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<title>Kevin Boone: Audible's returns policy -- who wins, who loses?</title>
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<h1>Audible's returns policy -- who wins, who loses?</h1>
<p>
<img class="article-top-image" src="img/ebook.png"
alt="ebook logo"/>
Audible is one of the world's largest suppliers of audiobooks. Its main
appeal is probably convenience -- Audible has a large catalogue, making it
easy to find content from different publishers and studios all in one place.
</p>
<p>
Audible certainly won't win any prizes for sound quality -- although recent
titles have improved in this area, most of the catalogue is still recorded using
22kHz audio sampling, in a lossy format with a bitrate of about 64 kbits/sec.
And it's often possible to get better prices directly from studios.
Going directly to the source has the advantage that you'll usually be
able to get better-quality recordings, without digital rights management
(DRM) concerns.
To be fair, Audible does have some good deals and, of course, some of
its catalogue is not available anywhere else. In the end, though,
it's convenience that is Audible's main selling point.
</p>
<p>
One aspect of that convenience is Audible's returns policy. Historically,
Audible has had a very customer-friendly returns policy.
<a href="https://help.audible.co.uk/s/article/can-i-exchange-one-audiobook-for-another" target="_blank">On the Company's website</a> it says:
</p>
<blockquote><i>
"Our return policy allows active Audible members to take a chance on a new narrator or story without losing a credit, or return titles purchased in error. Returns must be made within 365 days of purchase."
</i></blockquote>
<p>
Note that customers are <i>actively encourage</i> to purchase books
speculatively.
</p>
<p>
It's worth thinking a little about what "returning" a digital title amounts
to. All Audible's content is DRM-protected, so there's little risk
that somebody could just copy the material and then return it. All that
really happens when you "return" an Audible title is that it's removed from
the list of titles you're allowed to play.
</p>
<p>
Still, returns are not cost-free, either for Audible or the content
creators. The real risk to both has always been that a customer will
actually listen to most of the audiobook, and only then return it.
That's effectively a lost sale.
</p>
<p>
Still, Audible has always made a big selling point of the fact that
purchases are risk-free for customers. Until recently, returning
an audiobook was a matter of clicking the "Return this title" button
on the website. The customer would be issued, within a few seconds,
a token to purchase something else. I've typically bought about
a hundred audiobooks a year from Audible, and returned 10%-20% of them,
for a variety of reasons. While Audible has never published -- and
still does not publish -- any actual policy on the number or frequency
of books that can be returned, I've never had any problem replacing
books that I don't want to keep.
</p>
<p>
Until now.
</p>
<p>
Recently, like many customers, I've noticed that the "Return this title"
button has been replaced by a label saying "Not eligible for return."
This links to an invitation to call their Customer Services department.
To be
fair to Audible, when I <i>have</i> called, they've been willing to
refund my purchases. Still, this is not convenient. It's not, I think,
what people use Audible for. It's certainly a radical change in policy
-- needing to call and discuss the matter is certainly a
disincentive to returning a title, even
if the return is eventually honoured.
</p>
<p>
It's not entirely clear why the policy has changed and, in my
conversations with their customer services team, Audible has largely
denied the fact that it's changed at all. Still,
in the last year or so, there has been a lot of reaction from
content creators over who must bear the cost of the lost sale when
somebody returns at title, and that's probably at the root of the decision.
</p>
<p>
Audible's business relationship with its content creators is essentially
based on royalties -- as most publishing contracts are. In general,
Audible does not buy content and then re-sell it: Audible pays
a proportion of the sale price as a royalty. This means that a lost
sale from Audible is a lost royalty payment for the content creator.
It appears -- at least at first -- to be in the interest of
content creators that Audible should <i>discourage</i> returns.
</p>
<p>
Audible, being part of Amazon, certainly has no problems with cash-flow.
The same cannot be said for many of its content suppliers, unfortunately.
