Shazam is a music, movie, advertising, and television show recognition app created in 1999 by Chris Barton, Philip Inghelbrecht, Avery Wang, and Dhiraj Mukherjee, as a service to recognize songs. In 2018, Shazam was acquired by Apple in a deal worth $400 million. Before Apple acquired the company, Shazam made money by selling advertising spots to other businesses.
Shazam is a music, movie, advertising, and television show recognition app.
It was created in 1999 by Chris Barton, Philip Inghelbrecht, Avery Wang, and Dhiraj Mukherjee. Smartphones and music services such as iTunes had yet to be invented, and Barton lamented that he could never recognize the songs he heard on the radio.
With Mukherjee, he had the idea to partner with radio stations to identify songs on air and sell music to listeners.
Early versions of Shazam required users to call a number and hold the phone close to the radio to receive a text identifying the song. Shazam had over 1 million songs in its database by 2002, but a lack of technology meant song identification was slow and cumbersome.
Nevertheless, the founders tried various business models over the ensuing years. For a while, Shazam made money through reverse charge text messages. It also made deals with ringtone companies and mobile handset manufacturers.
Venture funding then became difficult to source as the platform continued to grow in the wake of the dot-com recession.
Today, Shazam searches a database of approximately 30 million songs and can identify a track in around two seconds. The app can also handle remixes, cover-band versions, and background noise.
Shazam revenue generation
Before the company was acquired by Apple, Shazam made money by selling advertising spots to other businesses. It also offered a premium version of the app called Shazam Encore.
Advertising in particular was a significant source of income for the company, making it profitable for the first time in 14 years. Despite this, Apple decided to remove advertising from Shazam in late 2018. In 2020, the premium app was also made free.
So how does it make money? Read on to find out.
Digital sales
When a user identifies a song on Shazam, they have the option to purchase it on iTunes.
After the Apple acquisition, the collection of referral fees became limited to iTunes. Revenue has probably also suffered because of the general decline in digital music purchases over the last decade.
User data
An indirect source of revenue for Shazam and Apple lies in user data.
Operating for over 20 years and with 20 million searches per day, the platform likely has a vast amount of data on user media content preferences and selections.
How Apple plans to monetize this information is open to interpretation. It may for example use this data to determine what sort of content is produced for the Apple streaming service Apple TV.
Alternatively, Apple may already sell the data in aggregated, anonymized form to interested parties. These include record labels, artists, television directors, and music or movie production companies.
Key takeaways
Shazam is a media recognition app developed by Chris Barton, Philip Inghelbrecht, Avery Wang, and Dhiraj Mukherjee in 1999. Barton was inspired to create the app to help users identify songs they heard on the radio.
Before being acquired by Apple, Shazam was a profitable company thanks largely to advertising revenue. The premium version of the app, Shazam Encore, was also made free after the acquisition.
Shazam makes money via digital sales, encouraging users to purchase the songs they heard on iTunes. The company may also sell vast stores of user data to interested parties.
Business Model Element
Analysis
Implications
Examples
Value Proposition
Shazam’s value proposition revolves around its music and media recognition capabilities. Key elements of its value proposition include: – Music Identification: Instantly identify songs by listening to a short audio clip. – Media Discovery: Discover details about movies, TV shows, and advertisements. – User-Friendly: Easy-to-use mobile app with a simple tap-to-identify interface. – Cross-Platform Integration: Seamlessly integrated with various music and streaming platforms. Shazam aims to enhance users’ entertainment experiences by helping them discover and engage with media content effortlessly.
Offers a unique and convenient solution for identifying music and media. Simplifies the process of discovering songs, movies, TV shows, and advertisements. Appeals to users seeking an easy-to-use, cross-platform tool for media recognition. Enhances user engagement and music discovery. Integrates with popular streaming platforms to provide a seamless experience. Empowers users to explore and interact with media content.
– Instant music identification through audio clips. – Discovering details about movies, TV shows, and ads. – User-friendly, tap-to-identify interface. – Seamless integration with music and streaming platforms. – Enhancing user engagement and media discovery. – Empowering users to explore and interact with content.
