The Toronto Star, Canada Monday, October 22, 2007 THINKING BIG: Simply Audiobooks By Ellen Roseman, Business Columnist Blockbuster of books Caption: From left, Sean Neville, Sanjay Singhal, Vitaly Petritchkovitch and Sharron Jones of Simply Audiobooks. COLLIN McCONNELL / TORONTO STAR Sean Neville was driving to class one day, listening to an audio version of his securities course textbook, when the idea hit. With all those commuters zipping around him on the highway, there must be a market in audiobook rentals, he thought. Inspired by the business model pioneered by Netflix.com in the United States and Zip.ca in Canada for renting movies on DVD, he drew up a plan. Then he ran across Sanjay Singhal at a business meeting - both have MBAs from Cornell University - and got him interested in the idea. A short time later, Simply Audiobooks was born. "We started the company in May 2003 with $700,000 in initial capital from investors," says Singhal, Neville's co-founder and the company's chairman and chief marketing officer. Now, just more than four years later, it has become one of North America's biggest suppliers of recorded books. Last year, sales topped $7 million. "Our forecast is that we'll be just shy of $10 million next year," says Singhal. How does it work? Customers pay monthly fees for unlimited rental, ranging from $15 for one book at a time with a 12-month prepaid subscription to $41 for four books. Alternatively, they can download audiobooks from the company's website to a computer and transfer them to a digital music player. In North America, the company pays no licensing fees for the content other than the price of the audiobook. However, for some publishers they pay for "library" copies that are usually between 50 per cent and 100 per cent more expensive than regular consumer copies. In the U.K., they have to pay licensing fees to the authors' and the narrators' unions, but not to the publishers themselves. Simply Audiobooks offers a choice of 12,000 titles to rent and about 22,000 to buy at its website. In contrast, bookstores such as Chapters and Indigo carry only 200 to 300 audiobook titles for sale, with no rental privileges. A year ago, Simply Audiobooks bought a downtown Toronto store at 350 Bay St. (previously called Spoken Word), where Neville used to rent audiobooks as a customer. The store was recently renovated and reopened under the Simply Audiobooks name. Former owner James Axworthy is now working hard to open another store later this year in New York's financial district at 46th St. near Madison Ave., close to the commuter traffic at Grand Central Station. Business has a strong appeal in the downtown store. Motivational authors such as Stephen Covey and Dale Carnegie are featured in the entrance as customers walk in. There's also a full range of business bestsellers, such as The Age of Turbulence by Alan Greenspan and Blink: The Power of Thinking Without Thinking by Malcolm Gladwell. Simply Audiobooks is going through an exercise of defining what it is and where it's going. "What we want to accomplish as a company is to be the leading audiobook retailer, online or off," says Singhal. "We don't want to take on Barnes & Noble or Amazon. We're thinking about Random House, Talking Book World, Audible and Play Away." But one problem it faces is raising awareness. Many potential customers think audiobooks are just for the visually impaired. Surveys show that 50 per cent of people in Canada and the United States don't know what an audiobook is - and 80 per cent have not listened to one in the past year. Another potential hurdle is with the business model itself. Currently Apple's iPod is the dominant music player and the company has its own store, iTunes, which carries audiobooks under an exclusive deal with Audible Inc., based in Newark, N.J. Audible, which trades on the Nasdaq Stock Market, had sales last year of $82.2 million (U.S.). This month, it announced a monthly $9.95 download subscription service for audiobooks with Harlequin Enterprises Ltd., owned by Toronto Star owner Torstar Corp. In order to transfer content to their iPod, Simply Audiobooks customers have to use CDs or burn their own CDs first. This is slower and costlier than going directly from a computer to an iPod. Still, downloading is the way of the future, a trend that be can't be ignored. "We're planning to run a campaign in the store, offering to help people download audiobooks on to their MP3 players," says Singhal. "We'll also offer free downloads, so you can test it." Downloading audiobooks is growing dramatically, making up about 10 per cent of the market, he says. But, he adds, "It will be 10 years before CDs go below 50 per cent of the market. That will happen only when auto makers switch over to hard drive (audio players)." Based in Oakville, Simply Audiobooks has 50 employees in Canada, the United States and Britain. Last year, the company was sixth on Profit magazine's Hot 50 list of emerging growth companies. Now bigger with a slower growth rate, it's 36th on this year's list. http://www.thestar.com/Business/article/269013 BlindNews Mailing List Subscribe: BlindNews-Request@xxxxxxxxxxxxx with "subscribe" as subject Unsubscribe: BlindNews-Request@xxxxxxxxxxxxx with "unsubscribe" as subject Moderator: BlindNews-Moderators@xxxxxxxxxxxxx Archive: http://GeoffAndWen.com/blind RSS: http://GeoffAndWen.com/BlindNewsRSS.asp More information about RSS feeds will be published shortly.