audiobooks
Amazon Music is updating its “Unlimited” subscription tier to give subscribers in the U.S., UK and Canada access to audiobooks from Audible’s library of one million-plus titles, the company announced on Tuesday (Nov. 19).
With the new perk, Amazon Music Unlimited follows in the footsteps of Spotify, which revamped its subscription offerings earlier this year to include a bundle of songs and audiobooks together. Though Spotify angered songwriters and publishers by arguing it didn’t need to pay the full mechanical royalty rate since it offered multiple royalty-earning services in one, it appears that Amazon Music will work with publishers to determine new rates privately. According to a statement by the National Music Publishers’ Association (NMPA), the trade organization is “optimistic” about Amazon’s new offering and is “engaged” with the company in a “respectful and productive way” to find a compensation model for publishers that “will not decrease revenue for songwriters.”
Subscribers to AMU’s individual plan and primary holders of family plans are entitled to one audiobook of any length per month, a perk that continues even after each billing cycle. For those whose appetite for audiobooks exceeds the one-per-month offer, additional titles can be acquired through Audible via monthly subscriptions or a la carte purchases.
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The additional perk comes without an increase in price — for the time being. Steve Boom, vp of audio, Twitch and games, said Amazon’s strategy is be “to add new things to the product” that add value and later “figure out what the right pricing strategy is in the long term.” In the U.S., AMU costs $9.99 for Prime members and $10.99 for non-Prime subscribers, both less than Spotify’s $11.99 monthly fee and, for non-Prime subscribers, equal to to Apple Music’s $10.99 price.
Spoken-word content has already proven a valuable complement to music. After AMU added podcasts in 2020, subscribers embraced having both music and spoken-word content in the same app, noted Boom. “The convenience of having both music and spoken word in the same app has proven really effective. It makes logical sense to bring audio books into it as well.”
Audiobooks will not be made available to Amazon Music Prime, the tier included with a basic Prime subscription, or Amazon Music Free, a free option with playlists, radio stations and podcasts.
The concept of “bundling” multiple services together has become a hot-button issue for songwriters and publishers. At the start of March, Spotify Premium subscriptions, including family and duo tiers, were quietly reclassified as bundled offerings, with both music and audiobooks included in the plans.
According to the stipulations of Phonorecords IV — the government-regulated guidelines that dictate the mechanical royalty rates for streaming from 2023-2027 — bundled services can qualify to pay out a lower royalty rate for publishing given that subscription dollars must be split between multiple services (in this case, books and songs). As a consequence, Billboard calculated that publishers and songwriters will earn an estimated $150 million less in U.S. mechanical royalties than previously expected in the 12 months following the change.
At the time, NMPA’s CEO/president David Israelite said he would “declare war” on Spotify — and he subsequently launched a multi-pronged effort to stop the streamer. This included sending Spotify a cease and desist for unlicensed lyrics, video and podcast content; filing a legislative proposal with both the U.S. House of Representatives and the Senate Judiciary Committees; and filing a Federal Trade Commission complaint. Around the same time, the Mechanical Licensing Collective (the MLC) sued Spotify for “improperly” classifying these tiers as bundles.
“We are optimistic about the new Amazon bundle,” Israelite told Billboard in a statement. “Amazon has engaged with the music publishing and songwriting industry in a respectful and productive way, unlike Spotify. We expect this new Amazon bundle will not decrease revenue for songwriters. Unlike Spotify, Amazon is looking at music creators as business partners and seeking to have a deal in place before the first round of royalty payments. This is in stark contrast to Spotify who is trying to pervert the compulsory license and slash what they pay songwriters.”
The NMPA and Amazon Music have not yet reached a final agreement.
Barbra Streisand is among the top contenders for a Grammy nomination for best audio book, narration, and storytelling recording category for the audiobook of her long-awaited memoir, My Name Is Barbra. That was also the title of her first TV special in 1965, for which she won a Primetime Emmy (outstanding individual achievements in entertainment – actors and performers), and a companion album for which she won a Grammy (best vocal performance, female).
Streisand received a life achievement award at the Screen Actors Guild Awards on Feb. 24, one of many such awards she has won. At the Grammys, she is one of just two women (Aretha Franklin is the other) to have won both a lifetime achievement award and a Grammy legend award.
This category usually yields one of most eclectic groups of nominees on the Grammy ballot – and so it will likely be again this year. The two most certain nominees would appear to be former president Jimmy Carter’s Last Sundays in Plains: A Centennial Celebration and Matthew Perry’s Friends, Lovers and the Big Terrible Thing. On Oct. 1, Carter became the first U.S. president in history to reach the age of 100. Perry died in October 2023 at age 54 after a long struggle with drug dependency – “the big terrible thing” in the title of his memoir.
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This would be Carter’s 10th nomination in the category, which would extend his record as the person with the most nods in the history of the category (which dates to the first Grammy ceremony in 1959). Should he win, it would be his fourth win in the category, which would enable him to break out of a tie with poet Maya Angelou as the person with the most wins in the category. Carter previously won for Our Endangered Values (2007), A Full Life: Reflections at 90 (2016) and Faith: A Journey for All (2019).
Perry received five Primetime Emmy nominations – including one for his iconic role as Chandler Bing on Friends.
Former House Speaker Nancy Pelosi has a good chance at a nomination for The Art of Power. She would become the first current or former House Speaker to be nominated in this category. Grammy voters lean Democratic and this would give them a chance to salute the longtime leader, who was the first woman elected as House Speaker. She served from 2007-11 and again from 2019-23.
Questlove is a strong contender with Hip-Hop Is History. The hip-hop icon has been nominated twice in this category, with Creative Quest (2019) and Music Is History (2023). Questlove won both an Oscar and a Grammy for directing the acclaimed documentary, Summer of Soul.
And that’s how fast five slots fill up. There are many other strong contenders on the entry list of 145 entries should any of these presumed front-runners fall short.
Jill Biden‘s Willow the White House Cat could easily make it. Former first ladies Hillary Rodham Clinton (as she was known when she won) and Michelle Obama each won in this category. (Obama won twice.) Many Grammy voters will want to salute the Bidens as Joe Biden’s presidency winds down. But this particular audiobook may seem a little slight. Some voters may prefer to wait for the audiobook of her expected memoir chronicling her life in the public eye.
