For a long time Ryan Azevedo had counted himself a fan of audio books. They were especially good company during his four-hour trips every other week to pick up and drop off his daughter in Central California.

It was the cost at $40 a pop he didn’t like.

But the L.A.-based entrepreneur saw an opportunity to do something about it a few years ago after meeting real estate investor Lisa Kaz, who also shared his voracious appetite for audio books.

The pair teamed up in 2003 to open Jiggerbug, an online audio book rental company that ships books on CD and cassette to members for a monthly fee. The service mimics what Netflix pioneered for DVDs in 1998, but began last year allowing members to download a limited number of rentals.

“I was a Netflix member and thought ‘Gee, they really need something like this for audio books,” said Azevedo, who serves as company chief executive while Kaz is chief strategy officer. “Originally it was basically our personal libraries, because I literally had a room that was nothing but audio books, and she had the same. It just grew from there.”

With iPods, video podcasts and other new technologies that have come to market, books on tape and CD might seem a little old-fashioned. Yet audio books continue to grow in popularity, with the Audio Publishers Association estimating sales to surpass $800 million this year. Jiggerbug has seized on that growth.

The company has 6,000 members and adds about 20 percent each month. It now has 24,000 titles in its catalog and ships up to 500 per day. (Half the members sign up for a mid-priced plan that costs $24.95 a month and allows a member to rent two books at a time and get one download every two weeks.)

“The market has enjoyed very steady growth ever since it emerged as a viable sector of the book market back in the mid ’80’s,” said Publishers Association President Mary Beth Roche. “People are just more and more pressed for time.

“People get a new gadget, an iPod, and they want to know all the different ways they can use it,” she continued. “We’re getting some people to test and try an audio book because of their interest in new technology.”

Jiggerbug, which generated $1.8 million in revenues in 2005, expects to reach profitability this summer and projects $2.5 million in revenue this year. The company got its start in November 2004.

Azevedo had founded an Internet search engine optimization and marketing firm called NetVoltage during the dot-com boom in 1998. He sold the company three years later and began serving as a consultant for Tony Robbins, working on the motivational speaker’s Internet platform. It was there that Azevedo met Kaz, an author who also owns the L.A. Auto Show and speaks about wealth-building strategies at Robbins’ seminars. Kaz and Azevedo started Jiggerbug using a combination of their own money and funds from private investors. They remain the primary shareholders.

Half fiction


Jiggerbug markets itself mostly through pay-per-click advertising on Google, Yahoo, and MSN, and through an affiliate program that enables someone with a Web site or newsletter to offer a link to Jiggerbug in return for $11 to $35 per referral.

While fiction makes up about 50 percent of rentals, the company is focusing especially on the popular personal growth category. The demographic interested in personal growth titles typically has a higher income, is more comfortable making online purchases, and tends to stay with the service longer, Azevedo said.

“They’re really voracious consumers,” he said. “We have relationships in the personal growth industry and we really want to niche ourselves out. Fiction is a scattered market, but personal growth we can really own because it’s not as fragmented.”

The cross-promotion program could give Jiggerbug a new revenue stream to help compete with companies such as Audible Inc., a publicly-traded audio book download service; and SimplyAudio.com, an audio book rental company also founded in 2003. Azevedo said his firm differentiates itself from competitors by enabling its members to rent audio books in a variety of forms on one monthly plan.

“Even though iPods and MP3 players are really hot right now and that’s definitely where the market’s going, the truth is, 60 to 70 percent of audio book listeners still listen on CD and cassette,” he said. “So we give flexibility to people who may want to listen in the gym on an iPod, but also want to listen in the car on their CD player.”

Jiggerbug member Ken Li commutes 100 miles round trip to his job at an equity research firm in San Jose. Li, who joined Jiggerbug six months ago, listens to audio book downloads on his laptop when he takes the train, and plays the CDs when he drives.

“I got into audio books largely out of necessity because of my long commute. I figured (Jiggerbug) sounded like the Netflix model, which I like, and I’d give it a shot,” he said. “The features they’ve got fit my lifestyle really well.”

*

Jiggerbug



Year Founded:

2003


Core Business:

Audio book rentals


Revenues 2004:

$600,000


Revenues 2005:

$1.8 million


Employees in 2004:

7


Employees in 2005:

14


Goal:

To expand beyond audio books to other information services


Driving Force:

People who want to learn, achieve and be entertained