As smart speakers become ubiquitous and teens get hooked, new studies show how users are engaging with music through the devices — and how the music business can take advantage.
Five years ago, when Amazon first introduced its voice-activated Echo smart speaker, it was advertised as a product that could make a grocery shopping list, tell users the weather — and play music from Prime Music or iHeartRadio. But as the smart speaker market grows, music is becoming the focus for device owners.
Music engagement through smart speakers has grown overall: Earlier this year, the Smart Audio Report from NPR and Edison Research stated that 77% of U.S. smart speaker owners use them to play music every week. This year, 17% of U.S. music listeners say they play music through smart speakers in a given week, up from 15% last year, according to Nielsen Music's new 360 2019 U.S. report, provided exclusively to Billboard. The biggest growth has been among Gen Z music listeners, as usage among teens jumped from 9% in 2018 to 20% this year, a 122% increase, according to the Nielsen study.
In April, tech analysis firm Canalys said it expects the global install base for smart speakers to pass 200 million devices by the end of 2019. Since Amazon kicked off the smart speaker arms race, Google launched a line of Home speakers in 2016, Apple started selling its HomePod last year, Facebook debuted its Portal device last October and earlier this year Sonos added Google Assistant to its home audio speakers to go with Alexa, which became available on the platform in 2017.
The smart speaker takeover has some wondering what the streaming business could look like once it shifts further away from people typing search terms into query boxes and more toward voice-operated speakers. "This whole topic is less about devices and more about just a gigantic, tectonic shift from text as a motor of interactivity to voice," says Larry Miller, director of the music business program at NYU Steinhardt. "Over the next several years, it's going to be much less about talking to or talking at or interacting with your Amazon or Google device than talking to the voice-based operating system that interacts with your life. This is a shift in the way that we fundamentally ask for the information and entertainment that we want, and in music this is a critical issue."
As smart speaker adoption continues to explode and music streaming on such devices takes on a bigger role, particularly among younger listeners, the music business has worked to adapt to the model. That has meant streamlining metadata, addressing fluctuations in user behavior and creating hyperpersonalized playlists.
Smart speakers are also playing an increasing role in how music listeners discover new artists and songs, with 61% of owners saying that new technologies like voice assistants have made it easier to discover new music, according to Nielsen. That number drops to 54% for teens and 44% for all music listeners, which is still impressive for a segment that didn't exist in a meaningful way half a decade ago.
Device ownership has changed as well, according to Nielsen. As expected, Amazon still controls a large portion of the smart speaker market, with 48% of owners stating they own a version of an Echo. But surprisingly, Facebook's Portal has overtaken Google's Home devices in market share, at 36% compared with 35%, according to the study. Several analysts who spoke to Billboard were shocked by the numbers Nielsen is reporting for the Portal, given the privacy-related public-relations debacle the company has brought on itself over the past 18 months and the complexities of getting into smart speakers in the first place.
"It's difficult to enter that market and challenge those incumbents," says Werner Goertz, a research director at Gartner. "The best example for that is the Samsung Galaxy Home, which doesn't seem to be coming because of those definitive barriers that were set up by the incumbents."
Globally, the smart speaker market has plenty of room to grow, with only 3% of music listening time taking place on smart speakers, according to the IFPI's Music Listening 2019 report. The United States outpaces the world when it comes to music usage on smart speakers, where 34% of people have used a smart speaker to listen to music in the last three months, compared with 30% in the United Kingdom and 22% in Germany, according to the study.
Despite the lackluster global growth for smart speakers, music labels need to figure out how to deal with voice assistants — a discovery tool that doesn't easily lend itself to music promotion — and fast. Amazon recently announced the Voice Interoperability Initiative, an agreement signed by more than 30 companies including Spotify, Tencent and Sony Audio Group, to make sure devices work with multiple voice assistants, which would theoretically allow users to summon assistants like Amazon's Alexa and Microsoft's Cortana on the same device or smart speaker.
"All three of the major music companies have significant efforts underway to examine how to optimize the reach and discoverability of catalog music voice," says Miller. "Record companies are beginning to think really hard about what this is going to mean for them for front line and catalog, but in particular for catalog — given the dramatic move toward streaming as the dominant source of monetizing music over these last five years. It's uncharted territory, frankly."
This article originally appeared in the Sept. 28 issue of Billboard.