Fast Company

Summer Reading: Why More People Are Listening to Books

Fast Interview: In this Q&A, Audible founder and CEO Donald Katz talks about what's popular this summer, the business of the spoken word, how life has changed since Amazon acquired his company, and why the "no asshole rule" is a vital corporate principle.

So what did you read this summer? Chances are, more and more of you listened instead. According to the American Association of Publishers, audio book sales grew by 20 percent last year. The largest online seller of audiobooks is Audible, which was acquired by Amazon earlier this year for $300 million. Audible offers more than 80,000 downloadable programs from current best sellers to daily newspapers.

What is popular summer listening this year?

One of the top books is Swan Peak, by James Lee Burke, which is narrated by the actor Will Patton, who's just a brilliant performer of Burke's latest detective novel and a whole lot of other books. The narrative capacity of the performers of these great works is really one of the powerful drivers of a book recast as an audio experience. I'm actually listening to, belatedly, Barack Obama reading The Audacity of Hope and he is one impressive writer and a very good oral interpreter of his own lines. Also reading his own work is the great William Shatner, who reads his own biography Up Till Now. A legendary reader of his own work is David Sedaris, who has a new book called When You Are Engulfed in Flames -- that is just a laugh out loud, hysterical listen. Lots of our customers also miss George Carlin and are downloading his many Audible titles. In September, we're expecting the new Thomas Friedman to be out, which is called Hot, Flat and Crowded, and we expect good sales.

For the management set, our CFO is raving about the No Asshole Rule: Building a Civilized Workplace and Surviving One that Isn't by Stanford business school Professor Robert Sutton. I was struck by this, because I thought I invented the "no asshole rule" as a guiding corporate culture principle.

How does traffic change during the summer? Is there a downloading equivalent of "beach reading?"

We don't see a lot of categorical shift to easier listening. We do see a summer uptick in travel, title volume and new member intake. But it's relatively inconsequential compared to our consistent growth on a day-over-day and year-over-year basis. We actually see more seasonality in terms of the pace of the business around the holidays, because that's when people get new iPods and other AudibleReady devices, which of course now includes GPS devices, MP3 sunglasses, and Cadillacs.

How many books do your customers go through?

At this point, our customers consume an average of 15 books in a year, which is a lot more books than a lot of busy people get to read without Audible.

Are they reading more because of the audio format?

It's the practicality. People have a huge amount of time during the day, particularly if they commute to work, when they can't read or look at the screen. By the last census, 97 million Americans drive to work alone and spend something on the order of 600 million hours per week in traffic. That's pretty dead time. If you ask people if they read as much as they need or want to read, almost everybody says no. Suddenly they realize they can make better use of their exercise or commute time by knocking off one book after another. And that's really been the secret to the growth of the business. Also, people love storytelling. Ultimately, there's some psychological benefit that may harken back to our childhoods: being read to is an extremely pleasurable experience.

Do you ever indulge in the guilty pleasure of actually reading a book?

Of course. I read whenever I can. To some extent, I cherry pick things I want to physically read because I'm pretty much attuned to the kind of experience I want in audio versus the ones I want to experience in text. It all depends on the mood. One of the exciting things about the Amazon Kindle -- which plays audible now -- is that eventually I will be able to have it sit on my bed table and I can pick up a story I just listened to in the car and read it from where I was.

Publishing is a very mature industry with growth rates usually in the single digits. Is the electronic area more ripe for growth?

Publishing is an industry pursuing a noble cultural calling. But publishing has always had an ambivalent relationship to technology-driven change. In fact, the music publishing business spent a whole lot of time trying to kill off the phonograph. The publishing industry fought off the paperback and was skeptical of the book club - which was effectively a technology-driven invention that used the new science of direct marketing and the mail to change the business. Now there are innovations like Amazon and Audible. Effectively, from my perspective, these disruptions -- along with Superstores -- changed a relatively aristocratic product into a mass market product. A lot of these disruptions have allowed increasingly middle class and lower middle class people to have access to books, which were traditionally for rich people.

The physical publishing business at this point is mature. It generates cash but not a lot of growth and even negative growth in some segments. But the economic efficiencies and the consumer benefits of digital shopping and digital media delivery portends, I think, a very bright future for this important industry, and one that represents, incidentally, tens of thousands of hard working writers. Publishing needs a consistent level of innovation, which invariably comes from outside the industry.

How many customers does Audible have and how much are you growing?

At the end of 2007, we had 457,000 members and many hundreds of thousands more shoppers who buy one or two things. That's compared to 381,000 members at the end of 2006. It's been a pretty significant period of growth. We reported 34 percent growth in 2007 in terms of revenue over 2006 and 159 percent growth on the bottom line year over year. Nothing bad about all that, particularly if you compare it to other businesses related to media.

How has life changed since Amazon acquired your company?

The most fundamental way it's changed for me is that I don't spend 40 or 50 percent of my time with accountants, lawyers and hedge fund managers. That's freed me up to spend a portion of that time to be a leader of a division of a fantastic company, a much larger company, and actually see to the knitting of the business -- which has been an incredible gift. After 37 quarters as public company -- of course, who's counting? -- it was time for us to be part of the kind of organization that's capable of scaling to be much bigger. Way before I started a company, I always thought that larger companies were designed to scale fantastic ideas but less designed to start truly embryonic ideas because they tend to have a strong defense mechanism. But I have to tell you, Amazon is something of an exception to that story. They're an exceptional company of that size in terms of the quality of entrepreneurial activity.

What books did you take on your summer vacation?

I went to Thailand, Cambodia and Vietnam. I listened to tours of Bangkok. I listened to cooking shows from audible that got me salivating in advance of the amazing food. But most importantly, I relived my youth as an observer and resister of the Vietnam War by experiencing Stanley Karnow's book on Vietnam, which was a 28-hour listening experience. I listened to it in the car and while I was on the Stairmaster for a week and half before I left, and during the 26 hours of travel from Newark to Bangkok. It was almost haunting to re-experience something that was so much a part of my life between the ages of 16 and 21, and then to actually go to Vietnam. My kids pointed out that I was a bit of pain in the ass to some of the guides because I knew a lot more about what they call "The American War" at various junctures than they did.

Wait, what about the no asshole rule?

Ha, good point. But the fact is, I was gentle in pointing out what happened to Ho Chi Minh at that particular meeting with Cho En Lai. It doesn't take much to embarrass a 22, 19, and 15 year old -- particularly if you're the dad.

And besides, the No Asshole rule is about the toxic, political, and ego-driven stuff that happens in too many organizations. Consistent debate about the best idea or the right answer is very different from a culture of consistent belittling. I know my colleagues of many years can confirm that during (job) interviews, I said that Audible has a no asshole policy, and that if you need or enjoy office politicking and power plays, please stay away.

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