All Access Group: Now

December 11, 2017

This Week’s Reflection

Six Reasons Why Apple is Buying Shazam

For those who haven’t heard, Apple purchased Shazam last week in a deal valued at $400M. Shazam has been around for nearly two decades — its technology lets users identify and discover songs, movies, TV shows, and commercials from brief audio clips through its app. The question is, what’s the rationale behind Apple’s decision to buy Shazam. My thinking is that there are likely several factors in play including these:

  1. Apple takes away referrals to Spotify (its primary rival) by routing users directly to Apple Music.
  2. Shazam’s music and sound recognition, which is already integrated with Siri (and has been for a few years now), stands to gain a deeper integration and entrenchment within iOS — similar to what Google has done with song recognition in Pixel.
  3. Shazam has built a massive database of 100M+ global active users, which Apple Music gains immediate and exclusive access to (along with valuable data as to user behavior from an audience of that scale and stature). This info can provide Apple with rich insights about consumer listening patterns and behaviors, to serve up more curated, tailored content that caters to an individual consumer’s preferences (which fosters stickiness).This audience can also be directed to become subscribers to Apple Music’s streaming service; especially given Apple’s marketing machine — if the right strategies are deployed.
  4. There are still billions (with a b) of consumers who are internet-connected around the globe, but aren’t yet paying for music streaming — and as they hear a song they like, they’re going to seek a way to capture it. This is one of the key market opportunities where an Apple and Shazam integration can pay off big time.
  5. Apple has a big focus on AR technology, and Shazam has developed an AR platform for brands, along with visual recognition capabilities, that can accelerate Apple’s efforts in this area.
  6. There is also a strategic advantage to the possible integration of Shazam with the new Siri-driven HomePod speaker which will come out in 2018 — relative to other leading voice activated devices from Amazon and Google.

Bottom line: Apple Music has been lagging Spotify in terms of streaming music domination, and the Shazam acquisition and integration could be a key missing link to capture market leadership for Apple once again.

~Kelli

 

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