Dolly Parton’s Behind the Seams: My Life in Rhinestones could also make the grade. The country queen was nominated in at least one category in 36 of the Grammys’ first 66 years, a remarkable show of sustained voter appeal. She has been nominated in each of the last five years. But she has yet to be nominated in this category.
Three past winners in this category are on this year’s entry list. In addition to former president Carter, they are TV hosts Rachel Maddow and Stephen Colbert. Maddow is entered with Prequel: An American Fight Against Fascism; Colbert with Life, a collab with Father John Quigley.
Maddow won in this category in 2021 with Blowout: Corrupted Democracy, Rouge State Russia and the Richest, Most Destructive Industry on Earth. (It didn’t win for Snappiest Title.) Colbert won in 2014 for America Again: Re-becoming the Greatness We Never Weren’t, from the period when he was parodying a right-wing, blowhard commentator on The Colbert Report.
Mariah Carey’s A Portrait of a Portrait could be a contender, though Carey hasn’t been nominated in any category since 2008.
Britney Spears didn’t narrate the audiobook for her best-selling memoir The Woman in Me. Oscar-nominated actress Michelle Williams did, and is entered here. Fun Fact: The Woman in Me topped the New York Times Hardcover Non-Fiction best-seller list, blocking My Name Is Barbra from reaching the top spot.
My Name Is Barbra isn’t the only case where a music star repurposed one of their old titles. Michael McDonald is entered with his audiobook What a Fool Believes, which he titled after The Doobie Brothers’ classic, which won Grammys for record and song of the year in 1979.
Many other titles by musicians are on the list, including George Clinton’s …And Your Ass Will Follow; Willow Smith’s Black Shield Maiden; gospel star Tasha Cobbs Leonard’s Do It Anyway: Don’t Give Up Before It Gets Good; Geddy Lee’s My Effin’ Life; Thurston Moore’s Sonic Life; Debbie Harry, Chris Stein, Romy Ashby & Dennis Bousikaris’s Under a Rock; Tegan and Sara’s Under My Control; Jeff Tweedy’s World Within a Song: Music That Changes My Life and Life That Changed My Music; Jessie Reyez’s Words of a Goat Princess; John McEuen’s The Newsman: A Man of Record; Geri Halliwell-Horner’s Rosie Frost and the Falcon Queen; and Jim Wilson’s Tuned In: Memoirs of a Piano Man – Behind-The-Scenes with Music Legends and Finding the Artist Within.
There are a number of titles by people from the worlds of politics and media on the list, including Arnold Schwarzenegger’s Be Useful: Seven Tools for Life; Brett Kavanaugh accuser Christine Blasey Ford’s One Way Back; Michigan Gov. Gretchen Whitmer’s True Gretch; Doris Kearns Goodwin & Bryan Cranston’s An Unfinished Love Story: A Personal History of the 1960s and Ali Velshi’s Small Acts of Courage.
Three past winners for best comedy album are on the entry list here. In addition to Colbert, they are Tiffany Haddish and Whoopi Goldberg. Haddish is entered with I Curse You With Joy. Goldberg has two entries on the list, Bits and Pieces and Camino Ghosts.
Grammy, Emmy and Tony winner Cynthia Erivo is entered with Children of Anguish and Anarchy. Charlamagne tha God, who was inducted into the Radio Hall of Fame in 2020 as a member of The Breakfast Club, is entered with Get Honest or Die Lying. Nicole Avant, a former U.S. ambassador to the Bahamas (and the daughter of Clarence and Jacqueline Avant), is entered with Think You’ll Be Happy.
Works by TV stars on the list include Henry Winkler’s Being Henry; Dan Aykroyd’s Blues Brothers: The Arc of Gratitude; Michael Richards’ Entrances and Exits; Julianne Hough’s Everything We Never Knew; RuPaul’s The House of Hidden Meanings; John Stamos’ If You Would Have Told Me; Mo Rocca’s Roctogenarians; Dr. Phil’s We’ve Got Issues (he’s listed as Phillip C. McGraw, PHD); Bill Maher’s What This Comedian Said Will Shock You; Patrick Stewart’s Making It So: A Memoir; and George Takei’s My Lost Freedom: A Japanese American World War II Story.
Three-time Oscar nominee Laura Linney is entered with Summer, 1976, a collab with Jessica Hecht. Other works by film stars on the list include Billy Dee Williams’ What Have We Here?: Portraits of a Life and Rebel Wilson’s Rebel Rising: A Memoir.
Sports figures on the list include Andia Winslow with Brittney Griner’s Coming Home and Deion Sanders’ Elevate and Dominate: 21 Ways to Win On and Off the Field.
And did we mention that novelist Salman Rushdie is on the list with Knife: Meditations After an Attempted Murder? We told you the list was eclectic.
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So, which five titles have the best chance to be nominated? Here’s my prediction (alphabetically by title): Nancy Pelosi’s The Art of Power, Matthew Perry’s Friends, Lovers and the Big Terrible Thing, Questlove’s Hip-Hop Is History, Jimmy Carter’s Last Sundays in Plains: A Centennial Celebration, Barbra Streisand’s My Name Is Barbra.
Spotify is demanding that a federal judge toss out a lawsuit filed by the Mechanical Licensing Collective over royalty rates, calling the case “nonsensical” and “wasteful.”
The MLC sued earlier this year, claiming Spotify had “unilaterally and unlawfully” chosen to cut its music royalty payments nearly in half through bookmaking trickery – namely, by claiming that the addition of audiobooks to the service entitled the company to pay a lower “bundled” rate.
But in a motion to dismiss filed in court Tuesday, Spotify calls those claims “meritless and wasteful” – arguing that making hundreds of thousands of audiobooks available to subscribers was not a “token” gesture aimed at reducing music royalties.
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“MLC’s position is nonsensical and factually unsupportable,” Spotify’s lawyers write. “And it profoundly devalues the contributions of the tens of thousands of book authors whose works are available with a Spotify Premium subscription—from literary luminaries, to mainstays on best sellers lists, to up-and-coming writers who are finding their audience.”
The MLC, which collects streaming royalties for songwriters and publishers, filed its lawsuit in late May — a week after Billboard estimated that Spotify’s move would result in the company paying roughly $150 million less over the next year. In its complaint, the MLC claimed Spotify was “erroneously recharacterizing” the nature of its streaming services to secure the lower rate.
