Spotify Paid $119 Million for Audiobook Distributor Findaway, Taking on Audible

variety.com:

Todd Spangler NY Digital EditorSpotify disclosed that it paid about $119 million in cash for audiobook distributor Findaway when the deal closed last month — representing its entry into the category dominated today by Amazon’s Audible.The company paid €117 million ($118.8 million) in cash for Findaway, Spotify revealed in an SEC filing Wednesday, after reporting better-than-expected Q2 results.

Of that amount, 71% (€83 million) was accounted for as goodwill, which is the estimated value of an asset based on the established reputation of a business.In addition, Spotify agreed to additional cash payments of €13 million ($13.2 million), which are contingent on the continued employment of certain Findaway employees.

Spotify also incurred about $5 million in acquisition-related costs for the purchase. The audio streamer first announced Findaway deal in November 2021. “We believe that audiobooks, in their many different forms, will be a massive opportunity,” Spotify CEO Daniel Ek said at the company’s 2022 investor day last month. “And, with one major player dominating the space” — referring to Audible — “we believe we will expand the market and create value for users and creators alike.”Long term, according to Ek, Spotify expects audiobooks to have gross margins above 40% — higher than its 30%-35% gross margin target for music — and be “highly accretive to the business.”Click here to sign up for Variety’s free Strictly Business newsletter covering earnings, financial news, and more.Spotify had previously disclosed that it paid €83 million in cash combined to buy podcast analytics firms Podsights and Chartable, deals it announced in February.According to Spotify, Findaway’s technology gives the company access to the growing.