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 via 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.