Why Apple Is Buying Shazam For $400 Million


Apple is reportedly going to acquire one of the most popular apps in history: Shazam. The app made waves back in the days of its popularity for being able to recognize any song it hears. Now, it also identifies movies, TV shows, and has augmented reality features as well.

Apple Is Acquiring Shazam

The Cupertino tech firm is finalizing a deal with Shazam according to TechCrunch, which could amount up to $400 million.

So, what's in it for Apple? As The Verge points out, the company will benefit most from Shazam's sound and music recognition capabilities, and the most likely prediction here is for Siri to come equipped with those. It'll also save Apple commission fees whenever Shazam sends users to the iTunes store to buy music, which made up the majority of Shazam's revenue last year, and drove 10 percent of all digital downloads.

There's another possible benefit. Suppose Apple integrates Shazam into its iOS ecosystem and shuts down the app itself, similar to what it had done with Siri, that move could hurt rival streaming services the likes of Spotify and Google Play Music, to which Shazam sends over 1 million clicks per day. Shazam also has a deal with Snapchat. It remains uncertain how the deal will affect any of these agreements.

Apple Could Use Shazam's AR Platform

Yet the real benefit could come from the company's AR features. Earlier in 2017, Shazam released an AR platform for businesses, an evolution of the visual recognition technology it launched in 2015. With AR, Shazam lets users scan all sorts of stuff, such as magazines, posters, books, and even products themselves to launch 3D animations, 360-degree content, and much more. Suppose Apple wanted to create a similar platform, this could them get started. It's also a perfect fit, seeing as Apple is also hell-bent on improving its ARKit platform.

Shazam is an extremely popular app, passing 1 billion downloads back in September 2016. Yet it only pulled a revenue of $54 million that year and lost $5.3 million. Yet news of a possible buyout isn't a surprise, as Shazam CEO Rich Riley previously hinted that the company was a likely acquisition target.

The deal could be announced as early as next week, according to Recode. If the $400 million buyout price is true, then that represents a significant drop from its last funding round, which put Shazam at a valuation of around $1 billion.

Do you think Shazam will remain a standalone app or be subsumed into Apple's ecosystem? Sound off in the comments section below!

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