Sweden-based Storytel has combined digital audiobook retailing and an expansion into print publishing to establish itself as a force in European media with global aspirations. Founded in 2006, the company offers digital streaming services for audiobooks, and in some cases print and e-books, in 16 countries, including Bulgaria, Denmark, Finland, Iceland, India, Italy, Mexico, the Netherlands, Norway, Poland, Russia, Spain, Sweden, Turkey, the United Arab Emirates, and, as of last month, Singapore. In recent years, it has relied on a series of acquisitions to support its growth, with purchases ranging from legacy print publishing houses to upstart competitors in the audiobook space.
“We launched the company at the right time,” said Storytel CEO Jonas Tellander. “It has been an amazing period for audiobook adoption. A lot of that can be attributed to the growth of smartphone use.”
Among the company’s first acquisitions were Sweden’s Massolit Förlag and B. Wahlströms Bokförlag, both bought in 2015, and then, in 2016, Norstedts Förlagsgrupp, Sweden’s oldest remaining publishing house, which was founded in 1823. The same year, the company snapped up Denmark’s Mofibo, a rival audio streaming service. It has also since absorbed numerous additional companies, including, most recently, Ztory, a streaming service for newspapers and magazines acquired in January
Despite Storytel’s rapid expansion, the Nordic region—Denmark, Finland, Iceland, Norway, and Sweden—accounts for the bulk of its business. Reporting its results for the first quarter, which ended March 31, the company counted 363,000 active users in Sweden, with the whole of the Nordic region, including Sweden, accounting for $26.9 million in streaming revenues and 645,500 subscribers. The remaining 11 countries where the company does business generated $3.9 million in streaming revenues and had 188,800 subscribers during the same quarter. In contrast, print sales from the Storytel various publishing divisions for the quarter were $11.1 million. The company anticipates 40% growth for the year, driven largely by streaming and subscribers in the Nordic countries.
Addressing the slower growth outside Storytel’s core markets, Tellander was sanguine. “Several of the markets we are working in are just beginning to grow their audiobook catalogues,” he said. “And one of the things we do as a company is help to jump-start that growth. Since 90% of the audiobook market is typically in local languages, the markets tend to reflect the size of the catalogue.”
Storytel offers access to more than 140,000 audiobooks and e-books in Sweden, while in India it offers 100,000 titles. In many markets, it also provides access to more than 35,000 English-language titles. Cumulatively, the company said it offers 270,000 individual titles across audio and e-books in all markets.
Storytel has also had some big wins in offering unique content. On May 16, the company announced that Russian bestselling author Dmitry Glukhovsky had written an exclusive audio story for Storytel titled “The Outpost,” set in the postapocalyptic world featured in his bestselling Metro series of novels. Earlier this year, Storytel made headlines across the Arab world with a collaboration with Pottermore Publishing that led to the production of an Arabic-language version of the audiobook of Harry Potter and the Philosopher’s Stone by J.K. Rowling.
Unsurprisingly, Storytel’s aggressive approach has created controversy and challenges—especially in Sweden, where the company has come to an impasse with Bonnier, Sweden’s dominant publishing group, which launched its own audiobook streaming service on April 1. Bonnier had stopped supplying Storytel with new bestselling releases, such as Camilla Läckberg’s latest blockbuster, The Golden Cage. Each side has publicly expressed disappointment with the other: Bonnier claimed that Storytel’s payment system is unfair, and Storytel charged that Bonnier demands royalty rates that are double those of other publishers.
Recently, Storytel changed its compensation model, shifting from per-listen charges to paying by the minute. In addition, in the wake of the European Union’s ruling to allow countries to reduce value-added tax on e-books and digital audiobooks to the same level as print books, Sweden will reduce the tax from 25% to 6% on July 1. Tellander has stated that the company won’t reduce the price of its service; it will instead use the additional revenue from the tax change to pay higher royalties to publishers.
Storytel’s next major initiatives are expanding into Brazil and Germany this year. “Germany is an interesting country—a big one, but one with a lot of potential for streaming,”
Tellander said. As for further expansion plans, he declined to make any revelations, saying, “Well, let’s wait and see.”
