Apple is close to acquiring the music recognition app Shazam, according to TechCrunch. The purchase is the latest acquisition for the world’s largest tech company.
First launched in 1999, Shazam has grown significantly over the last several years. Once specifically devoted to music recognition, Shazam now accepts audio and visual clips to identify songs, movies, and television shows. The service is the oldest of its kind, competing with Soundhound and Musixmatch.
While specifics on the deal are still sketchy, one source reported that Apple will approximately $400 million for the company. This estimate falls far beyond the company’s $1 billion valuation from its last funding round in 2015. The discrepancy is likely due to Shazam’s struggle to become profitable.
In 2015, Shazam posted an annual loss of $22 million dollars. The company saw a major turnaround in 2016 with revenues at $54 million dollars and became profitable for the first time with a pre-tax loss of $5.3 million. Earlier in 2017, Shazam CEO Rich Riley hinted that the company’s ability to become profitable could make it an attractive acquisition target.
A big part of Shazam’s turnaround is due to its feature diversification. In its earlier incarnations, Shazam made money primarily from advertising revenues and linking customers to services like Apple Music. In 2016, the company added a new augmented reality feature, allowing users to scan branded Shazam codes to unlock deals and games on the app.
The new features allow Shazam to build more strategic partnerships and drive engagement with the app. Earlier in 2017, the company partnered with spirits company Beam Suntory, maker of Jim Beam, Sauza, and Hornitos tequila, to create a wildly successful AR marketing campaign. Since its partnership with Beam, Shazam has partnered with a number of other companies and artists to create similar AR campaigns within the app.
It’s uncertain what Apple plans to do with Shazam. Apple frequently purchases smaller tech companies to scrape the technology into its own products. Apple could opt to integrate Shazam into future versions of iOS or use the app in conjunction with Apple Music.
Neither Apple nor Shazam has confirmed a deal is in the works. Sources say the companies will announce the acquisition on Monday, December 11. We will update this story as we learn more.