A takeover move rumoured to be US$400m; Apple bought Shazam to boost their music. Whilst this is one of Apple’s largest acquisitions to date, the salary comes as irritation to certain investors like Carlos Slim the firm DN Capital Ltd, who valued Shazam at US$1bn in 2015.
Why buy Shazam?
The feature Shazam users recognise immediately is the app’s ability to identify any song playing nearby after just a few songs, using the tune of the song to fingerprint a 10-second sample of audio onto a spectrogram. If a matching fingerprint exists on the Shazam database, Shazam identifies the song to the user. Apple Music and Spotify are rivals in gathering consumers for their services, and with anticipation of Spotify buying Shazam first, Apple made the move to secure the Apple Music service.
Furthermore, unlike Apple Music, Spotify collects data from users to understand a user’s taste of music and provide recommendations for songs based on that. Shazam has gathered that kind of data for decades. Now that Apple has bought Shazam, Apple can assemble data the same way Spotify can, maintaining the competition between the two music streaming services.
Impact on Apple
Apple will undoubtedly benefit from obtaining Shazam. Firstly, Shazam will be a better fit for the iPhone than Siri. Siri can identify what song is playing the same way Shazam can, but with Siri, you have to ask the question first. Secondly, Apple can fend Spotify off from Shazam. Shazam cannot make high profits just by being able to detect songs and has to promote links to both Apple Music and Spotify to earn a commission.
Now that Apple has purchased Shazam, Apple can remove any promotion of Spotify on Shazam, in order to make Apple Music more popular. This is crucial in the short term because as of March 2017, Spotify has 50 million paid subscribers, twice as many as the 25 million paid subscribers Apple has. Apple would be able to catch up to Spotify with Shazam under its wing, and these changes will be more noticeable in the short term.
Another efficient feature of Shazam that will benefit Apple is augmented reality (AR). Shazam can platform with brands and artists to promote certain adverts and events. By initiating AR codes at posters and hotel keys, users can scan them using the Shazam app and see what adverts or events will come up. This reduces the need for formal letters to provide invites.
This idea was first introduced in March this year to promote an event featuring Wyclef Jean (you might remember him for featuring in Shakira’s ‘Hips Don’t Lie’ music video). Apple can improve its efficiency further by acquiring AR now that they have bought Shazam. Combined with reduced competition from Spotify and quicker delivery of song names and song recommendations, Apple will experience numerous long-term benefits.