If you want to see the future of music software, take a look at what’s happening in music hardware.
Is the winner in streaming music the winner in smart speaker adoption?
In its initial phase, smart speakers are mostly associated with voice-activation and retrieving quick facts. Weather updates and details on restaurants are useful tidbits for life, but that’s just scratching the surface. Alongside the explosion in smart speaker penetration comes an inevitable expansion in the tasks that smart speakers will fulfill.
And that includes playing music — lots and lots of it.
According to survey data recently released by Deloitte, the most common application for smart speakers is now music playback. Stunningly, 60 percent of smart speaker users are citing music playback as the most common application, above functions like retrieving weather information, setting alarms, or just ‘amusement’ (and yes, we’ve all had our fun torturing Alexa).
Earlier, we’ve reported on the emergence are of higher-end smart speakers, with audio fidelity a driving feature. But — you retort — Sonos has been in this space for years! Which is true, except that smartly-connected home stereo systems are now merging into a far bigger and explosive category.
How explosive? Deloitte says that smart speakers will be a $7 billion business by the end of 2019. That’s a 63 percent jump over 2018 projected revenues of $4.3 billion, and just one of several bullish projections for smart speakers.
But the more things change, the more they stay the same.
This takeaway stuck out in Deloitte’s report: “In most markets so far, [smart speakers] have most commonly been used to play music, which arguably is not that disruptive: Devices that emit sound have been around since the 19th century.”
So why would smart speakers behave any differently? “Given that smart speakers’ third-most common use in several markets is setting up timers or alarms, the combination of music, weather, and alarm-setting makes smart speakers look much more like an updated bedside or kitchen radio than a fundamentally disruptive device,” the report continues.
In fact, Deloitte’s researchers seem pretty blasé about the music-related finding. After all, why wouldn’t consumers use a speaker — smart or dumb — to play lots of music?
But these kitchen radios could be the key to dominating the streaming music space.
Indeed, it’s no accident that Apple is doubling down on its HomePod+Apple Music integration: just this week, Apple started offering discounts on HomePods for Apple Music subscribers. But that’s just one of several bundled hardware+software deals ahead, with Amazon and Google both seeing a major connection between smart speaker and music streaming success.
All of which raises serious questions about Spotify’s longer-term ability to compete without a controlled smart speaker solution. In one scenario, Spotify will continue to succeed playing on a range of other smart speakers, including those from rivals like Apple and Google. But that ‘solution’ lacks the hand-in-glove compatibility that can only come from a controlled ecosystem.
So even if Spotify isn’t forcefully boxed out by the HomePods and Echos of the world, they’ll always be playing on somebody else’s ecosystem. And that could create a huge competitive disadvantage.