Originally posted on KickShuffle.com by Chris Borchert. Chris combined his love of music with his background in new media to co-found Kickshuffle in the fall of 2011. He currently studies at the University of Connecticut School of Law, where he is pursuing a certificate in Intellectual Property. He regularly publishes articles relating to social media, technology and the law, and most recently was published in Bloomberg Law Reports and the New Jersey State Bar Association website and newsletter.
David Jones, EVP of Marketing for Shazam, has over 20 years experience in marketing, business development, and product and business strategy. Prior to joining Shazam, David held Vice President of Global Marketing and Global Product roles at Friendster. Previously, David was also the director of eBay’s media and entertainment businesses in North America and also held several marketing and general management roles at eBay Inc, including roles focused on scaling the number of active members of the eBay community. At Shazam, he is responsible for consumer marketing, user growth and business intelligence.
Shazam has come a long way since its launch in 2002, when users received song IDs via SMS text messages. Today, Shazam “connects more than 250 million people, in more than 200 countries in 33 languages” and is one of the top 10 most downloaded apps in the iTunes App Store. In what ways has Shazam diversified its business model over the last decade and what is the strategy for the next few years ahead?
Our business model generates revenues from a number of sources:
- We will drive more than $300 million in music sales this year via our digital storefront partners like iTunes and Amazon, so we receive affiliate revenue from this, which ads up given that we sell over 500,000 songs per day.
- As you know, we have a freemium model, with both a free version of the Shazam App that is ad-supported, as well as our premium version, Shazam Encore. When we went unlimited tagging in our free iOS and Android apps last year, we intentionally de-emphasized this revenue stream in a strategic decision to enable people to use Shazam free and unlimited for not just music, but now TV shows and television advertising. Yet, there are still many people that want Shazam Encore either because it does not have ads, or for some of the special features, or simply because some people prefer to pay just a little for the best paid apps in the iTunes App Store or Google Play.
- Advertising in the app to reach our massive mobile user base remains a healthy and growing revenue stream.
- And, finally, our newest and fastest growing revenue stream. Shazam for TV Advertising is our fastest growing source of revenue for the company. To date, we have Shazam-enabled more than 200 ad campaigns in the US, Europe and Australia, and that number continues to grow. Our strategy in the years ahead is to continue to develop this offering as well as the Shazam for TV service with programming because we believe it has tremendous opportunity for growth.
More and more television shows and commercials are incorporating Shazam on-air prompts. How did Shazam first enter this market, and where does television advertising rank on Shazam’s list of priorities?
One of the things that we have noticed since the launch of our service is that people have always used Shazam to identify the music featured in ads and television shows, so, to us, it has seemed like a natural extension of the service. In 2010 and 2011, we piloted some new features for making both TV advertisements and TV shows interactive, and because those pilots went so well, we expanded our Shazam for TV offerings to now include all TV shows in the US and select television ads around the world (those ads from the brands that work with Shazam to make their TV commercials Shazam-enabled).
So, now, when people use Shazam with television, in addition to identifying the music in the broadcast, they can also get additional information about the product featured in the TV ad, and experience more for any TV program, such as cast details, gossip, tweets about the show and actors, and trivia, plus additional information. As stated earlier, this is a very important focus for the company.
As I understand it, Shazam maintains a central database of music by collecting content directly from record labels. Can unsigned artists contribute to the central database? If so, how?
Yes – in fact, we receive music this way all the time, from the artists directly or through their managers. They can email the music team at firstname.lastname@example.org.
Beyond what we receive from the major and independent labels, direct from artists and managers, and from some important music catalogs around the world, our Music Team is also constantly adding new tracks to our database that they discover before they become popular, or before radio airplay. This could be from some of the tastemaker Djs around the country and world playing new music for the first time. It could be from music supervisors for TV shows and ad campaigns, so that anything on TV is in our database. And, they scour the world’s music blogs looking for everything that might be tagged by Shazam users anywhere in the world, to make sure it’s in our database, now 25 million tracks and growing. These are just some of the techniques they use to make sure anything that could be tagged by our users will be identified for them.
How significant of a component is music discovery to the current Shazam experience?
Music discovery is what Shazam is primarily known for and it is what helps drive more than ten million tags each and every day.
We’ve added TV into the mix as a major extension or initiative for the business, but this is in addition to the core music side of our business, which we continue to invest heavily in. Shazam for TV does not represent a departure or change in our direction away from music, it’s in addition to our great music business.
The “About” section on Shazam’s website includes a list of U.S. and International patents that cover Shazam’s services and products. Can you talk a little bit about the state of IP in the social media/tech industry – and specifically the challenges involved in protecting your IP?
Shazam invented the technology over a decade ago and has been adding to its considerable patent portfolio since then. People in the industry sometimes forget that a decade ago, music identification technology like Shazam simply didn’t exist. Now it does, thanks to Avery Wang, the other co-founders, and other early inventors at Shazam. Now, there are more players in this space and audio content recognition (ACR) is better understood, but Shazam continues to innovate in this area with more patent filings and patents granted.
We don’t comment on IP generally in this space. Our patent portfolio is a developing asset of the company that we do invest time and energy in growing, but we at Shazam are primarily focused on building a global consumer brand and a wildly successful company and business.
Can you talk a little bit about (SHAZAM) RED? Where did the initiative come from and who else is involved?
Shazam works with the (RED) organization by donating a portion of the profits from our (Shazam) RED App to The Global Fund. We are proud to support this worthy organization and its goal of fighting AIDS and delivering the first AIDS-free generation by 2015. We’ve been working with the (RED) organization for several years now.
What advice do you have for today’s music/tech entrepreneurs?
Find a problem — a big problem that people are struggling with on a regular basis — and find a simple and elegant solution to it. Use technology as a means to an end, but not an end unto itself. Build a great product. Put it out there early and iterate until you get it right. And, make it easy for your fans to spread the word, ideally building viral and social components into it where it makes sense. Don’t be discouraged if the technology doesn’t exist today — chances are it can be developed with the right people involved, or it’s not that far away from becoming available.
Finally, there are many great products and services out there that people simply don’t know about. Great product is necessary, but not sufficient — discovery and user acquisition is the second act. when the time comes, be prepared to invest in marketing and user acquisition. Hopefully, you will have built a way to monetize the users of your app, which can help fund this user acquisition.
Sounds straightforward, I know. But, the art and the science is in the specific problem you are solving for, your approach, and a series of important decisions you’ll make along the way.