Smart Speakers & Music Consumption

March 2019

A report authored by Music Ally's Stuart Drudge for label trade group BPI and the Entertainment Retailers Association [ERA] looks at how voice-controlled smart speakers are transforming how fans engage with music.

____________________________________________

The report,  “Everybody’s Talkin’ – Smart Speakers and their impact on music consumption” looks at how this new technology is driving the next wave of music consumption, fuelling further growth in streaming and subscriptions while also establishing a new e-commerce platform for sales of physical product. 

48% of smart speaker owners in this study have premium music subscriptions and that number is expected to grow. That's bad news for broadcast radio, as 39% these smart speaker owners say time listening to the device is replacing time spent listening to AM/FM.

[Editor's Note: This presents an opportunity to traditional radio: to leverage their audiences to consume more of their programming on yet another digital platform.]

"Smart speakers are poised to kick-start the next stage of the music streaming revolution, attracting more casual listeners into subscription services drawn by music as the “killer app” for these devices,' said Geoff Taylor, Chief Executive BPI & BRIT Awards. "This exciting new technology will not only transform how we engage with music, encouraging more shared listening, but also how we discover it. The challenge and opportunity for labels and artists will be to ensure their music is as easily available and as effectively marketed via AI voice assistants as it has been through the screen interface.”    

In an August 2019 update to this report, growth of AM/FM listening on these devices has slowed sooner than expected. Our original projections paced AM/FM listening growing from 39% at the end of 2018 to 50% of Smart Speaker owners listening to radio by the end of 2019. We projected 46% usage by September 1, 2019. However, in the August update, 42% had used the devices for radio listening. This may be attributed to a) misidentification by users of the radio station they want to listen to, b) incorrect skills created by radio stations. Our study shows that multiple identifications are associated with radio stations: call letters, frequency and brand name (Magic 102.3) are the most common. If smart speakers can’t identify stations with specific ID skills to match listener expectations, listening can be lost opportunities.

Key Report Findings For Music

• Music is the most popular use for smart speakers, with users listening to more audio than they did before purchasing one of these devices.

• 34% of Echo and Home owners spend more than four hours a day listening to music, compared to 24% of the general population.

• 48% of smart speaker owners have a premium subscription to a music-streaming service.

• 39% of smart speaker owners say time listening to the device is replacing time spent listening to AM/FM stations – encouraging a shift away from traditional radio.

• Smart speakers may fuel more casual interaction with music – with generic requests to play music creating greater dependence on the personalization algorithms of speakers’ assistants.

• Labels must now create metadata around genre, mood and user activities.

• Smartphones have apps, and smart speakers have ‘skills’ or ‘actions’ – applications created for use by listeners. There’s an opportunity here for labels to launch skills for their artists and for radio to create skills for their listeners to use.

• Platforms such as Spotify want smart speakers to be gateways to listeners, not gatekeepers.

• Smart speakers are taking music streaming into a new world of shared listening, away from individual consumption, with multiple-user interaction.

More Key Report Findings

Smart Speaker history & guide to devices:

• Amazon’s Echo with its Alexa assistant was the first to launch in late 2014, but it has since been joined by Google Home (with Google Assistant) and Apple’s HomePod (with Siri).

• Sonos, and others have also launched smart speakers, while consumer-electronics firms like Sony, LG and Panasonic have used Google Assistant as their devices’ brains.

• Spotify and Facebook are both rumoured to be exploring this area.

Market data & forecasts

• Analysts’ estimates suggest 24m – 27m smart speakers were sold globally in 2017.

• The US & UK accounted for up to 95% of those sales, with the US taking the lion’s share.

• Futuresource estimates that 7% of UK households now own at least one smart speaker – with 2.8m devices shipped in 2017 (three-quarters of which were Amazon Echos)

• Between 39m – 47m Americans now have a smart speaker in their home, with Amazon’s Echo range thought to have around two thirds of those devices.

• Analyst global predictions for 2018 are bullish – forecasting up to 58m unit sales.

• 55% of US households will own a smart speaker by 2022 (175m units in 70m homes).

Special thanks to Music Ally's Stuart Drudge for label trade group BPI and the Entertainment Retailers Association [ERA] for their contributions to this article. You can read the entire report here.