What Apple Gains from its Deal with Shazam

Photo by Adrian at https://www.flickr.com/photos/aditza121/235315669. Licensed under Creative Commons 2.0 License.

The news that Apple has recently bought Shazam for $400 million (disclosed by unidentified sources) is a surprise to many. The combination of Apple’s streaming service and the London-based app is now intended as the best place to  discover and experience music.

Neither company has revealed the amount Apple has paid for purchasing the app, but different resources estimate it to be $400 million. At one point, Shazam was being valued at $1 billion. Shazam enjoys a broad geographic base of users and the rare acquisition by Apple demonstrates its continued push to be a major player in music.

Services Provided by Shazam

The UK based Shazam permits its’ users to identify and purchase music from a clip of sound playing in the surroundings like in a restaurant, café, etc. The company claims to have more than 100 million people using the app monthly and is earning revenue through purchases of digital music. Shazam claims that around 10% of all the digital music sales are through its app.

Despite the success that Shazam has enjoyed with digital music sales, what attracts investors like Apple are two additional revenue streams by the company: mobile advertising and Shazam’s promotional abilities.

The app earns revenue via advertisements of products and by recommending users to buy the products advertised. In the U.S., TV advertisements also utilize Shazam. If a user opens the application during a running advertisement, they view promotions and discount vouchers by some retailers as the app signals the retailer about the customer’s presence.

Why Apple bought Shazam?

The deal will also further lower the direct cooperation between Spotify and Shazam, as Shazam will support the Apple Music ecosystem and be integrated with Apple Music.

Experts are divided on the biggest benefits that Apple is seeking, but have offered several ideas.

Loyal Users of the App

Shazam has among the highest base of users among music services, with a billion – a number still growing. That enormous base of users is quite attractive to a company like Apple, which has an opportunity to better monetize those users through Apple Music.

Recurring Revenue

From its launch in 1999, Shazam has been phenomenally successful and along the way has collected a portfolio of music technology. Advertising on the app provides a stable stream of recurring revenue. Shazam will give traffic to Apple in the same way it provides to Spotify and other service providers. The system starts from identification of the song, streaming on Apple Music and ending with a download of the song from iTunes.

Data of Users

Not only are the users who will download music valuable, but the data of these users as well. The company has the data of people’s preferences of music, the time when they listen to the music, and also other trends that change with the passage of time. This data about users can help Apple better target its music services and promote individual artists and songs. Shazam has been offering its music recognition service and collecting data even before the iPhone existed.

Intellectual Property

Although Shazam has always had competitors such as China’s QQ Music, has not stayed behind in the technology race. It has been successful in being granted more than 200 copyrights of its audio and other technology. To many users the app is only useful for identification of songs, but very few know that it is also helpful for scanning movie posters and unlocking extras. The users can unlock behind the scene videos and any content of their favorite celebrity.  In this way, Apple now has the right to use the service of Shazam as now it is the intellectual property of Apple. The different modes of Apple: Apple Music and iOS apps can now benefit from Shazam technology as they will identify the music and other features as well.

There is no doubt that Shazam has tremendous capabilities of music-recognition that can help Apple in many different ways. However, observers have also tried their best to investigate other reasons for Apple, but they have not been successful in their attempts. Shazam has refused to disclose the terms of the deal it has made with Apple. Nevertheless, the business partnership is a perfect fit for Apple, allowing it to advertise its services on Shazam and reach billion users all over the world.

My name is Qurat-ul-Ain and I was born in Islamabad, the capital city of Pakistan. I am 25 years old and I did my bachelors in Electrical Engineering from National University of Science and Technology, Islamabad. I am working as a freelance writer along with doing a full-time job. I love writing and prefer writing on a variety of topics to increase my knowledge along with having fun by doing what I love. My hobbies include writing, traveling, listening music and watching movies. I simply love enjoying each moment I live.


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