Audible

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  • I will be presenting Audible Inc. Audible is a company that delivers all kinds of spoken audio over the internet to your computer. Once you purchase an audiobook, it is yours to keep forever. You may listen to it as many times as you like or even burn it to a CD.
  • There are many ways to listen. First, you can download it once and have it stored permanently on your computer in the same fashion that you download mp3’s of music. However, Audible uses a proprietary file format that provides even better compression than mp3 files. Another alternative is to listen to the sound as streaming audio. This option is more suitable for broadband connections because there must be adequate speed to keep up with the file. The final option is to transfer the audio from your computer to any AudibleReady mp3 player.
  • Audible.com offers highly personalized, high-value listening drawn from several sources. The Wall Street Journal, The New York Times, The Economist, The Harvard Business Review, The San Jose Mercury News-Tech Report, and many other periodical brands offer customers the opportunity to keep up with the rest of the world. Users who do not have the time to read the paper in the morning can listen to it during their commute to work or while they work out. Audible also offers a huge selection of novels, as well as proprietary content. maintains an exclusive digital audio imprint with Random House.
  • The search engine provides quick and easy access to Audible’s huge library of content. You can search by title or author. If you know you’re eager for some suspenseful fiction, you can browse by category. You can find out what other people are reading by checking out the best seller list, and you can even read reviews from the hottest magazines and newspapers in the business.
  • You can buy audiobooks one at a time or you can pay for one of 2 types of monthly subscriptions. The user interface is well laid out and easy to use. Downloading couldn’t be made any easier. Audible integrates directly into iTunes, the audio player of choice for all Mac users with OS X. For the PC you must download a free program called AudibleManager to keep track of all of your audio.
  • Most modern PC’s are already equipped with everything that you’ll need to use the service. For the Macintosh, however, you must have OS X installed, which is unfortunate because there are still many users of previous operating systems for the Mac that will not be able to take advantage of the service. Many popular mp3 players support the Audible format, and I expect that as time goes by the number will only increase. Currently, if you subscribe to the service for a year or more, you will receive an Audible Otis mp3 player.
  • Jeffrey Katz, founder of Audible, was named the Entrepreneur of the Year for 1999 by Silicon Alley trade magazine, Alley Cat News. In 1995 he founded Audible Inc., based in Wayne, NJ, with veteran software pioneer Tim Mott. It has been publicly traded since the summer of 1999. Microsoft now has investments totaling $15 million, and expects the company to be largely successful. For the most part, they have been. Unfortunately, they received some bad press in 2000. Katz stated the following in an interview with The Wall Street Transcript. “Bloomberg utterly misreported our cash position — by $15 million dollars — because of a simple misreading of our balance sheet.” Later in the interview he went on to say “Historically, continuous execution against an aggressive plan is far more lasting and rewarding to shareholders than all-too-casual journalism.”
  • Audible has many valuable partnerships in addition to Microsoft. The company is the exclusive provider of spoken word audio to Amazon.com’s 25 million customers, and maintains an exclusive digital audio imprint with Random House/ Bertelsmann called Random House Audible. The company was created from private investments by Kleiner Perkins, Microsoft, Intel, Compaq, and, in early 2000, Amazon.com, Random House and others.
  • The hottest mp3 player around is the Apple iPod. With capacities of 10GB, 20GB and 40GB offered, you can store your entire music collection and then some on an mp3 player that fits smoothly in your pocket. Audible recognized the potential market of iPod users and decided to jump in. As of right now, if you subscribe to Audible you can receive $100 off of an iPod.
  • Audible is beginning to be recognized for the quality of service and future potential that the company provides. They were ranked at 9 out of 10 by CNET, giving them the distinction of Editor’s choice. Deloitte & Touche LLP, one of the nation's leading professional services firms, placed them in a ranking of the 50 fastest growing technology companies New Jersey. Next we will talk about the growth that goes hand in hand with award winning service.
  • As this chart from bigcharts.com shows, Audible’s value has skyrocketed over the last year. The 52 Week Range is 0.15 to 1.46. Also, there has been a 3,190 percent revenue growth from 1998-2002 [10].
  • Audible clearly operates in the SWEET SPOT of electronic commerce. In the following quote, Katz sums up their business model and their future potential. ( read quote out loud) Here is another quote that helps describe the ease with which they operate. “The essence of the business involves the fact that we absent the physical product costs from the delivery of the content people habitually pay for.”