Customer Segments
Shazam serves a broad range of customer segments, including: 1. Music Enthusiasts: Individuals who want to identify and discover new songs. 2. Entertainment Lovers: Those interested in finding details about movies, TV shows, and ads. 3. Advertisers: Companies and marketers seeking insights into ad effectiveness. 4. Music and Media Industry: Professionals looking for data and trends in the music and media sectors. Shazam caters to users with diverse entertainment and information needs.
Focuses on a diverse user base with varying interests and needs. Customizes its services to cater to music enthusiasts, entertainment lovers, advertisers, and industry professionals. Provides valuable insights for advertisers and the music/media industry. Serves as a versatile tool for music discovery, entertainment information, and marketing analysis. Engages with a broad audience of users.
– Serving diverse customer segments broadens the user base. – Customizing services for different entertainment and information needs. – Providing valuable insights for advertisers and industry professionals. – Serving as a versatile tool for music discovery and entertainment information. – Engaging a broad audience of users.
Distribution Strategy
Shazam’s distribution strategy relies primarily on its mobile app, available on various app stores. Users can download and install the app on their smartphones, enabling them to access its music and media recognition features. Additionally, Shazam’s technology is integrated into various streaming platforms and music apps, further extending its reach to users. The app is promoted through app stores and partner integrations.
Utilizes its mobile app as the primary distribution channel, ensuring accessibility for users. Extends its reach by integrating its technology with streaming platforms and music apps. Promotes the app through app stores and strategic partner integrations. Prioritizes ease of access and cross-platform availability.
– Mobile app serves as the primary distribution channel. – Integration with streaming platforms and music apps extends reach. – Promotion through app stores and strategic partners enhances visibility. – Prioritizes ease of access and cross-platform availability.
Revenue Streams
Shazam generates revenue through advertising, affiliate partnerships, and music discovery features. Its primary revenue streams include: 1. Advertising: Displaying ads to users of the app. 2. Affiliate Partnerships: Earning commissions from referrals to music and media platforms. 3. Music Discovery Features: Promoting music sales and streaming through song identification. Shazam’s revenue is derived from advertising to its user base, earning commissions from referrals to music and media platforms, and facilitating music sales and streaming.
Relies on advertising revenue generated by displaying ads to users of the app. Earns commissions through affiliate partnerships by referring users to music and media platforms. Promotes music sales and streaming by facilitating song identification. Prioritizes revenue streams related to its core music recognition and media discovery functionalities. Utilizes a combination of advertising, partnerships, and music promotion for income.
– Advertising revenue from displaying ads in the app. – Earning commissions through affiliate partnerships. – Promoting music sales and streaming through song identification. – Prioritizes revenue streams related to core functionalities. – Utilizes advertising, partnerships, and music promotion for income.
Marketing Strategy
Shazam’s marketing strategy includes in-app promotions, partnerships with music platforms, and word-of-mouth marketing. The app promotes its features to users within the app, encouraging them to explore and engage with its music identification and media discovery functionalities. Shazam collaborates with music and media platforms to expand its user base and reach. Additionally, satisfied users often recommend the app to others, contributing to word-of-mouth marketing.
Utilizes in-app promotions to encourage user engagement with music identification and media discovery. Collaborates with music and media platforms to expand its reach and user base. Benefits from word-of-mouth marketing as satisfied users recommend the app to others. Prioritizes user engagement and partnerships for growth and visibility.
– In-app promotions encourage user engagement. – Collaborations with music and media platforms expand reach. – Word-of-mouth marketing from satisfied users is valuable. – Prioritizes user engagement and partnerships for growth and visibility.
Organization Structure
Shazam operates as a technology company with a focus on music and media recognition. Its organizational structure includes teams dedicated to technology development, partnerships, marketing, and user experience. Technology development teams work on enhancing the app’s recognition capabilities. Partnerships teams collaborate with music and media platforms. Marketing teams promote the app’s features. User experience teams ensure a seamless and user-friendly interface. This structure supports innovation and partnerships.
Employs specialized teams for technology development, partnerships, marketing, and user experience. Prioritizes technology enhancement to improve recognition capabilities. Collaborates with music and media platforms to expand the user base. Promotes the app’s features through effective marketing efforts. Ensures a user-friendly interface for a seamless experience. Supports innovation, partnerships, and user satisfaction.
