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Apple has acquired Shazam, the popular music identification app that was founded in 1999 and that is averagely used 20 million times a day around the world.

Shazam lets users identify songs, movies, TV shows and commercials from short audio clips. While Shazam identifies a song or other audio playing, it shows ads to users, even when it fails to identify a bit of audio, usually due to inadequate time or quality of sound.

An Apple spokesperson stated: “We are thrilled that Shazam and its talented team will be joining Apple….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.”

In another statement, a Shazam representative said: “We are excited to announce that Shazam has entered into an agreement to become part of Apple….Shazam is one of the highest rated apps in the world and loved by hundreds of millions of users and we can’t imagine a better home for Shazam to enable us to continue innovating and delivering magic for our users.”

The deal is estimated to be worth around $400 million. The acquisition cost is far from the $1 billion Shazam was valued at during its last funding round, but the company has had a hard time finding a viable business model, pulling in only $54 million in revenue in 2016.

Despite its low revenues, Shazam can help Apple in a number of ways. The most obvious would be with Apple Music, where Shazam’s team could help improve the experience of the service. If Apple decides to shut down the app, it would also take away referrals to Spotify, which together with Apple Music gets 1 million clicks per day from Shazam.

Apple is also interested in Shazam’s augmented reality technology, which could help improve its own offerings. Shazam has visual recognition tech and an AR platform for brands that could help in the development of a Google Lens-type feature and improve its ARKit efforts. In fact, the app is best known as a song identifier, but Shazam can also be used to scan movie posters or other images to “unlock” extras, like behind-the-scenes video clips or augmented reality content from a celebrity or brand.

Moreover, Shazam has amassed a serious users database. The app has been downloaded more than 1 billion times. Shazam boasts more than 120 million active users, who use the app 20 million times each day, according to the company’s own website. Its users are loyal, too. That loyalty could lead to more paying customers for Apple’s own services, such as Apple Music.

Nowadays, data is the new oil. Shazam knows what people are listening to, where and when, and how those trends are shifting over time. With this kind of attentional feedback, artists, labels and other businesses can learn where fans are listening in the real world, and make better decisions about where to promote their songs offline. Apple doesn’t have the same amount of data about listening tastes as Spotify, meaning it can’t drive recommendations with as high a degree of accuracy and precision, therefore Shazam essentially offers a shortcut to having a massive database.

Apple has been talking up its services business to Wall Street and it wants to be seen as more than a maker of beautiful electronics. Therefore, it makes sense for the shareholders to invest in a software brand that already has loyal users in dozens of countries.

Now, with all of that intellectual property in audio recognition and advertising, Apple Music, Apple TV and other iOS apps could take advantage of Shazam’s technology by allowing sound or image identification as a feature within them (much like Snapchat uses Shazam today).

Written By: Valentina Guidi 

George Millington