On Monday Apple confirmed it was buying Shazam; the music recognition service that quickly become a user favorite app at the start of the smartphone era. TechCrunch was the first to report the potential acquisition last week, and while specific terms of the deal have yet to be disclosed, TechCrunch has put the price of the deal in the $400 million range. Shazam was said to have been in talks with other companies, including Snapchat and Spotify.
At $400 million, Shazam would be one of Apple’s largest acquisitions. In 2014 Apple bought Beats Electronics for $3 billion in an effort to kickstart its music streaming business. Apple’s CEO, Tim Cook, on multiple occasions has said the company is ready and willing to use its billions to make big bets on acquisitions. It’s no surprise Apple came out ahead with Shazam’s acquisition when their biggest streaming competitor, Spotify, was attempting to acquire the music recognition company.
“We are thrilled that Shazam and its talented team will be joining Apple. 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 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 said in a statement.
Currently Apple has yet to share, or confirm, any plans regarding what it intends to do with Shazam’s technology. However, Shazam’s variety of functions is expected help further differentiate Apple’s music streaming service, Siri, and its new line of smart speakers hitting the market next year.
Shazam was founded in 1999 and its app has been downloaded over 1 billion times. In 2015, the company was valued at ~$1 billion at the end of its funding round. The deal with Apple is expected to be a disappointment for many of Shazam’s investors, which include Mexican billionaire Carlos Slim, and venture capital firms DN Capital Ltd. and Institutional Venture Partners. However, while Shazam has found itself to be popular amongst its customers, the company has struggled to turn its service into a business that justified its valuation; pulling in only ~$54 million of revenue in 2016.
According to research firm App Annie, Shazam had about 175 million monthly active users globally across iOS and Android in November. The US is its largest single market, with about 20 million active users.
Shazam’s core business has always been music recognition; people using its app to capture a small segment of music, and then telling the user the name of the song captured. Throughout the years, Shazam has has augmented this function with various other services; sending users to other sites to download or stream the discovered songs at their convenience. This included services Spotify and Google Play Music. Its been speculated Apple will keep the Shazam app going, but send consumers solely to Apple Music. Additionally, Shazam already integrates well with Apple Music, referring millions of users to play songs on Apple’s platform, also letting users buy songs directly from iTunes.
Shazam has yet to announce whether they will continue to operate its Android app once the deal closes. The deal has yet to be finalized but is expected to close in the coming weeks pending regulatory approval.
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