Apple’s acquisition of Shazam reveals hidden value

Apple has confirmed its purchase of music discovery app Shazam for $400 million.

In a statement sent to The Verge, Apple said:

“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.”

While it’s a far cry from the $1 billion that it was valued for back in 2015 – and while its affiliate sales revenue model took a major hit with the onset of streaming – Apple’s investment in the company outlines Shazam’s true value.

Founded back in 1999, Shazam has made a name for itself as one of the most prominent music recognition services in the world, with its flagship app boasting more than 1 billion downloads back in October of 2016. However, despite making £40 million in revenue for the 2016 financial year, the company had made losses of £5.3 million in 2016, and £16.6 million in 2015.

Even so, Shazam remained the distinctive platform when it came to music recognition, now boasting 100 million users; but it simply didn’t have the revenue it needed to become the tastemaker it pitched itself as.

Shazam is already integrated with Apple Music by referring users to play songs on its platform and its links to iTunes. Now, with Apple beating out fellow tech giants Snapchat and Spotify to buy Shazam, its streaming service Apple Music may just be able to compete in the same playing field as market leader Spotify.

You see, Spotify has 60 million paying subscribers, double the number of Apple Music’s 30 million. But discounting Apple’s user acquisition of Shazam’s 100 million-strong userbase, Apple Music will be tapping into Shazam’s technology to revisit its algorithm and improve its playlists and recommendations.

https://www.youtube.com/watch?v=y5DWJG4lGiQ

Watch Elton John talk about his album ‘Wonderful Crazy Night’ at Shazam

This article originally appeared on The Industry Observer, which is now part of The Music Network.