Today's Highlights
Apple officially acquires Shazam. But why?
By
Gayathri Natarajan
December 13, 2017
December 13, 2017
After a week of speculation and drama, it’s now official! Apple Music acquires Shazam, the music recognition app that has pretty much become a household name for all music lovers.
The decade old British app was one of the first to bring artificial intelligence into the world of music. The timing was perfect though, as Shazam made something unthinkable so practical that it streamed right into major public consciousness, garnering a whopping 1 Billion downloads when it was released for the iPhone in 2008.
Though the acquisition cost of Shazam was far less than it’s “unicorn” evaluation of $ 1 Billion in its last funding round, its declining popularity, revenue, and market share might have affected the pay-out that was to be. However, even at a purported $400 Million, the acquisition is one of the priciest in Apple’s History.
Addressing competition could be a strategy, and it is even possible for Apple to take away Shazam users from Spotify and make them iTunes exclusive, if it wants to. Shazam already has partnerships with Spotify and Snap Inc. both of them being a part of the race to buy Shazam. It also doesn’t hurt Apple to keep in step with their main competitor, Google Pixel, which is toted to have a better music recognition software than peers. Shazam, which is already integrated with Siri, could prove to be a strong contender in taking on Google Pixel’s software.
Whether Apple’s strategy is to stay ahead of competition, or it is to just buy user data, only time will tell if this move was worth it, especially in the unpredictable Indian music market.
Let's also not forget that back in 2013 Shazam partnered with Saavn to create more access to the Indian market. As per an Economic Times report, India had 97.5 + million online music listeners in 2015 which makes up for 63% of the urban population. 75% of this consumption comes from mobile usage. At the time Shazam lead to 12 million downloads while iTunes was at 4 million.
Will Apple Music be able to 4 times it's revenue? Only time will tell. But is it Apple's way to hitting Spotify where it hurts. Probably so.
Though the acquisition cost of Shazam was far less than it’s “unicorn” evaluation of $ 1 Billion in its last funding round, its declining popularity, revenue, and market share might have affected the pay-out that was to be. However, even at a purported $400 Million, the acquisition is one of the priciest in Apple’s History.
Why?
As expressed by DJ DeepScore, A.K.A Karan Khanna, a digital music artist in Delhi/NCR, “I hear so many great tracks that I use Shazam to keep a record of them, it helps me mix and develop my sets. But I mostly forget about them, as it is a separate task for me to go and download that track. This development will mean that the moment Shazam recognizes a song, I can immediately buy the track from iTunes and it will cost me, what, 12-15 rupees? It’s great!” Sure, the ease of use is a bonus, but in India, where the Mobile OS market is ruled by Google’s Android, is it really that attractive? “I don’t see how it affects me. I’m an independent musician and an Android user. I do not use iTunes and the functionality that I require from Shazam is going to be the same, whether Apple buys it or not”, says Ashish Kavi from the up and coming band Maram. Despite its low revenues and declining popularity, Shazam can be a boon for Apple in many ways. As Apple’s official statement goes,“Apple and Shazam are a natural fit” .Shazam began in the UK where people could dial 2580, hold up their phone to the music, and get a text with the name of the song. By the time it was an app in 2008, Shazam already had 6 years of data under its hood. Is Apple eyeing the user preference data that Shazam has acquired for almost 2 decades? Vivek Iyer, based in London, a Sales Director for a top IT company and a musician himself, says, “I am an avid user of Spotify. When I use Shazam to recognize music, it takes me to suggestions from Spotify too. I see this acquisition opening up opportunities for Apple to upsell their music. If I liked a song enough to Shazam it, Apple iTunes can suggest 5 other artists that I would be interested in downloading!”
Addressing competition could be a strategy, and it is even possible for Apple to take away Shazam users from Spotify and make them iTunes exclusive, if it wants to. Shazam already has partnerships with Spotify and Snap Inc. both of them being a part of the race to buy Shazam. It also doesn’t hurt Apple to keep in step with their main competitor, Google Pixel, which is toted to have a better music recognition software than peers. Shazam, which is already integrated with Siri, could prove to be a strong contender in taking on Google Pixel’s software.
Whether Apple’s strategy is to stay ahead of competition, or it is to just buy user data, only time will tell if this move was worth it, especially in the unpredictable Indian music market.
Let's also not forget that back in 2013 Shazam partnered with Saavn to create more access to the Indian market. As per an Economic Times report, India had 97.5 + million online music listeners in 2015 which makes up for 63% of the urban population. 75% of this consumption comes from mobile usage. At the time Shazam lead to 12 million downloads while iTunes was at 4 million.
Will Apple Music be able to 4 times it's revenue? Only time will tell. But is it Apple's way to hitting Spotify where it hurts. Probably so.
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