  • This chart summarizes the allocation of costs that Audible faces. The great thing about operating in the sweet spot is that once the initial business is in place, the cost of expanding is very little because you are selling bits rather than something physical. According to Katz, they do not spend very much on marketing. In fact, investors were originally disappointed that the company did not use the IPO dollars to purchase a Super Bowl ad because they believed that Amazon would begin to compete and they would not have a chance. That led to the partnership with Amazon.com. [2]
  • Ownership is divided amongst multiple partners. As you can see, Microsoft is the company’s largest investor. Amazon, Katz, and management also hold significant portions of the company. Percentages for those with less than 5% of the company are not shown.
  • Audible will continue to find new ways to push their products out into the hands of customers. In addition to their website and the partnership with Amazon.com, they are pursuing the business to business model with AT&T, Microsoft, and Ernst & Young. They are providing these companies with business content to try to help them run more efficiently. Also, they have a pilot program in place at a library in Michigan whereby patrons can check out an AudibleReady player and their choice of Audible content.
  • Audible sells into a market that includes over 84 million mobile listeners. The amount of content that they offer will continue to grow. They do not advertise overseas, yet have customers in over 100 nations, proving that word of mouth will help a good product market itself. As the company grows and the advertising budget increases, the potential for growth is unlimited. Well educated men with high incomes are still the primary users, and primary use occurs during commuting or exercising.
  • MediaBay.com is Audible’s biggest direct competitor. They offer a very similar service. However, it is important to note that the rise of streaming audio poses a potential threat since users could turn to other services for content. They also compete with traditional bookstores and clubs, which may have an advantage because people may prefer the written word to the spoken word.
  • Audible is loaded with potential. They have a loyal subscriber base and some very valuable partnerships that should prove important in the future. They operate in the sweet spot of e-commerce, and with the rise of broadband in the home the sweet spot should only get sweeter. I believe that Audible will flourish.
  • Audible

    1. 1. Audible.com Audio that speaks to you wherever you are ™ Joe Flowers CS453
    2. 2. Introduction <ul><li>Audible converts audiobooks and other spoken audio programs into digital files </li></ul><ul><li>Buy an audiobook from Audible and it’s yours forever to listen to as many times as you like. [1] </li></ul>
    3. 3. Ways To Listen <ul><li>Download and listen to audio on your computer </li></ul><ul><li>Streamed over the internet on your computer </li></ul><ul><li>Transfer audio from your computer to a CD or AudibleReady player </li></ul><ul><li>Proprietary file format, more compressed than mp3’s [1] </li></ul>
    4. 4. Types of Content <ul><li>Non-fiction </li></ul><ul><ul><li>Highly personalized listening drawn from sources such as The Wall Street Journal, The New York Times [2] </li></ul></ul><ul><ul><li>Other </li></ul></ul><ul><li>Novels </li></ul><ul><li>Proprietary content [3] </li></ul><ul><ul><li>Magazine editions </li></ul></ul><ul><ul><li>Growing library of comedy </li></ul></ul><ul><ul><li>Joint venture with Random House </li></ul></ul>
    5. 5. How To Find Content <ul><li>Search by title or author </li></ul><ul><li>Browse by category </li></ul><ul><li>Check out the best seller list </li></ul><ul><li>Music review from the latest audio magazines and newspapers </li></ul><ul><li>[1] </li></ul>
    6. 6. Get some audio! <ul><li>A la carte [6] </li></ul><ul><ul><li>Buy on a title by title basis </li></ul></ul><ul><li>Subscription plans </li></ul><ul><ul><li>Get one audio magazine, newspaper or radio program plus one audiobook each month for just $14.95 a month. </li></ul></ul><ul><ul><li>Get two audiobooks each month for just $19.95 a month. </li></ul></ul><ul><li>Automated downloads </li></ul><ul><ul><li>iTunes for Mac </li></ul></ul><ul><ul><li>AudibleManager for PC </li></ul></ul>
