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.
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History of Shazam
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.
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.
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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.
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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.”
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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.”
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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.
