How does Shazam make money

Talkin go money

Before universal access to digital technology, it was difficult or impossible to identify music in restaurants, bars or shops. Shazam was founded in 2000 and provided an easily available solution for music identification. Initially, consumers could use Shazam's call-in service to easily identify ambiguous songs. However, as smartphones and tablets became ubiquitous, Shazam developed an app for Apple (AAPL AAPLApple Inc174. 72 + 0. 27% Created with Highstock 4.2.6) and Android devices.

In 2014, Shazam expanded its business from music to television. Shazam's service works equally in both media. Users hold their smartphone or tablet to a music or television sound clip, which Shazam then processes and generates the title of the song or program being played. Shazam currently has 500 million users with 17 million tags per day and a music database with 30 million songs. Much of the revenue comes from investors and referrals to iTunes, Google Play, and Spotify. (For more information, see: Spotify Makes Internet Music Make Money.)

Referral fees

Shazam is known for its music service and allows users to listen to and identify songs through a process called tagging. In identifying the song, the service returns details such as the artist's name, song title, album, and the location where that song can be accessed. Shazam links song purchases with major vendors like Apple, Google, and Spotify, and receives a portion of each purchase for bank transfer.

A major source of income, Shazam estimates digital sales generate $ 300 million annually. Of the 17 million tags per day, 5 to 10 percent result in a purchase, the majority of it music, while TV shows, films and apps within Shazam's portfolio continue to grow.

advertising

Shazam works primarily with its mobile app and advertising is an integral part of its app platform. The company was part of 450 advertising campaigns. Each campaign costs between $ 75,000 and $ 200,000 and runs for a few months. Advertising alone creates a multi-million dollar business; However, Shazam hopes TV services will become its main source of income.

Recently Shazam launched a new distribution platform called Resonate to help TV stations and advertisers connect with consumers using their smartphones and tablets. Networks and brands can integrate the app into TV shows and deliver content for sale to users. (The Wall Street Journal estimates that 84 percent of smartphone and tablet owners use devices while they watch TV.) With television advertising remaining a multibillion dollar industry, Shazam expects the company to grow sales and growth rapidly.

Investors

Although Shazam was founded in 2000, it has seen much of its expansion in recent years. Thanks to the role of digital technology in individual lives, Shazam has grown exponentially. As of 2014, the company was valued at $ 500 million.

With much of the income generated from music referrals and advertising, Shazam raises investments to expand current and new businesses. In particular, the América Móvil tycoon Carlos Slim invested 40 million US dollars in the company to expand the service to Latin America. As a result, Shazam saw an increase of 100 million users worldwide. Sony has also acquired a $ 3 million stake in Shazam. Future investments and financing will secure Shazam's expansion and increase revenue. (For more information, see: Where's Carlos Slim's Money?)

The bottom line

Shazam started as a call-in service in 2000 and quickly expanded to reach the top of music. Identification. With much of the revenue from referral fees for Apple, Google, and Spotify purchases, Shazam expanded to include TV identification services.

The company insists that television advertising becomes the main source of income. Shazam has not neglected its music service and continues to develop new technologies for consumers. Recently, the mobile app integrated the Spotify and Rdio services so that users can play full tracks within the Shazam app.

In addition to music and TV, Shazam generates advertising revenue from its smartphone and tablet applications. As increasing technology enables greater means of reaching a large audience, digital services like Shazam will continue to grow and generate revenue.