Apple is close to acquiring the popular music recognition app Shazam for $400 million, as revealed by sources familiar with the matter.
Shazam allows users to identify any music playing nearby within seconds, whether it’s a song, advert or even a TV show. The app when launched in 2009, immediately became one of the most popular smartphone apps. In September last year, Shazam noted that the app had been downloaded more than 1 billion times while the figure is likely to be much higher by now.
A source said that the deal is being signed this week and most likely will be announced on Monday.
It was further revealed that Apple would buy Shazam for $400 million, a figure less than Shazam’s last valuation of $1.02 billion, according to Pitchbook.
To date, the music app has raised $143.5 million from investors that include IVP, Kleiner Perkins, London’s DN Capital and strategic investors Sony Music, Access Industries (owning Warner Music) and Universal Music. Kleiner Perkins had also invested in Shazam’s rival SoundHound.
Although Shazam is among the most famous smartphone apps, the company didn’t do great with profits. In its 2016 fiscal year, the company made £40.3 million ($54 million) in revenue which was a turnaround from the declines it suffered between the fiscal year 2014 and 2015. In 2016, Shazam made a statutory pre-tax loss of £4 million ($5.3 million) which was way smaller than the £16.6 million loss it made in 2015.
Last year, after the company achieved profitability, CEO Rich Riley hinted that the company was likely an ‘acquisition target’.
Shazam was founded in 1999 and has released a number of services since then. Most recently, the company has developed an augmented reality technology that allows you to discover content about anything you point your phone at.
The app also merges with other apps like Apple’s Siri and Snapchat.
The Path Not Taken:
SNAP had approached Shazam about a possible purchase, but it was Apple that took it home.
Deal is at $400m, per three people familiar with it.https://t.co/1Ampl8dK19
— Teddy Schleifer (@teddyschleifer) 8 December 2017
It is still unknown which of the Shazam features will Apple integrate into its own business. Notably, both Apple and Shazam have been working on the same feature that is the AR tech. Apple at the time when its innovation crown is under threat from companies like Samsung and Google wants to launch features that could attract more and more users to its Apple Music Platform.
The Google Pixel 2 had already been incorporated into the music recognition technology that displays the title of any nearby music on the screen. Now it isn’t hard at all to guess the reason behind Apple’s planned acquisition.
Apple has been super active to enhance its services by making a dozen of acquisitions lately. However, the biggest has been in the field of music. In 2014, Apple acquired Beats for $3 billion, which later became the foundation of Apple Music.
As of September this year, Apple Music had 30 million users while rival Spotify had 140 million users overall.