I love to paint. Who knows if my paintings are really any good, but I sure do like to paint them. When I am finished each painting, without even having to ask him, my husband finds a place in our house to hang it and puts it up for everyone to see. Whether he truly thinks I am talented or not, he is supportive because he knows how much I love to paint.
Music is subjective and everyone has their own tastes, likes, dislikes, etc. For example, in high school I LOVED the Smashing Pumpkins - my best friend, bless her heart, LOVED the Backstreet Boys for some reason (lol). She did not understand how I could listen to Billy Corgan*s voice - she compared it to nails on a chalkboard.
I guess what I am trying to say here is that he has something he loves to do. You admit that his lyrics are really good. Just be supportive of him - just because the sound of his voice might not be your taste, does not mean that it would not be enjoyed by somebody else. A lot of the time, I find anyway, really great music and lyrics can make a singer even if his/her voice is not spectacular. I would just tell him that you heard his demo and that he has some great lyrics and that you are really proud of him for pursuing his dream. Be supportive. That way, you are not lying to him and you do not have to hurt his feelings by telling him that you were not a fan of his singing voice.
My two cents.
