Amazon.com Buys Audible for $300 Million

Posted on January 31, 2008

Amazon.com is buying Audible.com for $300 million.

Amazon has increased its presence in the spokenword audio market, announcing this morning that it has agreed to acquire Audible, Inc. the country's largest provider of digital downloads of spokenword audio. Amazon is paying $11.50 per share and assuming Audible's outstanding stock-based awards, making the value of the deal about $300 million. Audible's stock price was at $9.33 the day before that deal was announced, although its shares were selling at a 52-week high of $14.22 in November. The purchase is expected to close in the second quarter.
For the first nine months of 2007, Audible had sales of $78.8 million, an increase of 34% over 2006, and a net loss of $1.5 million compared to a loss of $7.7 million in the first nine months of 2006. Commenting on the purchase, Steve Kessel, senior v-p for worldwide digital media at Amazon, said Audible "offers the best customer experience, and the widest content selection in the industry."

Audible is the exclusive distributor of spokenword audio to iTunes, which is one of Amazon's competitors. Amazon now offers digital downloads of music without DRM (Digital Rights Manangment), but Audible sells its content with DRM, meaning that buyers can't make multiple copies of what they purchased. That could be a problem. The trend is for companies to drop DRM because customers despise it so much.