“The financial consequences of Spotify’s failure to meet its statutory obligations are enormous for songwriters and music publishers,” the group’s attorneys wrote at the time. “If unchecked, the impact on songwriters and music publishers of Spotify’s unlawful underreporting could run into the hundreds of millions of dollars.”
At issue in the lawsuit is Spotify’s recent addition of audiobooks to its premium subscription service. The streamer believes that because of the new offering, it’s now entitled to pay a discounted “bundled” royalty rate under the federal legal settlement that governs how much streamers pay rightsholders.
In Tuesday’s motion, Spotify’s lawyers strongly defend that interpretation. They argue that the market for audiobooks has attracted “billions in consumer dollars” and that adding books was the kind of valuable new perk that had been intended to be covered by the lower bundled rate.
“At the heart of this dispute is an easily answered question: Is audiobook streaming distinct from music streaming, offering greater than token value?” the company’s lawyers write. “The answer is indisputably yes, and there is no need for federal court litigation to confirm it.”
The rule at issue says that streamers can use the bundled rate if they offer “one or more other products or services having more than token value.” Claiming that more than 200,000 audiobooks does not qualify under that rule is “baffling,” Spotify’s lawyers write.
“The creative output of these authors is not merely of ‘token value’,” Tuesday’s filing says. “Acceptance of that unassailable, commonsense proposition should end this meritless and wasteful litigation.”
MLC’s attorneys will file a formal response to the motion in court in the coming months. In a statement to Billboard on Thursday, the group said: “The MLC’s general practice is not to comment publicly on pending litigations. That said, we would reiterate that we take the enforcement obligations assigned to us by Congress extremely seriously and would refer you to the complaint we filed in this matter for more details regarding our position on this matter.”
Spotify has officially unveiled a basic premium tier for users who prefer not to pay extra for audiobooks, the company announced Friday (June 21). The plan is priced at $10.99 — $1 less than its premium individual plan, which includes 15 hours of audiobook listening time per month.
The reveal of the basic tier, which Spotify teased during its Q1 earnings call in April, follows the company’s June 3 announcement that it would be raising prices in the United States for a second consecutive year. Starting in July, its premium individual plan will bump up to the $11.99 price point, while its duo plan will rise to $16.99 a month (up from $15.99) and its family plan will spike $3 to $19.99 a month.
The news also follows a recent Bloomberg report that Spotify plans to roll out a high-fidelity audio tier later this year for $5 more per month than its premium individual plan.
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Shares of Spotify rose 1.5% to $317.86 this week, marking their third consecutive weekly gain. On Friday alone, the stock gained more than 1.2%.
The new tier comes amid a pitched battle between Spotify and music publishers following the streamer’s decision to reclassify its premium offerings as “bundles,” which qualifies those plans for a discounted rate on mechanical royalties in the United States. According to Billboard estimates, publishers and songwriters will earn roughly $150 million less in royalties in the first year following the change.
On May 15, nearly one month after the bundles were first reported, the National Music Publishers’ Association (NMPA) sent Spotify a cease and desist letter for allegedly hosting unlicensed lyrics, music videos and podcast content on the service. The following day, the Mechanical Licensing Collective (the MLC) sued the streaming company, alleging it had “improperly” classified its premium tiers as bundles.
Later in May, NMPA president/CEO David Israelite sent a letter to Judiciary Committee leadership in both the U.S. House and Senate asking for an overhaul of the statutory license in section 115 of the Copyright Act, which “prevents private negotiations in a free market” for mechanical royalty rates for songwriters and music publishers in the United States. At the NMPA’s annual meeting on June 12, Israelite announced that the organization had filed an official complaint with the Federal Trade Commission (FTC) and sent letters to the attorneys general for nine states along with consumer trade groups, alleging Spotify has violated the Restore Online Shoppers’ Confidence Act (“ROSCA”), section 5 of the FTC Act and other consumer protection laws.
Spotify has hit back at the various actions taken by the NMPA, at various points calling its accusations “baseless” and “misleading.” Of the MLC lawsuit, the streamer argued that “bundles were a critical component” of the Phono IV agreement struck between publishers and streaming services, that “multiple DSPs include bundles as part of their mix of subscription offerings” and that it “paid a record amount to publishers and [collecting] societies in 2023 and is on track to pay out an even larger amount in 2024.”
Recently, Spotify has reclassified its premium individual, duo and family subscription services as “bundled subscription services” in an ill-informed attempt to deprive songwriters and music publishers of their rightfully earned U.S. mechanical royalties. As a result, the agreed-upon revenue share rate for Spotify premium, currently 15.2%, may effectively be reduced to less than 12%, depending upon a number of factors. Losses to songwriters and publishers, estimated by Billboard to be $150 million on an annualized basis, will undoubtedly increase over time as subscription revenue and users grow.
Let me say straight away that this column is not intended to embarrass or disparage Spotify in any way. Quite the opposite: This is a respectful appeal to the company, specifically its senior leadership team, to do the right thing by songwriters, regardless of what strategies they appear to believe are legally permissible.
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Spotify has an unfortunate and documented history of punching down at songwriters and music publishers. In just the last few years, this includes appealing the Phonorecords III decision, which reasonably raised the mechanical royalty rate from 10.5% to 15.1% of revenue over a five-year period (while also providing discounted terms for family and student accounts that are beneficial to Spotify and other music services). Almost immediately after serving notice of its intention to appeal Phonorecords III, Spotify moved to retroactively implement the Copyright Royalty Board’s final pre-appeal decision and clawed back a multi-million-dollar credit from songwriters and music publishers throughout 2019. The appeal and remand process lasted for many years, ultimately delaying the payment of a large amount of mechanical royalties, including those earned during the hardship of the COVID-19 pandemic, until February 2024. And finally, in late 2021, Spotify proposed statutory rates for 2023-2027 that the NMPA referred to as the “lowest royalty rates in history.”
While the settlement of Phonorecords IV in 2022 was celebrated by both streaming services and music publishers, Spotify and other DSPs had especially good reason to rejoice. The settlement provides that revenue share rates minimally increase from the prior rate of 15.1% to 15.35% over a five-year period while also providing for discounts related to not only family and student accounts but also Spotify duo —subscription tiers that are meaningful to Spotify given the strong growth of family and duo plans, as the company has noted in earnings reports. The settlement also provides specific terms for DSPs that choose to bundle a qualifying music subscription service with other products and services.
