Apple bought Shazam for $400 million, which makes it
one of the company’s largest acquisitions in years.
Shazam makes the most sense inside Apple’s music
division, which falls under SVP Eddy Cue.
Apple is unlikely to be interested in Shazam’s
And given the iPhone maker’s penchant for secrecy, chances are
good that it will be some time before we learn anything about
Shazam’s future under Apple — if we ever do at all.
But if you connect the dots, a couple things about this deal are
1. Shazam is almost certain to continue to exist as a
2. This deal is all about Apple Music and data.
If the addition of Shazam works the way Apple hopes, the deal
will round-out the arsenal that supports its fledgling music
streaming service. And with the competition and the stakes in the
streaming business growing, the deal is an admission by Apple
that it needs to make bold new bets to assure its place in a
Just as the $3 billion Beats acquisition in 2014 provided the
foundation for Apple Music, the purchase of Shazam could help
Apple take its streaming product to the next level.
It’s another high-profile music deal for Apple
Since launching a music-recognition app in 2009, Shazam’s product
has evolved considerably. Shazam now offers advertising features
and augmented reality capabilities with ecommerce
But as vague as Apple was in its statement confirming the deal,
it made a point of explicitly mentioning Apple Music, noting that
Shazam and Apple Music were a “natural fit.”
That “fit,” isn’t the simple addition of music recognition
capabilities (though that will be a nice new feature Apple will
be able to bring to its iPhones). It’s the music data that Apple
gets from owning an app with hundreds of millions of users across
different platforms and countries.
Early warning system
One of the most underrated aspects of Shazam’s business,
according to an investor, is that Shazam offers an analytic
control center — a “dashboard” — for music industry
professionals. Record labels and executives have learned to rely
on it to discover songs that are starting to get popular.
When someone identifies what a song is through Shazam, that’s a
pretty strong signal that it’s catchy, or distinctive. “Our
data has shown that we can typically predict 33 days in advance
what’s going to be at the top of the Billboard Hot 100,” a Shazam
said in 2014.
Although Apple has access to a lot of similar data from its Apple
Music service, Shazam is globally available, and, as Apple
pointed out in its statement, is widely downloaded on non-Apple
platforms. That gives Apple Music unique insight into the songs,
artists and other trends that are about quietly gaining momentum
and about to break out.
Think of it as an early warning system for hit songs. Apple
already has strong human music curation assets, thanks to
the DJs at its Beats One online radio station and the handpicked
playlists on Apple Music. By mixing in Shazam’s data, Apple will
have a chance to dominate the cultural conversation in a way that
competitors like Spotify and Google may struggle to match.
Another valuable data point that Apple will be able to see now is
which Shazam-ed songs lead to an Apple Music subscription — or
even possibly Spotify subscriptions.
The app isn’t going away
Of course, the value of all that data comes from the fact that
Shazam is a hugely popular app that’s been downloaded more than 1
billion times, and is used by both Android and Apple users.
For that reason, it’s highly unlikely that Apple will discontinue
the standalone Shazam app.
Sure, there’s plenty of ways Apple can integrate Shazaam directly
into the iPhone itself.
Google recently incorporated similar music-recogntion technology
into its high-end Pixel 2 smartphone.
Google’s version of the technology constantly monitors nearby
music from the phone’s lock screen, displaying each song title on
the phone’s screen — a handy feature that Apple would be silly
not to emulate.
But Apple would also be silly to kill the standalone Shazam app
for Android phones.
Apple didn’t comment on whether the Shazam app will remain as a
standalone download, but the Shazam announcement of the deal
suggests that the app isn’t going way, noting that it will
“continue innovating … for our users.”
A TV show, too
Apple is also getting a piece of a reality show as part of its
purchase: “Beat Shazam,” which stars Jamie Foxx and received as
2.4 million viewers for its most recent episode aired in late
summer during the critical 8 p.m. prime time slot at
Fox. Season 2 of “Beat Shazam” began production this month
in Los Angeles, and Foxx is hosting again. It’s expected to air
The concept is simple: Contestants try to beat Shazam’s algorithm
before it can name a tune. And it fits very neatly into Apple
Music’s strategy of making video content about music.
Apple Music recently has started to
produce music-related TV shows to help boost subscribers to
Apple Music. But the two shows it has aired so far —
“Carpool Kareoke,” an adaptation of the James Corden-hosted late
night segment, and “Planet of the Apps,” a reality show about
apps — have received
decidedly mixed reviews.
Of course, “Beat Shazam” is a Mark Burnett-produced show, and
it’s not wholly owned by Shazam, so it’s not like Apple bought
the rights to stream it on its platform without some
negotiations. But it would be surprising if Apple didn’t do a
little bit of cross-promotion with its new TV property.
Forget about advertising
One part of Shazam that Apple’s unlikely to be interested in is
what brought the company to profitability in recent years:
Shazam CEO Rich Riley told Business Insider earlier this year
that the company had pivoted away from selling songs and toward
advertising as its main source of sales, which helped the company
He also said that the company made sense an acquisition
target for a big company looking for a foothold in music or
But Apple’s not looking for a foothold in advertising.
Unlike its Silicon Valley neighbors like Google and Facebook, it
sells almost no ads, except for a few App Store search
placements. Apple CEO Tim Cook frequently suggests that Apple’s
lack of advertising business separates it from other tech
So it’s hard to imagine that Apple would continue to strike deals
with companies like Sauza Tequila or Pepsi to offer deals or
unskippable takeover ads inside the Shazam app. Shazam booked $50
million in revenue last year, according to an investor, which is
basically a rounding error to Apple.
It’s also unlikely that Apple is interesting in Shazam’s
augmented reality products, despite Cupertino’s demonstrated
interest in the field. Shazam’s AR product was largely
based on technology from a company called Zappar, and was
based around “Shazam Codes,” or a QR-code like marker.
Apple’s AR division already has hundreds of employees and its own
home-grown technology, such as ARkit and the ability to natively
scan QR codes. It’s hard to see Shazam’s technology playing a big
part in Apple’s AR push.