ones that have been around longer than they ought. And consumers wish to examine them before purchase." We might well be talking about books, but actually this is an extract from an academic paper about the New York wholesale fish market–slightly paraphrased to avoid obviously piscine terminology. Fish markets are of interest to economists because they demonstrate some counter-intuitive behaviour: there is sustained price differentiation (different prices offered to different customers for the same thing) and very low elasticity of demand (perfect elasticity would be an exact inverse relationship between price and number of sales; fish merchants do not experience such a direct relationship).
EROSION OF COST
I was prompted to think about fish after seeing an article in the business paper City A.M., discussing what had gone wrong for Tesco. The columnist mentioned an academic paper1, and posited that aggressive pursuit of minimising costs might seem to be desirable business efficiency, but in practice the erosion of trust between supplier and retailer eventually has a detrimental effect on the service to the consumer. If the only thing that matters is lowest possible cost, there is no incentive for anyone in the supply chain to add value. For fish, "one price fits all" is not necessarily desirable. Is this true for audiobooks?
In 2013, I wrote an article called "Audiobooks, Craft or Commodity?" in which I expressed concern that the reduction of production fees would result in a lowering of standards. A look at some recent online reviews does seem to suggest that my fears are not entirely unfounded: "His narration is perfect, but this audiobook is let down by poor sound quality." Or "Almost no research seemed to have gone into getting the pronunciations of local words and place names right." Ouch. But as a fellow producer, my reaction is not one of schadenfreude, but sympathy that the relentless pressure to pack as much finished product in each day has precluded adequate time to get it right–even if you do care, as producer, you have to be able to afford to care.
Just as for suppliers to supermarkets, the link between cost of production and selling price has been broken. If Audible presents all audiobooks as being "worth" the same price, £7.99, then all but the highest profile titles are going to be created at the lowest possible cost. As the number of titles produced rises (and it was more than 30,000 in 2014, up three-fold from 2011), so the sales of some titles will fall to a few hundred copies. In my 2013 article, I predicted that the audiobook market would cannibalise itself, and I think it now is.
One might argue that the industry does not do enough to educate the listening public about what good value audiobooks are: an average 12 hours or so of expert reading for £7.99, of which in most cases, after tax and the costs of distribution, less than a half comes back to the publisher. It takes six to eight times the running time of an audiobook to create one, more if you count the preparation by reader and producer. So a 12-hour production will have required 80 to 100 hours of work. Yet the total revenue to the publisher from a midlist title might be only £1,600 (400 sales, average revenue £4).
A LOOK TO THE FUTURE
In February, I took part in a conference organised by Equity. "Audiobooks: A Dialogue for the Future" brought together readers, publishers, producers, studio owners, agents and retailers. The consensus was that the fees paid for the creation of audiobooks are half to two-thirds what they were before the market moved almost entirely to downloads, and that standards were suffering as all concerned had to pack more in to maintain a reasonable income. It was asserted that the prices are set by what the consumer will pay, although I did not receive an explanation of why it is that the Audible price in the United States is more than 20 per cent higher than in the UK (£7.99 UK, $14.95 US, which at the exchange rate at the time of writing is £9.93). Twenty per cent more revenue into the production industry here would make a considerable difference to the morale of those involved.
At this meeting, I observed that producers in the US were also concerned, quoting audiobook producer May Wuthrich writing in the February 2015 issue of Audiofile: "While there will always be ‘platinum’ productions for high-profile audiobooks, should these be reserved solely for a small percentage of books put into the market? I hope not. Put a great audiobook in the hands of a new listener and you have a fan for life; put an audiobook of lesser quality in those same hands and a precious opportunity might be missed." That is the degree of customer appreciation we have earned; let us not put it in jeopardy by an obsession with price.
DEVELOP MORE BRANDING
We might also consider whether we should develop more branding in audiobooks. In the UK, download listeners are beginning to think that all audiobooks come from Audible; there is little scope for differentiation between publishers, but there is no doubt that some have a consistently higher quality of output than others. Our customers do notice. I recently received an email from a listener that ended: "I consider the world of the audiobook a jewel in the media crown. I cannot praise enough the skills of some readers in the range of the voices they adopt. I am grateful that the unit cost to me, the listener, is so small... My life would be much poorer without audiobooks."
That is the degree of customer appreciation we have earned; let us not put it in jeopardy by an obsession with price.
1"Learning To Be Loyal: A Study of the Marseille Fish Market" by Alan P Kirman and Nicolaas J Vriend (www.qmul.ac.uk), which led to "Markets: The Fulton Fish Market" by Kathryn Graddy (www.economics.ox.ac.uk). Nicholas Jones is Audio Producer at Strathmore Publishing.