Many are small, specialist businesses, so it's not just the lost
royalties that are the problem: the real problem is that royalties
can be lost up to a year after the sale. This means that the suppliers
cannot tell, except on a rolling annual basis, what their royalty income
is. This is a cash-flow problem, rather than a cash receipts problem,
but it's a problem, all the same.
</p>
<p>
I suspect that many Audible customers do not understand this business
model. Many probably think that Audible is paying out the royalties,
and then swallowing the loss when a title is returned. But that's not
true -- the losses are shared with the content provider, who is usually less
well-placed to manage that loss.
</p>
<p>
On the other hand, Audible's returns policy is not at all unusual in
the publishing world. In fact, I think it is entirely mainstream. My
(printed) books (when they were still in print) were supplied by the publisher
to retailers, who could return any they did not sell. Any returns led to
deductions from my royalty payments. To the best of my knowledge,
my publishers did not impose limits on the number of books that retailers
could return and, in practice, I think that about 10% overall were
returned. In short, what Audible is doing with its content suppliers
is <i>not unusual</i>. It is the norm in the publishing industry.
</p>
<p>
There are two significant differences, however. First, my publishers
always supplied an itemized statement, showing exactly how my royalty
payment was calculated. It was clear how many books had been sold, and
how many returned, in each accounting period. Audible has notoriously
not provided its suppliers with this information (I'm not sure if
this has now changed).
</p>
<p>
Second, it's much easier to return a digital title when it's a one-click
operation, than it is to return a printed book.
To return printed books means that the retailer has to collect them
from the shelves, organize them, and ship them back to their various
publishers.
Consequently, retailers are generally going to try to sell books,
rather than return
them.
</p>
<p>
So where does this leave us? Who wins, and who loses, by Audible's change of
heart? Almost certainly fewer audiobooks will be returned to Audible,
and that <i>might</i> be because customers will take more trouble to
determine whether they are likely to like a book before purchase.
I confess that I've ordered from Audible speculatively -- as
they Company encouraged customers to do -- based on nothing
more than the cover artwork.
Now, if I want to carry on dealing with Audible, I'll have to do
more research. <i>Nobody loses</i> in pure financial terms --
my returns are simply converted into non-sales. Royalty losses are
converted in royalty non-payments. Arguably, this is better for the
content creator's cash-flow situation: it's better not to receive the
money, than to receive it and have it taken away unexpectedly.
</p>
<p>
However, content creators will not <i>gain</i> by the change in policy.
Whatever
they might hope, they aren't going to end up with more royalties, because
people will just buy fewer books.
</p>
<p>
In fact, the person who probably gains most is myself:
it's perhaps a better use of my
time to spend ten minutes reading reviews, than to listen to the first
hour or an audiobook and then decide I don't like it. All things
considered, the change in
returns policy appears to be beneficial for Audible, for the content
creator, and even for the customer.
</p>
<p>
And yet... something just doesn't smell right here. The question that
doesn't seem to be asked in the various, somewhat heated, discussions
on this subject is: why are so many books returned in the first place?
The sad fact is that the market is flooded with poor-quality books,
and consequently poor-quality audiobooks. When I lost royalties because
my books were returned, it made me wonder: what's wrong with my book?
And: how can I do better next time? It never occurred to me to think:
why don't retailers try harder to sell my books? Or: why don't retailers
do better research, to find out how many copies they'll actually
sell?
</p>
<p>
The fact is that the harder it is to get a product -- any product --
refunded, the less the incentive is for the supplier to produce
a decent product. The logical extension of <i>caveat emptor</i>
is <i>non emere</i> -- don't buy it.
The row about Audible's returns policy has come
about, not because customers are fickle, but because so much
media content is rubbish. When Audible offered immediate, no-questions
returns, that could be seen as a necessary reaction in a market that
is flooded with poor books. By changing that policy, the Company
is simply contributing to that lamentable situation.
</p>
<p>
So who loses? In the end, we all do.
</p>
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