The price of the acquisition is undisclosed, but is believed to be $395 million which is significantly lower than Shazam’s 2015 estimated value of $1.02 billion.
Shazam is a London-based startup, initially launched in 1999 as an SMS-based service, allowing users to identify songs or jingles that eluded them.
In 2017, Shazam is a far more streamlined and immersive service, allowing smartphone users to identify excerpts of songs at the click of a button – or through voice recognition software such as Siri. Additionally, Shazam has developed to become a social network unto itself, with users able to follow celebrities and friends, share music and keep up with global charts.
Apple’s motivation for this purchase appear quite simple, Shazam has grown from a pioneering start-up to a global brand; with over 500 million downloads and 100 million monthly users, Shazam broke the one billion download mark in 2016.
It is a staple app for any smartphone user and would be a further addition to Apple’s growing music streaming service.
This follows a string of acquisitions by the US firm, which include the purchase of Beats by Dr Dre for $3 billion in 2014 – the largest deal in Apple’s history. This deal laid the groundwork for Apple Music, which has grown consistently since its launch in July 2015.
Despite significant investment in the streaming industry, Apple has found it difficult to compete with Spotify. As of September 2017 Apple Music has around 30 million subscribers, which is roughly half of Spotify’s 60 million premium subscribers.
There are concerns in the industry that Apple’s intentions however are not simply an attempt to make headway with competition; they are a blatant attempt to shut them out.
Currently, Shazam generates enormous traffic to the Apple Music, Spotify and Google Play Music services and earns commission based on purchases.
According to the Shazam, the majority of its monthly revenue comes from Apple referrals. By fully integrating Shazam with Apple Music, the US firm can potentially cut out the red tape and save money on commissions. Their control of the app also allows Apple to prioritise its own content.
A statement from Apple said: “We are thrilled that Shazam and its talented team will be joining Apple. Since the launch of the App Store, Shazam has consistently ranked as one of the most popular apps for iOS. Today, it’s used by hundreds of millions of people around the world, across multiple platforms.
“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.”