Apple is rumored to be acquiring Shazam in a $400 million dump-off.
Update Dec. 11th. Apple has now confirmed the purchase (though not the price). Here’s an official statement from the company; our original coverage from last week is below.
“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.”
Apple is reportedly acquiring Shazam in a fire-sale deal, according to details emerging. According to TechCrunch, the acquisition is happening for roughly $400 million, a severely distressed price point.
Shazam is a popular music recognition app. The app allows anyone to recognize a song playing, typically in public places. More recently, the company started expanding its recognition capabilities to include formats like TV commercials, a move designed to increase branding revenues.
But that expansion has only been partially successful, with broader monetization a challenge.
Just recently, investors valued Shazam at north of $1 billion post-money.
But continued profitability problems have plagued the app for more than a decade, leading to long-term hemorrhaging and investor unrest. Accordingly, the Apple deal would allow certain investors to recoup their losses, while others would be left with nothing.
The latter, penniless group may include employees, according to TechCrunch. Other investors may also have to wait in line. In total, Shazam has raised close to $145 million from the likes of Kleiner Perkins, DN Capital, and IVP.
The company has also received strategic investments from all three major labels, with Warner Music Group parent Access Industries the most high-profile.
Accordingly, the Apple sale could complicate things for the strategic investor group. The reason is that Shazam’s recognitions offer great intel on what music fans like. As a worldwide, fairly ubiquitous app, Shazam offers unique data on what songs are grabbing the most attention and interest.
All of that makes it easier to identify bubbling artists and songs, or to validate the success (or lack thereof) of existing artists. Once under Apple’s wing, the valuable data-sharing could stop.
The acquisition could be part of a series of revamps at Apple, particularly around music.
The presence of Shazam could help Apple develop smarter algorithms around its playlists. And, subsequently broaden its Apple Music service.
Just recently, sources noted that Apple was planning to eliminate music downloads from the iTunes Store by 2019. That would vastly simplify the iTunes Music selection, and shift more consumers to Apple Music streaming.
Shazam has over 1 billion app downloads; an announcement could come Monday. More as this develops.