Audible Gives Away Rios

Borrowing a trick from the cell phone industry, an audio site is marketing its subscription services by giving away devices — in this case a Sonic Blue Rio 500 — for free.

Audible ( www.audible.com) is giving away the MP3 players to registered users who have not yet bought anything from the site, in return for a 12-month subscription at $12.95 per month.

"What Audible is doing makes a lot of sense from a marketing perspective," says Audio Publishing Association president Paul Rush, who says that the company is using the free player to lure Napster fans to try spoken word content. In addition to expanding its reach among the younger demographic, Rush says that the Audible free player plan may help to convince older, analog audio-book consumers to make the switch to digital.

Digital downloads of spoken word content represent five percent of total audio-book revenue, according to the Audio Publishers Association (www.audiopub.org). The digital component of the audio-book market is growing faster than the sector as a whole, and analysts expect this growth to continue. But the penetration of media players among spoken word consumers has been a limiting factor.

For the 84 million Americans who drive to work every morning, spending a total of 550 million hours per day in their cars, on-demand content from Audible or competitor sites such as Mediabay, provides a way of catching up with favorite radio shows and books.

While sales of hardback books in the U.S. have been flat over the last three years, audio-book sales increased 15 percent per year. According to a 1999 Gallup poll, only 29 percent of Americans had read more than 10 books in the previous year. Audible is hoping to cash in on this national decline in reading, providing overworked commuters with 28,000 hours of spoken word material from 160 content partners.

Among this material are novels such as The Hithchiker's Guide to the Galaxy by the late Douglas Adams, radio programs such as NPR's Fresh Air and All Things Considered, foreign language guides, and digests of business titles, newspapers and magazines. The site also programs original content, such as a radio series featuring Robin Williams in conversation with George Lucas and former Monty Python performer Eric Idle. Audible paid Williams in company stock.

Audible CEO Don Katz says that the company's relationship with device manufacturers such as Sonic Blue could serve as a model for emerging online music subscription services. "We've learned a lot about how to engage the device community, and I think the music world will follow our example," says Katz, who cites the marketing practices of the cell phone industry as an influence on the company's free MP3 player offer.

In February, Audible received a $10 million investment from Microsoft, boosting the company's ailing stock price by over 100 percent. Prior to the Microsoft investment, Audible's stock had been traded at less than a dollar per share. Earlier this month, Audible announced that it had reduced its losses to $7.7 million for the first quarter of this year, with revenue of just over $1.3 million, a 30 percent increase from the first quarter of 2000.

Sonic Blue has focused its own marketing efforts on new versions of its player, the Rio 500 and the Rio 800. "Sonic Blue gave us the Rio 500s in such a way that we were able to give them away for free," said Audible spokesman Jonathan Korzen. He adds that the company hired a third party to check that the players were in good working order.