Last year, we broke the news that Apple was buying the music recognition startup and app Shazam for about $400 million, and nearly one year later, the deal has finally closed. Today, Apple announced that it has completed the acquisition, and that it would soon be making the service ad free to use for everyone, removing the app’s ad-supported free tier.
“Apple and Shazam have a long history together. Shazam was one of the first apps available when we launched the App Store and has become a favorite app for music fans everywhere,” said Oliver Schusser, Apple’s vice president of Apple Music, in a statement. “With a shared love of music and innovation, we are thrilled to bring our teams together to provide users even more great ways to discover, experience and enjoy music.”
It’s not clear how Apple longer term will integrate Shazam’s core product into its service — a pretty clever piece of technology that can identify a song by hearing a fragment of it. The two main directions appear to be to let it continue to remain a standalone app longer term, or to subsume part or all of it into a bigger Apple Music offering. (The two are not mutually exclusive.)
At $400 million — a figure confirmed to us by several sources when we were first reporting on the deal — Shazam is one of Apple’s biggest acquisitions both in music and overall, and it underscores the amount of investment that the iPhone maker is willing to put into expanding its role as a force not just in hardware, but in the services that run on that hardware.
In music, it’s in hot competition with over-the-top providers like Spotify — which, along with Snap, was also looking into buying Shazam — and Pandor, (which is now going to be a part of SiriusXM. Other notable Apple acquisitions specifically in music have included the acquisition of Beats, which became the basis of Apple Music, which Apple acquired for $3 billion in 2014.
In May, Apple announced that it has passed the 50 million user mark for Apple Music.
The deal comes three weeks after the EU finally gave a green light to the deal after Apple first made public its intention to buy the startup. (We write “startup” only in name: it was venture-backed to the tune of about $143 million but had been around since 1999.)
The app has hundreds of millions of users and had passed 1 billion downloads back in September 2016, but it had never managed to turn a profit.
In September 2017, Shazam reportedly made £40.3 million ($54 million) in revenues in its 2016 fiscal year, which was a turnaround from the declines between FY 2014 and 2015. It made a statutory pre-tax loss of £4 million ($5.3 million) in 2016, which was still a loss but significantly smaller than the £16.6 million loss in FY 2015.
Although it is one of the most popular apps in the music category, Apple was not found to be making an antitrust violation in buying it.
“Any concerns in that respect were dismissed because Shazam’s data is not unique and Apple’s competitors would still have the opportunity to access and use similar databases,” the EU noted in its approval earlier this month.
More to come.
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