It’s difficult to imagine why Spotify could have any degree of buyer’s remorse concerning the Phonorecords IV settlement or deliberately attempt to manipulate its terms given how clearly reasonable and fair it is. Spotify presumably entered into the settlement with the full knowledge and acceptance that it was agreeing to pay the revenue share rates of 15.1% to 15.35% upon a properly undiluted revenue base, as it had been doing until March 2024.
But Spotify has again devalued the contributions of songwriters to its platform, a move that has been described by rights and advocacy organizations as “cynical,” “potentially unlawful,” “greedy” and “offensive.”
I’ve been asked a lot in recent weeks why Spotify is doing this. The answer, other than perhaps “because they believe they can,” is simple. I believe that Spotify is unjustly attempting to reduce the amounts it pays to songwriters and music publishers in order to (1) effectively use the displaced royalties to offset the costs of running its audiobook business and (2) improve its margins.
Spotify’s reframing of the vast majority of its subscription services as bundled subscription services is a work of fiction. It has done so, in part, by launching a standalone audiobooks access tier that does not appear commercially attractive to users and was launched, at least to an extent, to support its “bundling” strategy. As noted in the Mechanical Licensing Collective’s (the MLC) legal complaint against Spotify, the audiobooks access tier is largely hidden from view on Spotify’s website on a page where the primary purpose is to steer subscribers to premium, not audiobooks access.
The audiobooks access tier is also only available in the United States, the only country to which the Phonorecords IV settlement and accompanying statutory framework applies, and is notably not available in any other country where audiobooks are available in premium. Spotify’s intent is rather obvious on its face, but to think that the availability of the audiobooks access tier as implemented is something of a silver bullet that qualifies it to reclassify its premium individual, family, and duo tiers as a bundled subscription service is a true mark of acting in bad faith. To do so when Spotify is reportedly on the cusp of rightfully raising prices in the United States is all the more insulting.
In the wake of the ire directed at Spotify from songwriters and the music publishing community in recent weeks, the company has issued statements to Billboard and other media.
First, Spotify has stated that it is simply doing what other services have done with bundled products. In my opinion, this is misleading. The Spotify competitors that have availed themselves of bundle reporting methods have done so for products that are bona fide bundles consisting of individually available services and products that hold a clear commercial value, and to which users actively elect to subscribe. Spotify has even done this itself for bundled products on a more limited basis, in the manner actually intended by the Phonorecords IV settlement and its predecessors. But as the MLC’s legal filing against Spotify notes, anyone who subscribed to Spotify premium prior to November 8, 2023, did not elect to receive audiobooks content or functionality. Many premium users have not utilized audiobooks even once; and, as of this writing, a non-student Spotify subscription without audiobooks does not even exist.
Spotify has also been quick to point out that music publishers “agreed to and celebrated” the Phonorecords IV settlement. I can assure readers there is no world in which the music publishing community truly believed that it was agreeing to bundling provisions in the manner in which they are being abused by Spotify to drastically reduce its payments to songwriters and music publishers. At minimum, Spotify’s actions clearly violate the spirit of the agreement, and to say otherwise is blatantly dishonest. To the extent Spotify may believe it has outsmarted songwriters and music publishers, there should be no pride in ownership.
Finally, Spotify has stated that it “paid a record amount to publishers and societies in 2023 and is on track to pay out an even larger amount in 2024,” which presumably refers to Spotify’s global rather than U.S. domestic spend on music publishing royalties. This may be true given Spotify’s growth trajectory, which as of its most recent reporting was up 20% year-over-year in revenue and up 14% in premium subscribers. However, it is wholly irrelevant and a deflection from the issue. Simply paying more from one year to the next does not atone for the grave offense at hand. The amount of royalties paid is not the only pertinent metric.
Spotify has repeatedly stated its desire to become a more efficient and profitable company. I applaud that. Spotify operating profitably is good for the music business — including songwriters and music publishers. And Spotify is welcome to spread its wings and invest in new areas of business such as podcasts and audiobooks. But let’s be clear: The royalties that Spotify pays to songwriters and music publishers (and other music rightsholders including record labels) are not preventing it from becoming or remaining profitable.
Spotify has said on multiple occasions, including during its 2022 investor day presentation, that it has chosen to prioritize growth over profitability and has done so deliberately and willingly. Its music gross margin has operated at strong numbers and improved over time, in part thanks to its marketplace initiatives, but overall gross margin has been dragged down by investments the company has made in the podcast space. Not all of those investments, including content deals and acquisitions of other companies, have produced positive results, as is well documented in various media, and Spotify has since pivoted to operate more efficiently and better ensure that its costs do not grow quicker than its revenue.
The royalties Spotify pays to songwriters and music publishers are not the problem, nor are the royalties it pays to others. Spotify receives tremendous value in exchange for the mechanical and other royalties that it pays for musical works, and songwriters should not be treated by Spotify as a drag on its margins. To pay slightly north of 15% of revenue for songwriters’ creative output is a gift, and there is absolutely no reason for Spotify to sneak around corners to dilute songwriters’ income. It is beyond the pale, even relative to actions that Spotify has taken against songwriters and publishers in recent years.
I love Spotify and have been a user since the very beginning. But I value the songs upon which it has built its entire business even more. Spotify is a house built by songwriters. In the modern listening environment, which heavily depends upon personalization, recommendations and playlists, songs and songwriters are an even more crucial part of the infrastructure and the value conveyed to consumers who pay Spotify subscription fees.
I’ve often said that compensating songwriters in accordance with the value that they bring to music streaming platforms is not only good business but also good for business. Spotify’s relationship with songwriters and publishers, whether it realizes it or not, is mission-critical and not just about maintaining positive sentiment. Given the global stature of Spotify and the company’s interest in various content types including podcasts, music videos and lyrics, returning its relationship with songwriters and publishers to a respectful position is important to its future. Unfortunately, Spotify’s relationship with the songwriter and music publishing communities that it has built its business upon is now more fraught and damaged than ever. Trust has been almost entirely eroded. That cannot merely be chalked up to, as Spotify stated during its most recent earnings call, “natural tensions between suppliers and distributors.” But it may not be too late to fix things.