– Specialized teams focus on technology enhancement. – Collaborates with music and media platforms. – Promotes app features through marketing. – Ensures a user-friendly interface for a seamless experience. – Supports innovation, partnerships, and user satisfaction.
Competitive Advantage
Shazam’s competitive advantage lies in its pioneering music identification technology, user-friendly app interface, extensive database, and integration with music and media platforms. Pioneering Technology: Offers advanced audio recognition technology for accurate identification. User-Friendly Interface: Provides a simple and intuitive interface for users. Extensive Database: Maintains a vast database of songs and media content. Integration: Seamlessly integrated with popular music and media platforms. Shazam stands out as a reliable and user-friendly solution for music and media recognition.
Derives a competitive advantage from: – Advanced audio recognition technology for accuracy. – Simple and intuitive user interface. – A vast database of songs and media content. – Seamless integration with music and media platforms. Stands out as a reliable and user-friendly solution for music and media recognition.
– Advanced audio recognition technology for accuracy. – Simple and intuitive user interface. – A vast database of songs and media content. – Seamless integration with music and media platforms. – Stands out as a reliable and user-friendly solution for music and media recognition.
As of 2023, major Apple shareholders comprised Warren Buffet’s Berkshire Hathaway with 5.73% of the company’s stock (valued at over $130 billion). Followed by other individual shareholders like Tim Cook, CEO of Apple, with about 3.3 million shares, Artur Levinson, chairman of Apple, with over 4.5 million shares, and others.
Apple has a business model that is divided into products and services. Apple generated over $394 billion in revenues in 2022, of which $205.5 came from iPhone sales, $40 billion came from Mac sales, over $41 billion came from accessories and wearables (AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch, and accessories), $29.3 billion came from iPad sales, and $78.13 billion came from services.
iPhone and Services sales represented the main revenue drivers in 2022. Within the service revenues, the fastest growing sub-segment was the advertising business Apple built on top of the App Store, followed by the Mac, Accessories & Wearables, and the iPad.
In 2022, most of Apple’s sales (62%) came from indirect channels (comprising third-party cellular networks, wholesalers/retailers, and resellers). These channels are critical for sales amplification, scale, and subsidies (to enable the iPhone to be purchased by many people). In comparison, the direct channel represented 38% of the total revenues. Stores are critical for customer experience, enabling the service business, and branding at scale.
In 2022, Apple generated 62% from indirect channels vs. 38% from its direct channel. In 2021, 64% of Apple’s sales came by indirect channels vs. 36% from its direct channels in 2021.
Apple is a tech giant, and as such, it encompasses a set of value propositions that make Apple’s brand recognized, among consumers. The three fundamental value propositions of Apple’s brand leverage the “Think Different” motto; reliable tech devices for mass markets; and starting in 2019, Apple also started to emphasize more and more privacy to differentiate itself from other tech giants.
Apple’s mission is “to bring the best user experience to its customers through its innovative hardware, software, and services.” And in a manifesto dated 2019 Tim Cook set the vision specified as “We believe that we are on the face of the earth to make great products and that’s not changing.”
In 2022, Apple is worth two and a half trillion dollars. Apple generated over $205 billion from iPhone sales in 2022, which accounted for over 52% of its net sales—followed by services revenues at over $78 billion, wearables and accessories at over $41 billion, Mac sales at $40 billion, and iPad sales at over $29 billion.
Apple’s mission is “to bring the best user experience to its customers through its innovative hardware, software, and services.” And in a manifesto dated 2019 Tim Cook set the vision specified as “We believe that we are on the face of the earth to make great products and that’s not changing.”
It costs Apple $501 to make an iPhone 14 Pro Max, and the company sells it at a base price of $1099. This makes Apple’s base markup on the latest iPhone model at 119% Apple is the only tech company able to sell its tech products at a such a premium, thanks to a combination of hardware, software and marketplace.
While Apple Tim Cook’s salary has been $3 million since 2016, most of Tim Cook’s compensation is performance-based. For instance, in 2022, while the salary of Tim Cook was $3 million, he had total compensation of over $99 million, which comprised stock awards and other incentives and bonuses.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
