Posted on Monday, Mar 16th 2015
Here is an interesting story of music recognition app provider Shazam, which has slowly made its spot in the Billion Dollar Unicorn club. Today, Shazam is a lot more than just a music recognition service.
Shazam was founded in 2002 in Hammersmith, UK by Dhiraj Mukherjee, Chris Barton, Philip Inghelbrecht, and Avery Wang. The company began as a service that helped listeners identify music that they had heard but did not know details about. In 2002, users could access Shazam by dialing 2580 on their phones and holding the phone up to the music. Shazam would identify the music and send out an SMS giving the user the song title and the name of the artist. By 2008, Shazam had realized the future of mobile apps. They launched their mobile app and became one of the first apps available on the Apple App Store.
Shazam works on the principle of using the digital fingerprint of the music and matching it against their database of millions of music albums and TV shows. The application is able to identify the music within four seconds of the user tapping on the app’s button. In fact, Shazam’s service has become so reliable that even Apple has tied up with them to integrate Shazam’s service into Siri for iOS8.
Recently, Shazam expanded their reach to Mac users as well. Users are no longer restricted to using the app on their iOS or Android device. Unlike the mobile app, Shazam Mac App does not need to be tapped to be turned on. The Mac app is always on and keeps identifying the music that the computer is able to listen to. Once Shazam identifies a song, it uses the OS X’s Notification Center to notify the listener. Additionally, the user can click on the menu bar icon and instantly see details of the song along with a link to iTunes to purchase it, a link to Shazam’s website to view the song’s lyrics and listen to more songs from the same album and a link to YouTube to watch the music video and related music videos.
Today, Shazam is much more than a music-based app. They have added commercials to their database that not only identify the commercial, but also pull up information regarding the product including special offers. TV is another big focus area for Shazam. They have signed up with several broadcasters to create Shazam-enabled ads and programs.
Shazam’s apps have reported more than 500 million downloads so far. They also boast of over 100 million monthly active users. They connect more than 500 million people and have a library of over 12 billion tags.
Shazam earns commission every time a user buys digital music through app stores after finding it through their app. Additionally, they earn advertising revenue through display advertising within the app and through licensing agreements with streaming devices and services.
Shazam does not publish its detailed financials. According to reports published last year, for the year ended June 2013, Shazam saw revenues grow 42% to £31 million (~$46.3 million). Losses for the year reduced 40% over the year to £1.98 million (~$2.95 million). Shazam is not yet profitable and the management believes in investing in the development of their products and markets before focusing on profitability.
They have been venture funded so far with $125 million raised from investors including Kleiner Perkins Caufield & Byers, DN Capital, Sony Music Entertainment, América Móvil, and Institutional Venture Partners (IVP). Their last round of funding was held earlier this year when they raised $30 million in a round led by Kleiner Perkins Caufield & Byers and DN Capital at a valuation of over $1 billion.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
This segment is a part in the series : Billion Dollar Unicorns
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