Here is my genuine and respectful appeal to Spotify, and it’s not a big ask: Please voluntarily honor the Phonorecords IV settlement on the intended terms that you know fully well were agreed to and promptly reverse course on your misguided attempts to reduce U.S. mechanical royalties in this manner. Songwriters and the broader music publishing community will thank you. If this is too much to ask, I believe the songwriting community will never want to hear another word from Spotify about, to use the company’s own words, “giving a million creative artists the opportunity to live off their art.”
Adam Parness was the global head of music publishing at Spotify from 2017 to 2019. He currently operates Adam Parness Music Consulting and serves as a highly trusted and sought after strategic advisor to numerous music rightsholders, notably in the music publishing space, as well as popular global brands, technology-based creative services companies and firms investing in music and technology.
Spotify is changing the way it pays songwriters and publishers in the United States — leading to an estimated $150 million cut to U.S. mechanical royalty payments — and the music business is speaking out.
By adding audiobooks into Spotify’s premium, duo and family tiers, Spotify now claims it qualifies to pay a discounted “bundle” rate to songwriters for premium streams given that it now has to pay licensing for both books and music from the same subscription price tag — which will only be a dollar higher than when music was the only offering.
Spotify argues that adding audiobooks reclassifies the service from a “standalone portable subscription” to a “bundled subscription offering,” according to the royalty rate formula provided in Phonorecords IV. The National Music Publishers Association (NMPA) and Nashville Songwriters Association International (NSAI), both of which represented the music business in Phono IV proceedings, disagree with Spotify’s reading of the settlement, with the NMPA calling it “a cynical and potentially unlawful move” that is a “perversion of the settlement we agreed upon in 2022.”
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Last week, Billboard calculated that this change will lead to an estimated $150 million cut in U.S. mechanical royalties from premium, duo and family plans for the first 12 months the bundle rate is in effect, compared to what songwriters would have earned if the three subscription tiers were never bundled. The change affects payments starting in March 2024, so it will not impact Spotify’s premium, duo or family payouts for the first two months of 2024. Specifically, the estimate refers to losses for the first 12 months after the premium, family and duo tiers are qualified as a bundle, not calendar year 2024.
As Spotify grows, the music business fears that the difference between what payments to songwriters and publishers would have been if premium continued to be counted as a regular standalone service versus what will be paid now that music and audiobooks have been bundled will continue to increase.
Spotify says it will soon offer a music-only subscription tier that will pay out in the same way Spotify premium used to, but there’s not yet a timeline for when this option will launch.
Back in March, Spotify released a statement about the change to the bundle rate, stating that the company is “on track to pay publishers and societies more in 2024 than in 2023. As our industry partners are aware, changes in our product portfolio mean that we are paying out in different ways based on terms agreed to by both streaming services and publishers. Multiple DSPs have long paid a lower rate for bundles versus a stand-alone music subscription, and our approach is consistent.”
Below is an updating list of music industry reactions to the news:
National Music Publishers’ Association (NMPA)
“It appears Spotify has returned to attacking the very songwriters who make its business possible. Spotify’s attempt to radically reduce songwriter payments by reclassifying their music service as an audiobook bundle is a cynical, and potentially unlawful, move that ends our period of relative peace. We will not stand for their perversion of the settlement we agreed upon in 2022 and are looking at all options.”
Association of Independent Music Publishers (AIMP)
“Two weeks ago, we spoke out about the potential consequences for independent music publishers should Spotify go forward with its plan to bundle a previously free service, audiobooks, with music subscriptions. Now that an actual number has been put to the potential lost revenue for music publishers, a staggering estimate of $150 million per year, we feel the need to speak out again.
“It is a deeply cynical move for Spotify to attempt to circumvent the CRB settlement agreed to by the NMPA & NSAI and DiMA in 2022 via this bundling ‘loophole,’ and further insulting that the price of a Spotify subscription will actually increase for users while cutting revenue for the songwriters who keep their business alive. This is especially problematic for independent music publishers, as they and all publishers are legally prevented from negotiating protections against bad-faith tactics such as this, while labels are allowed to do so in a free market.
“At this point, we still do not know how Spotify plans to notify its subscribers of this change. The right thing to do is to default existing subscribers to music-only accounts, and then give them the option to add-on the audiobook service for an additional $9.99 per month — Spotify’s proposed standalone rate for audiobooks. This ensures a proper, non-devalued royalty rate for both music and audiobook publishers and rightsholders, who will otherwise both be negatively affected by bundling.
“The AIMP offers its unequivocal support to the NMPA as they fight this critical battle to prevent Spotify’s scheme from taking effect. We encourage all independent music publishers to join us in this stance and make their songwriters aware of this attack on their livelihood. We cannot allow bundling to become a precedent that can be used to deprive songwriters of their well-earned royalties.
“The AIMP has also been speaking with the Coalition of Concerned Creators and are happy to report that we are aligned on this issue. Please find their statement on this issue below.
“From the Coalition of Concerned Creators:
“All musicians, creator advocacy groups, unions and organizations, and other creator stakeholders — including authors and podcasters — must stand firm against Spotify’s recent policy shift. It is essential to advocate for equitable compensation for music creators, who are pivotal to the industry’s sustainability. Additionally, this is a clear pattern of behavior and we continue to be concerned about Spotify’s bridge into new audio formats, like audiobooks, and how this pattern of behavior will affect other creators, like authors, as well.”
Nashville Songwriters Association International (NSAI)
“Spotify, we are writing regarding Spotify’s decision to ‘bundle’ music with audiobooks, resulting in an estimated annual loss of as much as $150 million in mechanical royalty payments to American songwriters, composers and music publishers. This attempt at lowering royalty payments to an already beleaguered songwriter community is in the worst bad faith and a perversion of the Copyright Royalty Board settlement that the Nashville Songwriters Association International (NSAI), the National Music Publishers Assn. (NMPA) and the Digital Media Assn. (DiMA) agreed to in 2022. It counters every statement Spotify has ever made of claiming the company is friendly to creators.
“‘Bundling’ music with other offerings without a music-only option does not comport with our view of the intent of the Copyright Royalty Board (CRB) in recent Phonorecord procedures in which the NSAI participated. Further, this move negates gains awarded to songwriters by the CRB. NSAI will not accept what we view as an attempt to manipulate the intent of the court through a ‘bundling’ gimmick. NSAI calls for Spotify to immediately reverse its course and offer separate music subscription choices at price points that will fairly remunerate songwriters.
