Apple buys Shazam

Shazam Entertainment Ltd. is a British app development company that has created the famous Shazam app that is capable of identifying music, movies, advertising, and television shows, based on only a short sample played and using the microphone on the device. And now we all received the news that on Monday December 11th Apple buys Shazam.

Apple buys Shazam

What is Shazam?

For those very few people who don’t know – Shazam works by analyzing the sound captured by your smartphone and seeking a match based on an acoustic fingerprint in a database of more than 11 million songs. The app then offers to listen to the song on Spotify, Youtube, Apple Music etc.

Apple buys Shazam

This app was started to develop in 1999 and now in 2017, December 11th Apple Inc. has officially purchased Shazam for $400 million. This is one of the biggest Apples purchases in the company’s history. Last big purchase was made in 1996, the purchase that brought back Steve Jobs back to the company that he co-founded. The purchase was Next Computer Inc. and the bill was over $600 million dollars.

Apple buys Shazam

Shazam’s investors

Though Apple buying Shazam seems like a great investment it may not seem that way to Shazam Entertainment Ltd.’s investors. For example, Carlos Slim, the Mexican billionaire, venture capital firms like Kleiner Perkins Caufield & Byers, DN Capital Ltd. and Institutional Venture Partners. Shazam Entertainment Ltd. is an 18-year-old company and it took twice the average time to deliver and exit for it’s backers. The company was valued about $1 billion when it closed its last funding round in 2015, so…

Co-founder of VC firm Mangrove Capital Partners and chairman of website building service Wix.com Ltd., Mark Tluszcz comments: “A company isn’t worth a billion dollars until it’s sold or exited. Many of these so-called unicorns are of course fakies. They will face their day of reckoning and may turn out to be a disappointment. The case of Shazam will serve as a stark warning to other companies.”

Apple buys Shazam

How Shazam started to make money?

Shazam, though very popular and useful app, has struggled to turn it’s services in to a real business that justified its valuation. In 2010 Shazam expanded and added some great new features. Now the app let tv viewers “Shazam” an ad which would then open a promotion from the advertiser on a “Shazamer’s” device. May seem like a feature that not many would use, but Shazam Entertainment Ltd. reported that this feature was used 700 000 times during the Super Bowl broadcast in 2014.

Why Apple buys Shazam?

Apple in its statement received on Monday said that “Apple Music and Shazam are a natural fit, sharing a passion for music discovery and delivering great music experiences to our users. We have exciting plans in store, and we look forward to combining with Shazam upon approval of today’s agreement.”

Apple buys Shazam

Shazam in November had about 175 million active users globally, both from iOS and Android. Though the majority of active users are in USA (about 20 million active users in November) and the second place goes to UK with 4 million active users in November.

Apple also comments on Shazam’s popularity “Since the launch of the App Store, Shazam has consistently ranked as one of the most popular apps for iOS. Today, it’s used by hundreds of millions of people around the world, across multiple platforms.”

Apple’s launch of iOS 8 in September 2014 came with the seamless integration of Shazam into Apple’s intelligent personal assistant Siri function, so that people could ask Siri what music is playing in the background. So it is only natural that this purchase would help Apple embed that capability more deeply into its music offerings.

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