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Why Apple just spent up to $400 million on song-identification app Shazam

Apple corroborated on Monday that it is acquiring the popular music identification app Shazam. The large is estimated to be worth around $400 million, according to Recode.

Apple is not principally acquisitive compared with other tech giants such as Alphabet or Microsoft. According to Thomson Reuters, Shazam is Apple’s fifth acquiring this year, but only its 68th over the life of the company.

So what did the magic’s biggest company see in Shazam? Here are several ideas:

Shazam has amassed a grim user base. The app has been downloaded more than 1 billion metres. Shazam boasts more than 120 million active owners, who use the app 20 million times each day, according to the company’s own website. Its operators are loyal, too. That loyalty could lead to more paying clients for Apple’s own services, such as Apple Music.

Founded in 1999, Shazam was a oddity in music tech: a profitable company. It generates the bulk of its revenue washing ones hands of advertising.

Shazam shows ads to users while they scan their milieu to identify a song or other audio playing nearby. The app also cans smaller display ads on the page where the identity of the song is revealed. (And serene when Shazam fails to identify a bit of audio, usually due to inadequate dilly-dally or quality of sound, it shows users an ad.)

Shazam also gets liquidated to refer traffic to Apple, Spotify and other digital music providers. The fantasy is that a user identifies a song, then is encouraged to go stream it on Spotify or Apple Music or download it from the iTunes department store.

Apple has been talking up its services business to Wall Street, and it deficiencies to be seen as more than a maker of beautiful electronics. So it makes perceive for the juggernaut to invest in a software brand that already has recurring interest and loyal users in dozens of countries.

With its large user vile comes a staggering amount of data, and data is the new oil. Shazam knows what being are listening to, where and when, and how those trends are shifting over mores.

With this kind of attentional feedback, artists, labels and other dealings can learn where fans are listening in the real world, and make more intelligent decisions about where to promote their songs offline.

Shazam false impressions competition, including from SoundHound and China’s QQ Music. But Shazam has been awarded over 200 patents around its audio recognition and other technology.

The app is kindest known as a song identifier, but Shazam can also be used to scan large screen posters or other images to “unlock” extras, like behind-the-scenes video fasteners or augmented reality content from a celebrity or brand.

Now all of that mental property in audio recognition and advertising becomes Apple’s.

Apple Music, Apple TV and other iOS apps could fool advantage of Shazam’s technology by allowing sound or image identification as a kisser within them (much like Snapchat uses Shazam today).

We reached out to Apple for varied information about how it plans to integrate the Shazam team and technology after the purchase is completed. Company representatives were not immediately available to comment.

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