“The American songwriter community is appalled that this is happening while Spotify is reporting record profits, and while founder Daniel Ek has recently cashed in a reported $180 million in stock options, including $118 million that practically coincided with the ‘bundling’ announcement which reduced Spotify’s yearly royalty obligation. The amount Ek cashed in conveniently mirrors the estimated amount that Spotify wants to leech off the back of songwriters who create the product on which streaming services are making billions.
“Reporting record profits while reducing songwriter royalties as the company founder cashed in millions in stocks proves a greedy, offensive and callous disregard for the songwriters on whose backs these revenues are generated.
“Signed unanimously by Nashville Songwriters Association International”
When Bloomberg reported that Spotify would be upping the cost of its premium subscription from $9.99 to $10.99, and including 15 hours of audiobooks per month in the U.S., the change sounded like a win for songwriters and publishers. Higher subscription prices typically equate to a bump in U.S. mechanical royalties — but not this time.
By adding audiobooks into Spotify’s premium tier, the streaming service now claims it qualifies to pay a discounted “bundle” rate to songwriters for premium streams, given Spotify now has to pay licensing for both books and music from the same price tag — which will only be a dollar higher than when music was the only premium offering. Additionally, Spotify will reclassify its duo and family subscription plans as bundles as well.
To determine how great this loss in royalty value would be for the music business, Billboard calculated that songwriters and publishers will earn an estimated $150 million less in U.S. mechanical royalties from premium, duo and family plans for the first 12 months that this is in effect, compared to what they would have earned if these three subscriptions were never bundled. Notably, this change will not impact Spotify’s premium, duo or family pay outs for the first two months of 2024. Bundling kicks in starting in March, so this number refers to losses for the first 12 months after premium, family and duo is qualified as a bundle, not the calendar year of 2024.
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Billboard’s figure was calculated by determining how Spotify’s service revenue, payments to labels, performance royalty rates, and other factors that impact mechanical income are expected to rise each month throughout 2024. These 2024 projections are based on actual numbers pulled from the Mechanical Licensing Collective’s Spotify rate sheets for 2023. For premium specifically, the streamer will pay an estimated $100 million less in the first 12 months bundling is in effect, in comparison to what Spotify was projected to pay in the next 12 months had it never been reclassified.
To be more conservative with the premium-only estimate, if the lost royalty value was calculated purely based on actual 2023 numbers from the MLC, the losses would be around $80 million for the first 12 months, but given all of Spotify’s music service revenue grew by an average of 1.1% every month in 2023, according to Billboard’s calculations, $80 million is almost certainly a low-ball. (A representative for Spotify declined Billboard’s request for comment).
As Spotify grows, the chasm between what payments would have been to songwriters and publishers if premium was counted as a regular standalone service versus what it will be paid now as a bundle with books is expected to increase. According to Spotify’s latest earnings call, the company is growing steadily, up 14% year-over-year for premium subscribers and 20% year-over-year for premium revenue globally.
The lost royalty value for songwriters and publishers could become even larger if Spotify ups the cost of premium to $11.99, which a source close to the matter thinks is possible. It is also possible that this loss could be lessened by how many users change their subscription from premium, duo and family to Spotify’s forthcoming music-only tier, which will pay out in the way that premium did before it was bundled, but this is unlikely to make a significant impact in the estimate of first year losses, considering the tier has yet to be launched and users are automatically renewed on their current plans, even after bundling.
Given there are some unknowns still present, estimates range for lost mechanical royalty value for the first year. One source close to the matter agrees with Billboard’s estimate, also independently calculating that the lost royalty value will total at $150 million in U.S. mechanical royalties for premium, duo and family. Another source calculated somewhere between $140-150 million. A third source says their personal estimate totaled at around $120-130 million at minimum.
This change only impacts the United States, but there are fears that Spotify’s reclassification will have a domino effect worldwide, given other major markets like Australia, Canada, Ireland, U.K. and New Zealand also have audiobooks now included in Spotify premium. Roberto Neri, CEO of the U.K.-based songwriting organization The Ivors Academy told Billboard that “if Spotify gets away with this in the U.S., they will no doubt use it in their future negotiations with European, [Asian-Pacific] and other territories,” and that “what happens in one territory can impact others.”
The National Music Publishers’ Association, which represents U.S. music publishers, said that it would be “looking at all options” to fight back against Spotify’s changes to premium when it was first announced in March, and now that the fight between TikTok and UMG has concluded, it has turned its “full attention” to this issue.
“It appears Spotify has returned to attacking the very songwriters who make its business possible,” said David Israelite, the NMPA’s president and CEO, when the change to premium was first announced. “Spotify’s attempt to radically reduce songwriter payments by reclassifying their music service as an audiobook bundle is a cynical, and potentially unlawful, move that ends our period of relative peace. We will not stand for their perversion of the settlement we agreed upon in 2022.”
Phonorecords IV Settlement
So, how did we get here? It all goes back to the Copyright Royalty Board (CRB), the slate of judges that set the rates for U.S. streaming mechanicals, based on weighing the business interests of publishers, songwriters and services. Unlike the sound recording side of the music business, which decides on their streaming rates based on private, free market negotiations, the publishing mechanicals are highly regulated in the U.S.
Every five years, the NMPA, Nashville Songwriters Association International (NSAI) and members of the Digital Media Association (DiMA), such as Spotify and Apple Music, come together to discuss the rates for the next five-year period; and if no agreement can be reached, then the CRB judges make a determination after a rate trial. In 2022, the three organizations convened about the period of 2023-2027, called “Phonorecords IV” or “Phono IV,” and decided, in an effort to save time and money, to come to a voluntary settlement to present to the CRB judges.
Even though the Phono IV settlement included changes to the way bundling worked (which was considered a concession to streaming services), many in the music business called the settlement as an overall win, especially because the previous five-year rate (Phono III) was fought over for about five years, causing confusion over rates in the interim. When it was announced, the NMPA touted the Phono IV settlement as delivering the “highest rates in the history of digital streaming,” because of its win for a larger headline rate, and many felt it signaled a new era of cooperation between streaming services and the music business. Israelite says now in his statement that Spotify’s latest move to bundle audiobooks “ends our period of relative peace.”
