Published on December 11th, 2017 | by Alan Cross1
Why Is Apple Spending $400 Million to Buy Shazam? Here’s Why.
If all goes according to the rumours today, Apple will announce the acquisition of the nifty music identification app, Shazam. But why? Music Industry Blog explains.
Shazam finally found a buyer: Apple. Ever since its affiliate sales revenue model crumbled with the onset of streaming (there’s no business in an affiliate fee on a $0.01 stream), Shazam has been trying to find a new business model. It doubled down on providing tools for TV advertisers but never got enough traction for that to be a true pivot.
Shazam’s problem has always been that it was a feature rather than a product – as so many VC funded tech companies are. The fact that it sold for $400 million – just 2.8 times its total investment ($143 million) and well below its previous pre-money valuation of $1 billion, illustrates how much value has seeped out of Shazam’s business. The Apple acquisition though, is one of the few ways that Shazam’s ‘hidden’ value can be realised.
Interesting. Keep reading.