Apple buys Shazam, shunning the set top market since ‘99

Shazam is arguably one of the world’s most popular song recognition apps, therefore serving as a powerful platform for Apple to push its music streaming ambitions to challenge the might of Spotify. Apple could have knocked up its own Shazam-rivaling software in a heartbeat, implying there is much more to the UK-based firm than meets the eye.

Shazam creates acoustic fingerprints which are returned to the user once a song has been successfully recognized, and then offers up a window with different sources of where to listen to or buy the track, while the likes of Apple and Spotify pay Shazam for the privilege. This famous audio fingerprint technology is based on Gracenote data.

The main question mark for the app following its takeover is whether Apple will replace this multi-source service with one focused entirely on its own streaming service Apple Music. Apple being Apple, we suggest this stranglehold on Shazam is likely, but the move will come at the cost of an atrophied user base – sitting at 1 billion downloads and around 100 million active users last year. The vast amount of data that Shazam has accumulated over the years from this huge global user base is the real selling point here – providing invaluable insights for Apple to fine tune its content recommendations.

Those recommendations can also apply to TV, a space Shazam has expanded into over the past few years, applying its audio recognition technology to identifying TV programs from their sound tracks, but with software enhancements to address the more challenging task of identifying video content. This all relies on a central database to look up a signature captured from the sound bite.

Shazam has been compatible with Siri for over three years and Apple’s “exciting plans” following the takeover will certainly focus on harmonizing the two technologies beyond the very basic compatibility available today. It has also teamed up with Snapchat and Twitter, along with launching the Shazam for Brands initiative to the advertising community.

A less mature venture for Shazam is augmented reality advertising, which could fit nicely with Apple’s plans going forward considering how much focus was put on AR technologies around the launch of the iPhone X.

When Nielsen acquired Gracenote at the end of 2016, followed by a partnership between Samba TV and WPP’s Kantar, Faultline Online Reporter suggested that there would be a heightened interest in other audience recognition technology players like Shazam and Flyswipe, due to gaining the capability to drive ads by acquiring music and video content metadata.

Interestingly, one of Shazam’s main content recognition rivals, Audible Magic, went in the opposite direction by targeting set tops and has its software has been deployed on the Slingbox and Entropic’s SoC platform, while Shazam openly shunned the set top market in favor of mobile. Now under the wing of Apple, Shazam’s software may be used to push sales of Apple TV streaming devices and it’s no secret that Apple has long had big TV content ambitions – meaning Shazam could be tasked with handling the main screen after all, after successfully hedging its bets on the second screen ahead of its time.

“Shazam is one of the highest rated apps in the world and loved by hundreds of millions of users and we can’t imagine a better home for Shazam to enable us to continue innovating and delivering magic for our users,” said a Shazam spokesperson.

Apple said in a statement, “Since the launch of the App Store, Shazam has consistently ranked as one of the most popular apps for iOS. Apple Music and Shazam are a natural fit, sharing a passion for music discovery and delivering great music experiences to our users.”

Shazam comes with a reported price tag of around $400 million, plummeting from its $1 billion valuation from just two years ago, which was generous given that Shazam had revenues of just $54 million last year – its first year of profitability since launching in 1999.