    7. 7. Hardware requirements [4] <ul><li>PC </li></ul><ul><ul><li>Windows 98 or higher </li></ul></ul><ul><li>Macintosh </li></ul><ul><ul><li>OSX with iTunes 3 or above </li></ul></ul><ul><li>Hardware to listen </li></ul><ul><ul><li>Audible Otis MP3 player (free with 1 yr subscription) </li></ul></ul><ul><ul><li>Palm Handheld </li></ul></ul><ul><ul><li>Apple iPod </li></ul></ul><ul><ul><li>Other players… </li></ul></ul>
    8. 8. History <ul><li>Founded by Jeffrey Katz [3] </li></ul><ul><li>Publicly traded since the summer of 1999 [2] </li></ul><ul><li>Microsoft invested early on and now has investments totaling $15 million [5] </li></ul>
    9. 9. Partners <ul><li>Microsoft </li></ul><ul><li>Amazon </li></ul><ul><li>Random House [2] </li></ul><ul><li>Joint marketing agreements with device manufacturers including… [3] </li></ul><ul><ul><li>Hewlett-Packard </li></ul></ul><ul><ul><li>Sony Electronics </li></ul></ul><ul><ul><li>Apple </li></ul></ul>
    10. 10. Ipod integration [5] <ul><li>Integrates with iTunes on OSX </li></ul><ul><li>Comes with AudibleManager for PC [6] </li></ul><ul><li>Receive $100 off a new Apple iPod when you purchase a 1 year subscription [7] </li></ul>
    11. 11. Awards <ul><li>CNET editor’s choice [8] </li></ul><ul><li>Named to Deloitte & Touche's prestigious Technology Fast 50 Program for New Jersey [9] </li></ul>
    12. 12. Growth [9]
    13. 13. Business Model [2] <ul><li>“ Audible was designed to become an extremely profitable enterprise — and designed to get to that state as the clear leader. This is a company that does not need that many consumers paying us on a regular basis to be a very profitable enterprise, because of the fundamental structure of the business model. As we scale up the infrastructure needed to serve large numbers of customers — because of the efficient nature of the inventory and delivery structure — it doesn’t need to scale that heavily.” </li></ul>
    14. 14. Business Model (cont’d) <ul><li>Target Operating Model: [3] </li></ul><ul><li>Revenue - 100% </li></ul><ul><li>Content Costs - 30% </li></ul><ul><li>Marketing Costs - 25% </li></ul><ul><li>Operation Costs - 15% </li></ul><ul><li>Pre-tax Margin - 30% </li></ul>
    15. 15. Ownership - January 15, 2002 <ul><li>Above 5%: [3] </li></ul><ul><li>Microsoft – 35.5 % </li></ul><ul><li>Amazon.com – 6.7 % </li></ul><ul><li>Donald Katz (founder) – 5.7 % </li></ul><ul><li>Management/Directors – 8.8 % </li></ul>
    16. 16. Distribution [3] <ul><li>Audible.com </li></ul><ul><li>Amazon.com </li></ul><ul><li>Affiliates program </li></ul><ul><li>Corporate Sites (B2B) </li></ul><ul><li>Library program </li></ul>
    17. 17. Growth/Customer Base [3] <ul><li>Plan to add a couple of thousand hours of content per quarter. </li></ul><ul><li>No overseas advertising yet they have customers in 100 nations. </li></ul><ul><li>Demographics still skews to men, average income $90k, 40% have advanced degrees, but they are seeing a move down from high-income users.  Most use for commuting and exercising, with some listening at desktop for short duration content items. </li></ul>
    18. 18. Competition [3] <ul><li>Traditional and online retail stores, catalogs, clubs, and libraries </li></ul><ul><li>Websites that offer streaming audio utilizing Windows Media Player or RealPlayer </li></ul><ul><li>MediaBay.com </li></ul>
    19. 19. Will They Make It? <ul><li>Long term potential </li></ul><ul><li>Loyal Subscriber base </li></ul><ul><li>Sweet Spot Operation </li></ul><ul><li>Rise of broadband </li></ul><ul><li>Prognosis Positive! </li></ul>
    20. 20. References <ul><li>1. www.audible.com (click “How it works”) </li></ul><ul><li>2. www.twst.com/ceos/adbl.html </li></ul><ul><li>3. www.cognitrol.com/ADBL/overview.htm </li></ul><ul><li>4. www.audible.com (click “What I need”) </li></ul><ul><li>5. www.atnewyork.com/news/article .php/584711 </li></ul><ul><li>6. www.apple.com/ipod/audible.html </li></ul><ul><li>7. www.audible.com/gojandr/ </li></ul><ul><li>8. reviews.cnet.com/4505-3514_7-9624241.html?legacy=cnet&dir </li></ul><ul><li>9. http ://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=ADBL&sid=152157 &o_symb=ADBL&x=33&y=18 </li></ul><ul><li>10. http://bigcharts.marketwatch.com/news/articles.asp?guid={2D0BA43F-70FB-474D-B0B4-85D4BE5A3C9C}&newsid=806550614&symb=ADBL&sid=152157 </li></ul><ul><li>11. www.audible.com/katz </li></ul>

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