Apple has finalised the purchase of song identification app ‘Shazam.’ For years, Shazam has been one of the most downloaded apps in the world, enabling users to identify songs at the push of a button, and then either stream or download them. While the purchase is reportedly worth around US$400 million, this is not a happy ending for the application.
Just like the sale of Mashable last week, Shazam has been sold for peanuts compared to what it was once worth, with analysts putting it at around the billion-dollar mark as late as January of this year. The reason for the slump in value has to do with monetisation.
Shazam has struggled to build any advertising revenues despite an incredibly large audience and high usage metrics. In fact, advertising was predominantly garnered from music sites such as Apple Music and Spotify. The primary issue was that while the usage was high, the time-on-app was short and Shazam ended up to be a victim of its own excellent UX. Essentially, because users can simply open the app, press the button, get the song and move on to a genuine music site, there has been no real opportunity to create engaged advertising for anyone but those genuine music sites. The result was a large and loyal audience that presented no value to a wide range of advertisers. The only logical moves were to undergo an interface overhaul, which would be mean ‘upgrades’ counterintuitive to the overall customer experience, or sell out to a business like Apple, who could add the Shazam app natively to its Apple Music offering.
There is a theme developing with regards to business values. As organisations are acquired, genuine values, rather than hypothetical guesses must take precedence. The question becomes, was Mashable, or Shazam ever worth the amounts that were being predicted or were these estimates based on the assumption rather than science?
With many other acquisitions currently being rumoured, we may be in the middle of a period of value consolidation across the industry.