Apple is reportedly buying music recognition app Shazam, a move that could allow it to integrate an important feature into its line of smartphones at a time when the iPhone’s innovation crown is under threat from Google and Samsung.
LOS ANGELES — The music app Shazam is best known for its uncanny ability to identify songs that are already playing.
But Shazam’s new owner Apple could use that technology for more than just naming that tune. It could also fine-tune Apple Music’s feature that recommends songs for listeners, similar to the algorithmically updating playlists that streaming giant Spotify offers.
Apple on Monday said it was buying Shazam, one of the first music apps used with the iPhone when the device originally launched, to beef up its Apple Music subscription service.
Apple Music is the No. 2 streaming music service, with 30 million subscribers, to No. 1 Spotify’s 60 million.
Richard Windsor, an analyst at Edison Investment Research, predicts Shazam can help strengthen Apple’s music streaming service by suggesting songs.
“This is one of the traits that makes Spotify’s service so good as it is able to take that and match it to users’ tastes,” he says.
Shazam, which has been downloaded over 1 billion times, is used over 20 million times daily to discover music by using the smartphone microphone to identify songs. While its heyday was several years ago, when the technology was novel, London-based Shazam has been struggling to find a business model that works in today’s world, analysts say. It has tried expanding into naming music from commercials,
The app is no longer at the top of the charts, at No. 91 on the Apple iTunes chart and no longer in the top 100 for the Google Play Store chart.
Shazam and Apple didn’t announce a purchase price, but TechCrunch reported it at $400 million, a deep discount to its prior value. In January 2015, Shazam announced a new $30 million fund-raising round it said valued the company at $1 billion.
Waning use of Shazam reflects increased integration onto the iPhone. Shazam is now accessible from Siri, the iPhone personal digital assistant, allowing users of the iPhone to identify songs without having to open the Shazam app.
The growing shift to streaming music, as opposed to downloads, has also crimped Shazam’s model — as well as challenged Apple’s, which popularized music downloads with the Apple iTunes store and pre-phone iPods.
When more listeners would buy and download music, Shazam was able to pick up affiliate fees when its customer would buy a song or album at an online store like iTunes after hearing the music on Shazam. That buying pattern faded as more listeners streamed music.
“It doubled down on providing tools for TV advertisers but never got enough traction for that to be a true pivot,” said Mark Milligan, an analyst with British based Midia Research. That Shazam sold for far less than the company’s 2015 valuation “illustrates how much value has seeped out of Shazam’s business.”
Shazam has been built into Siri since 2014–“(“Siri, what song is playing on the radio?””) while rival Google has built even stronger identification tools into the new Google Pixel 2 phone, without asking, and the “Google Lens,” feature lets you place your phone in front of a record album to get information about the band and featured songs.
Paul Resnikoff, the publisher of Digital Music News, thinks Apple will keep the app going, but re-orient to send consumers to Apple Music.
Currently, identified songs are offered as potential downloads on Apple Music, or as streaming options on services like Spotify and Google Play Music.
Additionally, Digital Music News Monday published a report that forecast Apple will put all of its efforts into music subscriptions in 2019 and close down the iTunes store, which sells downloads of singles and albums.
“Downloads are cratering,” says Resnikoff. “They are dropping in double digits every year. There’s been a massive shift to streaming. The $1.29 download feels like a couple of years ago.”
Apple disputed the report, saying it’s “not true.”
Follow USA TODAY’s Jefferson Graham on Twitter, @jeffersongraham.