Apple confirms plans to buy music recognition app Shazam

Apple on Monday confirmed its plan to buy Shazam, the UK-based music recognition app, in its biggest acquisition since the iPhone maker’s $3bn deal to buy Beats Electronics in 2014.

Terms of the deal were not disclosed but people familiar with the matter have pointed to a valuation of about $400m, less than half Shazam’s valuation after a private financing in 2015. 

Acquisitions of this size are relatively rare for Apple, which typically buys about a dozen smaller start-ups over the course of a year. 

A $400m price ranks Shazam alongside some of its largest deals in the past 20 years, including 2012’s purchase of security company AuthenTec, which went on to power the iPhone’s Touch ID system; PrimeSense, the Israeli maker of 3D scanning technology that helped to create the iPhone X’s face-tracking and matching TrueDepth camera; and NeXT, the 1997 software deal that saw the late Steve Jobs return to the company he co-founded. 

The iPhone maker’s purchase of Beats three years ago was its largest outright acquisition, and formed the basis of the Apple Music streaming service. 

Shazam, which is already integrated with Apple Music and the Siri virtual assistant as well as social media company Snapchat and Spotify, the streaming service, could help iPhone owners to discover the music they hear around them using its patented audio recognition system. 

“We are thrilled that Shazam and its talented team will be joining Apple,” the iPhone maker said on Monday. “Since the launch of the App Store, Shazam has consistently ranked as one of the most popular apps for iOS. Today, it’s used by hundreds of millions of people around the world, across multiple platforms.”

London-based Shazam was hailed as an early success story for the UK’s consumer technology industry and was one of the country’s few start-ups to achieve a $1bn valuation. 

A sale to Apple ends a long period of speculation about Shazam’s future, after it signalled plans for an initial public offering of at least $1bn back in 2013.

Despite its popularity with users, however, the group has struggled to monetise its business, especially as consumers have switched to music streaming platforms. Revenues last year grew 14 per cent to £40.3m, with pre-tax losses of £4m, according to UK company filings. 

Founded in 1999 as a service where users could phone a number, listen to a song and receive a text message with the name and artist, the company’s early use of sound recognition software earned it a reputation for innovation in the music industry. Shazam attracted investment from record labels as well as venture capitalists in London and Silicon Valley. 

More than 1bn people have downloaded Shazam’s mobile app on both iPhones and Android smartphones since it launched in 2008.

Shazam confirmed on Monday that it had “entered into an agreement to become part of Apple”.

“We can’t imagine a better home for Shazam to enable us to continue innovating and delivering magic for our users,” the company said.