Apple Acquires Shazam
After TechCrunch first broke the story last Friday, Apple confirmed on Monday the acquisition of UK based Shazam. Apple said:
“We are thrilled that Shazam and its talented team will be joining Apple. Since the launch of the App Store, Shazam has consistently ranked as one of the most popular apps for iOS. Today, it’s used by hundreds of millions of people around the world, across multiple platforms. Apple Music and Shazam are a natural fit, sharing a passion for music discovery and delivering great music experiences to our users. We have exciting plans in store, and we look forward to combining with Shazam upon approval of today’s agreement.”
Apple did not disclose the price but we have several sources that have confirmed to us that the deal is in the region of $400 million.
- I see this acquisition speak more to content discovery, ambient computing and AI than a pure music service play
- Shazam’s core business is in music recognition. People use its app to capture a clip of music that is playing to recognize what it is. Its app has seen over 1 billion downloads to date.
- Shazam built other services around that core business. Music referral to Apple Music, iTunes, and Spotify; it started to provide information about music and artists; it creates charts of the music most requested.
- More recently It’s also branched out into more marketing services based on visual recognition. Users can capture snaps of images even using barcodes, that lead them to more content from a brand or another organization.
- In 2014, Apple also integrated Shazam into Siri so that every time you asked Siri what song is playing, Siri uses the Shazam’s engine.
- Apple has a lot to gain from an AI perspective in the acquisition. First, it gains access to a highly engaged base from which it can learn a lot about music preferences and use the knowledge to improve its service.
- Second, while I expect Shazam to remain an open app on all platform I do expect Apple Music to be the sole referral service. This will without a doubt help grow users for Apple Music as well as increase engagement from current customers.
- While Shazam has a geographically broad base I am not sure how age diverse that base is which might mean that the referrals might leave out millennials.
- Access to this data is key to Apple as right now it has a smaller base than Spotify, which might mean a weaker recommendation engine.
- I also wonder if there is any IP or any learnings that Apple could apply to other types of content, from podcast to TV. this would play a big role as HomePod hits the market in early 2018 and ambient computing.
- The latest move into AR and marketing is also very interesting considering how vocal Tim Cook has been about the power of AR. Barcode integration, in particular, might offer some interesting opportunities in China.
F.C.C repeals Net Neutrality
The Federal Communications Commission voted on Thursday to dismantle rules regulating the businesses that connect consumers to the internet, granting broadband companies the power to potentially reshape Americans’ online experiences.
The agency scrapped the so-called net neutrality regulations that prohibited broadband providers from blocking websites or charging for higher-quality service or certain content.
- The commission Chairman defended his position saying this is great for consumers as it will create more competition, which in turn will lower prices. However, the other side of the coin is that providers might just offer tiered services where cheaper plans just do not deliver a rich enough experience. This would drive consumers to just pay more for a better service. But the downside for consumers who cannot pay more would be to have access to a smaller internet. An internet that could not just be slow but be partial too.
- This is quite astonishing considering what other countries in the world are doing. While net-neutrality is a given in all mature markets it is still a battleground in some of the emerging markets. If you think about what we are now facing: slowing down internet traffic, fast lanes for certain kinds of content, the blocking of websites you can see that these are all techniques used in totalitarian regimes.
- Other emerging markets are going out of their way to make sure that basic internet services are granted to all so that the poor are not left out. India is a good example.
- There is also concern that company looking to reach potential customers over the internet will face a pay to play mentality that might just leave out start-ups or companies with smaller budgets.
- Such concerns are not only for businesses but for anyone using the internet as a form of communication. Non-mainstream media, activists, any minority groups, they could all see their sites put at a disadvantage and basically their voices silenced.
- Things get even more complicated when internet providers own content companies as they could decide to favor their content over their competitors’ content. Think for instance about being able to stream movies on your phone from the AT&T service without impacting your data plan but not being able to do the same with Netflix.
- Vertically integrated ISPs like Comcast and Verizon are trying to compensate the decline in cable television revenue with bundles of video services with internet plans so that the internet looks more like cable. Without net neutrality, these service providers have carte blanche in how aggressive they can be.
- Our internet will not change overnight. But this is not necessarily a good thing. Companies will experiment and implement small but consistent changes to the point where we will not know what we do not know anymore.
Thank you for great article. I look forward to the continuation.