Shazam, the popular app people can use on their phone or computers to recognize music, is rumoured to be bought by technology giant Apple for an estimated $400M. The UK based company founded in 1999 currently has around 60 million active users. In January of 2015, the British tech firm was valued at £660m ($1bn), a remarkable milestone.
2 years ago, Shazam claimed to BBC that roughly 10% of global music sales originate from the app. Users would follow a link from inside the app and then be redirected to an external site to purchase the track. Shazam makes a large majority of its revenue from commissions that are paid on referrals to the iTunes Store, owned by Apple. With the acquisition, Apple would effectively be saving money on commissions.
With the giant company acquiring Shazam, this would hurt competition like Spotify and Google Play Music because Shazam would no longer refer users to these sites. Currently, Spotify has 60 million active users compared to Apple Music’s 27 million.
According to TechCrunch.com, in September 2017 Shazam reportedly made 54$ million in revenue in the 2016 fiscal year. This comes as a turn as there were declines between 2014 and 2015. Shazam’s CEO Rich Riley commented on how Shazam was likely a target for acquisition.
Apple has made many big acquisitions in the music sphere in the past few years. Beats were acquired in 2014 for 3$ billion, which then went on to be the foundation for Apple Music. At this time it isn’t clear what will happen to Shazam post-acquisition.