Music recognition service Shazam has surpassed 100 million monthly active users and more than half-a-billion downloads as it gears up to become one of the first mobile application companies to go big - and go public. The company says its monthly active users have grown 34% from July last year alone, putting it in among the top 20 consumer internet companies with the largest user bases, including Twitter, Facebook and WhatsApp.
The milestone comes a year after Shazam raised $40 million from billionaire Carlos Slim’s America Movil, in exchange for an estimated 10% stake. To date, the New York-based service with 250 employees has raised close to $100 million from venture capital firms including Kleiner Perkins and Sony Music Entertainment.
Founded in 2002, Shazam uses a smartphone's microphone to identify music or sounds from a television show or film in the vicinity, on average within around four seconds of tapping a button.
Its competitors include SoundHound and Play by Yahoo Music. When users “Shazam” a song, they’re taken to iTunes, Google Play or Amazon to download it or music streaming services such as Spotify. Shazam takes a cut of these revenues, but recently the company’s advertising business has surpassed what it makes from music sales and even licensing deals with partners like Apple, which has integrated Shazam’s service into Siri for iOS 8.
A big reason for the advertising push has been Rich Riley, the former Yahoo executive Shazam hired in April 2013 (when it had 60 million monthly active users) to replace Andrew Fisher, who is now chairman. Riley has since boosted Shazam’s advertising partnerships for banner ads and television ad campaigns.
In an interview with Forbes he wouldn’t comment on whether Shazam was profitable, though he has separately said the company brings in revenues in the "tens of millions" of dollars. “Advertising is the biggest [revenue driver] and then our music business,” Riley says.
Shazam’s financial future lies not just in music sales but in “hundreds of thousands of retail environments,” Riley says, as well as a forthcoming partnership with National CineMedia that will see cinema owners AMC and Cinemark employ Shazamable advertising in movie theaters.
Riley wouldn’t say if he’ll replicate the Siri integration with Google Now or Microsoft Cortana. “What I can tell you is that you’ll see us continue to make more and more things Shazamable,” he said. “For example we’re looking at live events. We’re looking at radio. We’re looking at how do we expand that universe of things that are Shazamable, and so we have an active pipeline of those kinds of opportunities that will come out in coming months and quarters.”
Shazam is, in other words, moving from being a music recognition service to an everything-recognition service.
Last December the company also launched Auto Shazam, which allows it to automatically listen out for music in the background to develop playlists, turning itself off when the phone battery gets low. "We feel that the world is moving towards an 'always on' state," Riley says. "Your device is becoming so powerful that it needs to be situationally aware."
As for the business roadmap, Riley seems largely focused on an IPO, which Fisher has described as the company's primary ambition. But Riley is also open to acquisition offers, and he refuses to deny that Shazam has entertained offers recently.
“I’m confident that Shazam will be able to IPO if it wants to in the next few years because of the strong brand, user base and business model,” Riley says. “But if it made more sense to be acquired, that could certainly be a choice as well.”
