Audible, the spoken-word digital media company, has filed its annual report with SEC, and some interesting details. A note by its auditor, questions its financial processes: “During our 2006 compliance efforts, we identified material weaknesses involving ineffective execution of non-routine contracts, inadequate financial information and communication, ineffective review of account analyses, and inadequate identification and analysis of international non-income tax related matters…as a result, our independent registered public accounting firm issued an adverse opinion on the effectiveness of internal control over financial reporting.”
Also, some other details:
— We generated $3.3 million in revenue in the UK during 2006, an increase from $0.5 million in 2005. We believe that revenue from Audible UK will continue to grow provided we are able to obtain additional content that is appealing to more customers.
— Approximately $3.7 million, $9.5 million, and $19.5 million of our content and services revenue is derived from sales of Audible content at the Apple iTunes Store, in 2004, 2005, and 2006, respectively.
— Its new contract with Apple for iTunes: Audible “has agreed to certain exclusivity obligations that restrict the Company to varying degrees from integrating Audible content into other internet-based services. The new agreement also provides that the Company’s revenue is formula-driven, based upon the selling price on the iTunes Store and the content cost.
— Also this clause is interesting: :The new agreement also changes the terms of the revenue share payments due to Apple. Under the terms of the previous agreements, the Company paid Apple a revenue share based on number of customers who used the iTunes software to download digital audio. In the new agreement, the revenue share paid to Apple is a percentage of sales made by customers who are referred directly by Apple to the Company
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