Business English: Audio books open a new chapter in digital age

Visit the website of audio publisher Naxos and you will notice something different. Previously dominated by recordings of classics from Austen to Beckett, the audio books site now features a " contemporary" section, starring Japanese author Haruki Murakami. Digital downloads of Naxos's talking books account for about 12 per cent of sales in the US, bringing the iPod generation to a once- staid industry that was dominated by cassette tapes as recently as 2003. "I do think there's a new audience for audio books," says Nicolas Soames, publisher and founder of Naxos, a UK-based company. "We were not doing things like Murakami until a few years ago, when it was all on cassettes, and we wouldn't see many cool, hip people with a cassette player." Driven by iPod, MP3 and smartphone users, a new market for audio books has been created. Audible, the leading provider of audio book downloads, says the majority of its customers have never before bought a traditional audio book on tape or CD. While e-books still account for less than 1 per cent of print sales, digital downloads more than doubled to 6 per cent of the $800m audio book market in 2004. Audible says its own sales have grown by more than 80 per cent since then. Publisher Random House admits its e-book efforts went dormant after little enthusiasm from consumers, but it has dived into downloadable audio books with enthusiasm. Its bestseller The Da Vinci Code has regularly topped the digital charts on download sites Audible.com and iTunes.com, while The Holy Blood and the Holy Grail, the book whose authors unsuccessfully sued Da Vinci Code author Dan Brown for plagiarism, recently made its audio debut in digital. Jeremy Ettinghausen, audio and e-books publisher at Penguin, which is owned by Financial Times publisher Pearson, says that digital audio downloads are bringing books to customers who might never visit a bookshop. "The thing that's really exciting is we're able to sell to an entirely new demographic," says Mr Ettinghausen. "With the turmoil in high street retail sales, publishers are always looking at ways of directly reaching consumers." In many ways the success of downloadable audio books is down to the popularity of Apple's iPod. But the books can also be listened to on other devices such as phones, which are being developed with ever-bigger capacity to store audio files. Audible has a deal with Sony Ericsson in the UK under which new models of its Walkman phones and smartphones come loaded with Audible's software and an abridged version of The Da Vinci Code. Mr Soames explains that, until as late as 2003, books on cassette tapes outsold CDs. Some listeners, he says, appear to be moving from cassettes to audio downloads without buying CDs. He adds that the margins are lower in audio downloads, but it has the benefit of bringing new audiences. Mr Ettinghausen also says the economics of downloadable books make more sense. Although recording costs remain, sales can be profitable on much smaller numbers, and the problem of returns is eliminated. Digital audio books never go " out of stock", meaning publishers and distributors can take advantage of the "long tail" effect, in which low levels of demand sustain profits over a long period of time. The most pressing issue for audio book publishers, according to Mr Soames, is the proliferation of file formats. While Audible's software comes bundled with new iPods and can be installed on to smartphones and MP3 players, rival audio sellers face the challenge of striking a similar deal with iTunes or risk being locked out of the huge market of iPod owners. The one format that works on almost any player is MP3, but it is not easy to include anti-piracy technology with these files.