How Bundling Affects Mechanical Revenue
Even though the price of Spotify premium is rising, that additional revenue does not benefit songwriters and publishers. Now that premium is considered a bundled service with audiobooks, some of the subscription price is owed to book publishers and authors to license their works, too.
Mechanical revenue for bundles is calculated by seeing what audiobooks are valued at as a standalone offering ($9.99) and weighing that against the price of the premium bundle offering ($10.99), according to Phono IV. The value of music is found by dividing the total premium price ($10.99) by the two services (audiobooks only and premium) together ($21), which results in music being valued at about 52% of the total bundle, or around $5.70 per subscriber.
How Bundling Affects the Total Content Cost
The first step in calculating the mechanical royalty rate a streaming service owes to songwriters and publishers is to find the “all-in pool.” Streaming generates two forms of royalties for music publishing — performance and mechanical — so this “all-in pool” includes both types. (Performance royalties are determined by a separate, but also U.S. government regulated, process).
The all-in pool is the greater of either the headline rate (which ranges from 15.1% for 2023, 15.2% for 2024, 15.25% for 2025, 15.3% for 2026, and 15.35% for 2027) of Spotify’s music revenue (which is now lowered to around $5.70 per subscriber because of bundling) or the percentage of total content cost (TCC), a.k.a. what royalty Spotify pays to labels.
Previously, Spotify premium qualified for the full rate of the lesser of 26.2% of TCC for the period (or $1.10 per subscriber). Now, after deciding to change its premium offering to include audiobooks, Spotify argues it qualifies as a “bundled subscription offering,” which moves its rate down to 24.5% of TCC for the accounting period.
Regardless of whether the CRB mechanical formula determines all-in royalty pool based on the percentage of TCC or the headline rate, both options are negatively affected by Spotify reclassifying premium as a bundle. According to Billboard’s calculations, every month of 2023 used the headline rate of music revenue as the all-in pool for premium, but after bundling, the next 12 months will use the percentage of TCC as this pool.
After that, the final mechanical royalty pool is determined by subtracting out the performance monies from the all-in pool. This number is weighed against a calculated royalty floor. Whichever is the larger number is the final amount owed to publishers and songwriters for U.S. mechanical royalties.
What began as a music-only streaming platform evolved into a broader audio platform that included podcasts and audiobooks. Now, Spotify is venturing into video — in both snippets and long-form content, although the latter is only in an experimental phase.
During Tuesday’s Q2 earnings call, CEO Daniel Ek and interim CFO Ben Kung repeatedly referred to “the Spotify Machine” when explaining the company’s expansion beyond music. As Ek explained, the term means the company “isn’t just a sort of one-trick pony anymore, but it’s actually multiple verticals working together” to create more choice for consumers and drive more engagement.
“Because you may come for the music and stay for the audiobooks,” Ek said. “Some customers may come for the podcast and stay for the audiobooks.”
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The term makes sense: Spotify is an increasingly complex product with multiple moving parts, numerous audio and video formats, and a variety of paid tiers. Each new component to the machine is meant to make the company more valuable as a whole. Similarly, concert promoter and ticketing company Live Nation uses the term “flywheel” to describe how its various products and business segments provide momentum for the larger entity. But “the machine” has a better ring to it.
The machine is integral to becoming a sustainable, profitable company. As Spotify detailed in its 2022 investor day presentation, branching out from music will help improve its gross margins and become the profitable company it has long aspired to be. Music margins are roughly 30% of revenue — the remaining 70% goes to rights holders — and will top out at 35%, the company has said. At that 2022 presentation, Spotify said podcast margins can reach 40-50% gross margin and overall gross margin can get to 40% (gross margin rose to 27.6% in Q1 from 25.2% a year earlier).
The machine helps increase engagement. Spotify is more valuable if people spend more time using it. When engagement increases, churn decreases, which in turn reduces the expense involved in bringing those lapsed customers back. When engagement increases, free users are more likely to become paid subscribers. The last thing a streaming service wants is an infrequent customer who doesn’t enjoy the features or delve deep into its content. Audiobooks are a good example of keeping people hooked: Ek said that in the markets where audiobooks are available, 25% of users are listening to them. What’s more, in the first two weeks a Spotify user listens to audiobooks, Spotify sees “over two and a half hours of incremental usage on the audiobook side,” he said.
The machine gives users greater freedom of choice. Ek confirmed Spotify will have an audiobook-only subscription tier along with a music-only tier; the standard subscription tier offers both music and audiobooks. Over the years, Spotify has given consumers multiple options to choose from: an individual plan, a two-person plan called Duo, a multi-user family plan, and, in certain markets, the ability to purchase one day at a time. Spotify wants to provide “as much flexibility as possible in this next stage of Spotify” to convert more users to paid subscribers, Ek explained.
The machine is built to maximize value. Ek and Kung frequently mentioned a particular internal metric, a value-to-price ratio, that Spotify uses as a North Star these days. By adding podcasts, audiobooks and education, as well as features such as Wrapped — Spotify’s personalized year-end recap — Spotify delivers more value than it provided when it was a simpler, music-only service. Ek singled out the videos that Spotify has added in “11 or 12” markets and built anticipation for video clips that will allow artists to tell stories about their new releases. Such videos are one way Spotify is “focused on winning discovery” to make the platform a better listening experience, Ek said. Spotify’s recent foray into educational video courses in the U.K. is another stab at adding value.
The machine ultimately gives Spotify the ability to raise prices. When Spotify adds products and features, EK explained, it increases its value-to-price ratio. That, in turn, allows it to occasionally raise prices to capture the value it created. “The way you should think about this as investors is the better we can improve the product, the more people engage with our product, and the more value we ultimately create,” Ek said. “And the more value we create, the more ability we will have to then capture some of that value by price increases.” After more than a decade of value creation and stagnant prices, Spotify raised rates in July 2023. In April, it again hiked rates in select markets — including the United Kingdom and Australia — and is expected to expand those increases to additional markets.
The machine also requires a feat of engineering. “It’s a fairly complex machine,” Kung said, because Spotify has both variable-cost models, such as revenue sharing and per-hour royalties, and fixed-cost models — some in-house and licensed podcast content, perhaps. Ek added that “the machine takes care of all the complexity on the back end to deal with what was historically a very difficult problem to solve, which is multiple business models in one consumer experience.” Spotify’s engineering challenge is incorporating additional verticals into a seamless user experience without getting clunky — a criticism often launched at iTunes, which started as a music store and added videos, books, apps, podcasts and iTunes U, a place for educational materials. “Simplicity is hard,” a former Apple product designer once wrote. “Very hard. But when you get it, it’s beautiful.”
