Shazam isn’t independent any longer, for it’s being acquired by Apple. Apple will save by not worrying about commissions and owning the recognition technology from Shazam.
The acquisition cost is far from the $1 billion Shazam was valued at during its last funding round, but the company has had a hard time finding a viable business model, pulling in only $54 million in revenue in 2016.
Siri briefly automatically recognized playing music using Shazam, but the feature was quickly changed to only work when the user actually asks what song is playing. It’s unclear if this was for privacy reasons or as part of their licensing agreement, but it would be fantastic to see automatic song tagging return as part of this acquisition.
Shazam’s music-recognition technology used to be novel, but now it’s relatively easy for anyone to replicate that product. So Apple must think the brand itself has value, and it’s reasonable to assume it will integrate the feature into its iOS operating system.
It’s not clear what will happen to Shazam’s existing deals with Spotify, which competes with Apple’s music-streaming service, or Snapchat, which has integrated Shazam into its camera screen.
It turns out that the conversations with Snap began about six months ago, after advisor Goldman Sachs drummed up interest. Snap was open to acquisition talks because its integration with Shazam’s music recognition technology had been going well.
But Snap has had a volatile time on the stock market since it went public in March, and so Shazam was getting mixed messages about how much the social media platform would be willing to pay.
But the real benefit for Apple may come from Shazam’s augmented reality tech. Earlier this year, Shazam launched an augmend reality platform for brands, building upon the visual recognition technology it launched back in 2015. The technology lets users scan magazines, books, posters, advertisements, and other physical products which could then launch 3D animations, product visualizations, and 360-degree videos. If Apple wanted to, say, build its own version of Google Lens, this could be a good place to start. It would also build on the company’s existing ARKit efforts, which have made iOS a leading platform for AR developers.
By acquiring Shazam, Apple would basically cut out the middleman and save money on commissions. It would also hurt the competition, since Shazam would no longer be referring people to rivals Spotify and Google Play Music. The deal would also help the Apple Music service gain ground on Spotify, by making it easier for users to find songs and add them to playlists. At present, Spotify has 60 million users worldwide, while Apple Music has just 27 million.