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Apple gets Shazam for reported $400 million!

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Shazam is the latest UK tech firm to be snapped up by overseas buyers since the fall in the pound after the Brexit vote.

Apple has bought Shazam, a London-based app that allows smartphone users to identify music, for a reported $400 million. According to Thomson Reuters, Shazam is Apple's fifth acquisition this year, but only its 68th over the life of the company.

“Apple Music and Shazam are a natural fit, sharing a passion for music discovery and delivering great music experiences to our users,” said Apple.

Neither side would officially say how much Apple had paid, but a figure of about $400m has been reported, less than half the $1bn the app was last valued at when it tapped investors for cash in 2015.

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A spokesman for Shazam, which was founded in 1999, said: “ 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 purchase is Apple’s biggest acquisition since it bought rapper Dr Dre’s headphones company Beats Electronics for $3bn in 2014.

Shazam is the latest in a string of British tech firms to be snapped up by overseas companies since the fall in the value of the pound after the Brexit vote. Microchip designer ARM Holdings was sold to Japan’s Softbank for £24bn last year. Hertfordshire-based Chipmaker Imagination Technologies was sold to China-backed private equity firm Canyon Bridge for £550m earlier this year.

Shazam, which creates “acoustic fingerprints” of music and returns song information and links for smartphone owners to buy or listen the tune, has been downloaded more than 1bn times. The app is already used by Apple’s assistant Siri, allowing users to ask: “What song is playing?”

Why to buy Shazam
Although Shazam is popular with smartphone users it has struggled to make much money, with revenues of $54m in 2016. But, Shazam has amassed a serious user base. 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, like Apple Music.

It is also possible that Apple is looking for Shazam’s data. With its large user base comes a staggering amount of data, and 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.

Shazam was formed in Hammersmith, west London, by a group of friends frustrated that they often had trouble identifying the names of songs they liked on the radio. Shazam started before smartphones and iTunes, so to use the service people had to call a number, put their phone up to the radio, then receive a text identifying the song.

Dhiraj Mukherjee, one of its co-founders, has complained in an interview with the Guardian that the invention was too ahead of its time. “People even now say, ‘Oh, it’s a great idea.’ In the end, that was not necessarily an advantage [for me]. Being ahead of the market has consequences as well.”

Mukherjee, who has left the company, said he could not cope with stress of working at a startup. “I used to work 16- to 18-hour days and I would honestly not have had the stamina over 15 or 16 years [to stay with Shazam]. I have a wife and three kids and they test my stamina in different ways.

“When you’ve been an entrepreneur, you seek opportunity in a situation, whereas if you’re not you see obstacles or risk or challenges. The rule of thumb is: don’t go bankrupt, live to fight one more day.”

Of the original team behind the app, Mukherjee, Chris Barton, Philip Inghelbrecht and Avery Wang, only Wang remains. It took 14 years before Shazam crossed over into profitability last year, largely thanks to advertising revenues.

The company had earlier planned to float on the stock market at a suggested valuation of $1bn.

Source: theguardian.com, cnbc.com

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