Partnerships / Acquisitions

Apple To Acquire Shazam To Increase Music Subscriptions

Apple is looking to boost its music service subscriptions by acquiring Shazam for about $400 million.

According to TechCrunch, media reports are saying that Apple is buying the music recognition app, with the deal to be finalized and announced sometime this week.

Shazam, a U.K. company founded in 1999, allows people to use their smartphones or computers to identify any song, TV show, film or ad in seconds by listening to an audio clip or visual fragment. The company says it has more than 100 million monthly users, earning most of its revenue from commissions paid on referrals to Apple’s iTunes store.

Shazam also integrates with other apps like Snapchat and Apple’s Siri, and currently sends traffic to other music apps like Spotify and Google Play Music, which pay when those clicks convert to purchases. If the Apple deal goes through, Shazam would no longer refer people to Apple’s rivals, and Apple would also save money on commissions by cutting out the middleman.

Neither Apple nor Shazam have commented on the reports, but one source describes the deal as in the nine figures; another puts it at around $400 million. However, those numbers are lower than the $1.02 billion post-money valuation Shazam had in its last funding round, in 2015. All told, Shazam has raised $143.5 million from investors that include Kleiner, Perkins, Caufield and Byers; London’s DN Capital and IVP, as well as strategic investors Sony Music, Universal Music Group and Access Industries (which owns Warner Music Group).

One of Apple’s biggest acquisitions was the purchase of Beats for $3 billion in 2014, which then became the launch point for Apple Music. That service has around 30 million users as of September of this year. In comparison, Spotify has over 60 million paying subscribers, with 140 million overall.

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