I don't recall the very first time I opened the Shazam app. But I do remember back in the early days of the iPhone, it felt like a little bit of wizardry in my hand to be able to, in a few seconds, extract the name of the band whose song was playing on the car radio or bar stereo from the tip of my tongue.
Truth is, it still does. And that's precisely why most of the company's users--100 million per month, per statistics it just released--still use the Shazam app.
Yes, 100 million monthly users. It's a stat that puts the company in an elite club. And this week Shazam also announced it closed a $30 million round of investment funding, valuing the company at more than $1 billion. That more-than-$1-billion valuation is entrance to another elite group, known amongst investors as the "unicorn club." It is comprised of fewer than 100 startup companies today.
Its fast-growing Silicon Valley peers may well be asking: Who let the old dude into the disco? Shazam is no fledgling upstart. The London-based company debuted its first product in 2002, in which you dialed 2580 to get a song title. Bu the fact is it's always been a solid, growing, business. In the last 13 years, it's been plodding patiently on a path of fairly steady revenue growth (with spending to match), internal growth (to 250 employees across six major global cities), and retains its status as one of the most downloaded apps of all time.
For all those lauds, it's worth noting that Shazam has taken a total of $125 million in venture capital funding--and three of those rounds happened in the past two years, during the tenure of new CEO Rich Riley. Shazam also doesn't, on the whole, make money. And over the years it has cycled through multiple business models and shuffled nearly its entire management team.
For the last two years, there's been fairly widespread speculation that the company is on track to go public. But before any profitable IPO, Shazam needs to demonstrate, well, simple profitability. To do so, it will need to pull out one more bit of wizardry: Convincing its millions of users it is not a one-trick pony.
"There may be 100 million people opening the app every month, if they don't come frequently enough and stay, then it's just a little app that will give me a benefit--but there's no way to monetize that meaningfully," says Thales S. Teixeira, a professor of marketing at Harvard Business School.
Shazam boasts that it is responsible for the sale of one-in-10 music tracks in the United States--400,000 a day--and makes money from referral fees from digital-download retailers such as iTunes and Amazon. And, impressively, the company has successfully forged partnerships with just about every major player in online streaming, managing to be a neutral player while making deals with Rdio, Spotify, Beats, Deezer, and Google Play.
But those referral fees are no longer Shazam's primary line of revenue. Instead, in-app advertising, paired with deals made with advertisers, make the most money, according to company executives. A narrow slice of revenue numbers that the company has released show that in the last six months of 2013, Shazam brought in total revenues of $25.6 million, and reported a loss of $8.8 million.
"Shazam wants to engage with consumers wherever sound is playing a role in their lives; whenever they are thinking about music," says Teixeira.
For example, the Super Bowl halftime show, or the Grammy Awards: Both are completely "Shazamable," and more than 1 million people opened up Shazam during the Grammys this past year. Moreover, every single network TV show in the United States is Shazamable--meaning, the app can not only identify it, but also point the viewer to behind-the-scenes interviews, show merchandise, or deleted scenes. Or, really, anything on the mobile web. Riley, Shazam's CEO, refers to the capability Shazam has built for TV-, film-, and advertising-makers as "an HTML5 blank canvas."
"We planted our flag in music identification back before mobile was cool," Riley tells Inc. "But we always want to do more. You don't even have to listen to music to Shazam anymore."
He's referring not just to multimedia, but also in part to a new Web-based content-feed the company launched in December. A user can log into Shazam.com to see not just the most Shazamed songs in the United States, or other music charts, but, alternatively, their friends' activity. A music player can accompany this feed. Consider it Shazam as a social network.
But wait! There's more. Yet another line of revenue might be dubbed "Shazam for shopping." In a little-known talent, the Shazam app can communicate with certain in-retail-store beacons, which are small hardware devices that ping customers' cell-phones using low-energy Bluetooth signals. This sort of in-store communication with customers is all the buzz in the retail industry, as merchants have long salivated at the thought of beaming targeted offers to the phones of shoppers strolling their stores. But customers seem reluctant to download retailer-specific apps or allow unfamiliar intrusions into their personal devices.
That's where Shazam is working on a Trojan Horse strategy. (It has partnered with a beacon developed by Qualcomm Labs, called Gimbal.) Says Riley: "Retailers realize that not that many people are willing to download their app, but most people already have Shazam."
Anindya Ghose, an IT and marketing professor New York University's Stern School of Business, has spent much of the past few years studying mobile marketing, interactive retail beacons, and consumer privacy around the world. He says in Asia, where I reached him over telephone, beacons are increasingly popular in retail environments, and customers universally seem willing to give up a little bit of their data in exchange for the right rewards--say coupons or discounts. The primary hurdle to retailers using in-store mobile marketing is consumer awareness. But, Ghose says, "given that a lot of consumers have the Shazam app, it is a brilliant play."
For the more proactive consumer--or avid product fan--there's also a brand new capability of Shazam that has nothing to do with music, or any sound. It's visual identification.
In 2014, Shazam began working with a company called Digimarc, which scans objects, such as a bar code or DVD case, essentially doing what a QR code does--without the QR code. Visually Shazamming something, again, can lead the consumer to any website on their mobile device.
"Something interesting is the ability to connect the physical world with the digital world--a company's digital investments with their real-world investments. That is definitely a trend," and it's called cross-channel advertising, says Cathy Boyle, senior mobile analyst at eMarketer, a private research-and-consulting firm based in New York City. "Any app developer that says 'I can help you' with that will win advertisers' hearts."
Teixeira thinks there's more to this recent technology integration than meets the eye.
"Most of us search Google with words, but you can also search by an image. So Shazam is getting closer to competing with Google," he said.
And that would be no small change.