According to TechCrunch, Apple is finalizing a deal to acquire Shazam, the app that lets you identify any song that’s playing, any movie or even TV shows from an audio clip. Apple will pay up $400 million to Shazam, and was also confirmed by Recode.
Apple to acquire Shazam will benefit the company’s music and sound recognition technologies, and it will also save some money on commissions Apple pays right now to Shazam for sending users to its iTunes Store to purchase content. Referrals have made up majority of Shazam’s revenue in 2016, especially referrals to iTunes Store, and also drove 10 percent of all digital download sales, according to The Wall Street Journal.
There is a high chance that Apple may shut down the app after the acquisition is finalized and there are two main benefits this provides for the iPhone maker. The first is that by shutting down the app, it will bring more advantage to itself and hurt competing streaming services like Google Play Music and Spotify. On the other hand, Apple will acquire the company’s assets in terms of Shazam’s augmented reality tech and further benefit its services. Shazam right now lets users scan magazines, posters, books, advertisements, and other physical products which then launch 3D animations, 360-degree videos, and product visualizations.
Shazam right now has agreements with other services like Spotify, Snapchat, and Google Play Music, but it’s unclear at this point how this acquisition will affect those agreements.
Shazam has been popular for nearly 19 years of operation, and has over 1 billion downloads. Unfortunately, the company only pulled in $54 million in revenue in 2016, while also losing $5.3 million in the year. Apple on the other hand will definitely benefit from acquiring Shazam and turning a profit for the iPhone maker shouldn’t be a problem.