The machine might take some getting used to. As Spotify branches out to non-music verticals, it has stakeholders other than the music rights holders, artists and songwriters it has served for more than a decade. Now, Spotify also supports podcasters, authors and — although in the early stages — educators. That has already created some tension between music publishers and Spotify following news that Spotify considers its music-audiobook subscription offering to be a bundle under the Phonorecords IV mechanical rate structure in the United States. Subscription bundles allow Spotify to pay a slightly lower royalty rate. But really, is anybody surprised that the machine is trying to save a little money?
Bono’s audiobook Surrender, which the U2 frontman authored and narrated, was named Audiobook of the Year at the 2024 Audie Awards, which recognize distinction in audiobooks and spoken-word entertainment. The awards were presented at the Avalon Hollywood in Los Angeles on Monday (March 4).
Bono’s audiobook, subtitled 40 Songs, One Story, was released by Penguin Random House Audio in November 2022. It runs 20 hours and 25 minutes. A companion album, Songs of Surrender, debuted and peaked at No. 5 on the Billboard 200 in April 2023.
The four other finalists for audiobook of the year were All the Sinners Bleed by S.A. Cosby, narrated by Adam Lazarre-White, published by Macmillan Audio; Inside Voice: My Obsession with How We Sound, written and narrated by Lake Bell, published by Pushkin Industries; Sing a Black Girl’s Song, by Ntozake Shange, edited by Imani Perry, foreword by Tarana Burke, narrated by Alfre Woodard, D. Woods and full cast, published by Hachette Audio; and Tom Lake by Ann Patchett, narrated by Meryl Streep, published by HarperAudio.
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Oscar-nominated screenwriter Nia Vardalos (My Big Fat Greek Wedding) hosted the awards show. Presenters included Felicia Day (a 2024 Audie Award winner), Lake Bell (a 2024 finalist) and Samira Wiley (a 2021 finalist).
Former first lady Michelle Obama won in the business/personal development category for The Light We Carry. Six-time Tony winner Audra McDonald won in the literary fiction & classics category for Homer’s The Iliad. In the humor category, the winner was Leslie F*cking Jones, written and narrated by Leslie Jones, with a foreward by Chris Rock.
All 27 categories were gender-neutral this year. The best male narrator and best female narrator categories were transformed to best fiction narrator and best non-fiction narrator.
The awards are presented by Audio Publishers Association (APA), a not-for-profit trade organization. Since 1986, the APA has worked to bring audio publishers together to increase interest in audiobooks.
The full list of winners can be found on the APA’s website: audiopub.org.
Here are 2024 Audie Award winners in selected categories:
Audiobook of the year
Surrender
Written and narrated by Bono
Published by Penguin Random House Audio
Autobiography/memoir
Making It So
Written and narrated by Patrick Stewart
Published by Simon & Schuster Audio
Business/personal development
The Light We Carry
Written and narrated by Michelle Obama
Published by Penguin Random House Audio
Fantasy
The Dragon Reborn
By Robert Jordan
Narrated by Rosamund Pike
Published by Macmillan Audio
Fiction
Tom Lake
By Ann Patchett
Narrated by Meryl Streep
Published by HarperAudio
Humor
Leslie F*cking Jones
Written and narrated by Leslie Jones, foreword by Chris Rock
Published by Hachette Audio
Literary fiction & classics
The Iliad
By Homer, translated by Emily Wilson
Narrated by Audra McDonald
Published by Audible Studios
Short stories/collections
Wild and Precious: A Celebration of Mary Oliver
By Mary Oliver, with the contributions by Sophia Bush, Ross Gay, Samin Nosrat, Rainn Wilson, and Susan Cain
Narrated by Sophia Bush
Published by Pushkin Industries
Dolly Parton, Bono, “Weird Al” Yankovic and other music personalities are among the finalists for the 2024 Audie Awards, which recognize distinction in audiobooks and spoken-word entertainment. The nominations, which are presented by the Audio Publishers Association (APA), go to the narrators rather than the authors (unless they are one and the same). Winners across 27 competitive categories will be revealed on March 4 in Los Angeles.
Parton is nominated in the autobiography/memoir category for Behind the Seams, which she wrote and narrated with Holly George-Warren and Rebecca Seaver. Her competition includes actor Patrick Stewart for Making It So.
Bono is nominated for the top award, audiobook for the year, for Surrender, which he both wrote and narrated. His competition includes Meryl Streep, the narrator of Ann Patchett’s Tom Lake.
Yankovic is nominated in the multi-voiced performance category for Surely You Can’t Be Serious: The True Story of Airplane!. Yankovic narrated the saga of the 1980 comedy classic with a full cast including Barry Diller, Beau Bridges, Bill Hader, David Zucker, Jerry Zucker, Jim Abrahams and Jimmy Kimmel.
Because nominations go to the narrators, the nominee for best non-fiction narrator for Britney Spears’ best-seller The Woman in Me is its narrator, Michelle Williams rather than the pop superstar.
Nominees in the narration by the author(s) category include former first lady Michelle Obama for The Light We Carry and, again, Patrick Stewart for Making It So.
Obama is also nominated in the business/personal development category for The Light We Carry, where she faces Tony and Emmy winner Sheryl Lee Ralph, nominated for Diva 2.0: 12 Life Lessons from Me for You.
Six-time Tony winner Audra McDonald is nominated in the literary fiction & classics category for Homer’s The Iliad. Among the other nominees in the category: two-time Oscar winner Tom Hanks for his own book The Making of Another Major Motion Picture Masterpiece, with a full cast including Rita Wilson, Natalie Morales, Ego Nwodim and Holland Taylor.
Tony and Grammy winner Leslie Odom Jr. is nominated in the young listeners category for I Love You More Than You’ll Ever Know, which he narrated with his wife, Nicolette Robinson.
In the humor category, the nominees include Leslie F*cking Jones, written and narrated by Leslie Jones, with a foreward by Chris Rock.
All 27 categories are gender-neutral this year. The best male narrator and best female narrator categories have been transformed to best fiction narrator and best non-fiction narrator.
The full list of nominations can be found on the APA’s website: audiopub.org.