01 10 08

Interview: Shazam boss talks iPhone, biz models, and D2C


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It's been a pretty good week for music ID service Shazam. Not only did it announce a new preload deal with Samsung and T-Mobile, but it also trumpeted the fact that its iPhone application has now been downloaded by more than 1.5 million people, tagging over 20 million tracks between them.We caught up with Shazam CEO Andrew Fisher to talk about these deals, and how they affect the company's wider strategy.So, iPhone has been a success for you?Usage is ramping up really nicely, with more than 1.5 million people downloading the application and becoming active users. And the 20 million calls to the service are a real testament to the fact that this is maturing as a whole consumer experience. It's not just about 'name that tune in the pub quiz' any more'.It's richer: you can buy songs on iTunes, watch the YouTube videos, or use the camera to capture who you're with at the moment of hearing that track, and create your own music memories. And on the music sales side, the good thing is that on iPhone, you've got pricing parity with the web, so there's nothing to inhibit people from buying a song once they've discovered it. There's no price disadvantage to them for transacting on the mobile.What are your plans for monetising this success, given that the current iPhone app is free to use?The plan is that we will introduce advertising in the near future,, but we recognise that not everybody will want advertising in the application, so we'll give them the option to get a premium version which will have no adverts, but also some more features. We're not quite ready to reveal those yet though.Is the iPhone app driving your growth right now?Not only that. Our total call volume has increased proportionately on other deployments too. Particularly for our smart client, which is being embedded with Motorola, Samsung, AT&T and others. With that, people don't need to remember a shortcode to use the service, and they're getting a richer experience, with album artwork, biographies, lyrics, search and charts. It's a lot more features than just dialling 2580 and getting a ringtone.One thing we're benefitting from increasingly is that the handset manufacturers and carriers are seeing more value in music as a category. So they're giving Shazam deck placement that they could give to games or location-based services. Music is getting more screen real-estate, which means more people are discovering services like Shazam.Does the success of Shazam on iPhone show that essentially, free usage is the way forward for the service?Not necessarily. We absolutely see a premium service that people are willing to pay for. In 60 countries outside the UK we're seeing a lot of success for pay-for services. Yes, the basic element will become free and ubiquitous. We're aiming to be on 250 million devices by the end of 2009, and the analogy we use is comparing it to a search engine, where people don't pay to search for information.But there's much more to Shazam than finding the name of a song and the ability to buy that track. It's evolving into a richer feature set, where our strategy is very much around enabling people to undertake their music journey beginning with discovery, but then through acquisition and social interaction around it.In what sense?On mobile specifically, the social aspect is the emerging trend in the market. Shazam's strategy is to encourage people to capture magical music moments. Everyone has a certain time in their life where they have certain songs that they relate to. It might be something you heard as a teenager, and when you hear it today, you think of certain friends, or whatever's part of that music memory.We're seeing it with people's taglists – it's not just music they're interested in buying. Features like taking a photo and rotating it with the album art is building up people's music life story.That's all very well, but how do you make money out of this?There are two things around that. Outside the UK, Shazam's main distribution channel is to partner with carriers and handset manufacturers. Those groups are focused on differentiating their handsets or building loyalty to their mobile tariffs. And if people are starting to invest their time in building up a musical history, they start to build loyalty to a specific service.To our partners, that has value. And we expect to introduce some additional features to extend that, as I've said, and we believe people will be prepared to pay for those via a subscription.The Samsung deal seems interesting, especially as T-Mobile is also involved…It's a reinforcement that Shazam is now seen as a leading discovery application on mobile phones, and that we're able to drive more transactional value into the [carrier] stores, as well as increasing ARPU and the use of the network.It also reflects the fact that the handset manufacturers are all starting to focus on adding services, rather than just features on a device. What someone like Samsung is doing is shortening the time to market when a carrier says they'd like Shazam on a phone.So what about this new breed of unlimited mobile music services – Comes With Music and PlayNow plus for example. What do they mean for Shazam?It's very positive to see these legitimate unlimited services being provided to users, although of course, the devil is always in the detail: it's really important that it's transparent to consumers.Might the companies running these services decide to do music identification themselves though? Is it a threat to Shazam, rather than an opportunity?For us, it's very much an opportunity. We have 90% of the worldwide market, but although our expertise is in the technology, it's also in the music sourcing, and that's what the carriers and handset manufacturers can't do in-house.They can't get music content that hasn't even been signed by a label yet, but is popular in nightclubs in Ibiza where it's being played by DJs as vinyl. But that's the kind of content that people expect to be on these databases and music stores.This kind of content might not be available for purchase, but we can make people interested in it, and labels can then put that content into the market. That's not something that can be done in-house by the carriers or OEMs.So what's the next platform after iPhone? Will you come out with a Shazam app for Google's Android OS?We're looking at all platforms, as our mission is to make Shazam ubiquitous on all mobile phones. We've worked with every operating system so far, from BREW to Symbian to Microsoft and Java. Emerging platforms are interesting, because there's more you can do to integrate other services – for example, it's been relatively easy on iPhone to integrate YouTube.Is the future for Shazam direct-to-consumer distribution through things like the App Store and Android Market then?It's very tempting today, if you have first mover advantage on iPhone or Android, to feel that D2C is an easy thing to do, without spending a lot of marketing money buying adverts on music TV channels or wherever. But if there are 1,800 iPhone apps and you're number 1,500, it's very difficult for people to find your app and become aware of it, so it's slightly short-sighted to think the world has suddenly changed.It will come back to the carriers and the handset manufacturers, as they control what's preloaded on the device as opposed to what's coming down over the air. The power still resides with the companies who can preload Shazam on devices, so that people switch their phones on and see the icon on the screen.However, these companies' strategies are changing, and moving towards more branded services. We're seeing more attribution of Shazam, and more latitude to develop the services. We're leading those customers, as opposed to being led by them 24 months ago.Lastly, how important is the web to Shazam going forward? There's a lot going on online with music right now, so how can you capitalise on it?We've had good success on the Web in terms of people tagging on their mobiles and then going to the website for the browse and buy experience. On the community side, we recognise that there are very established and strong music communities, from MySpace and Facebook through to Last.fm, iLike and Pandora. We very much respect those services, so we're focusing on being a mobile-to-web company.But ultimately, it's very clear to us, and from what our users are telling us, that there is real convergence taking place. People are building a single music collection, which is rapidly becoming a multimedia collection in their home, complemented with photos and other digital assets. There's real value for Shazam to move across devices in enabling the whole discovery and sharing process around that.The Web remains important to us though. We've focused on our Facebook application, as people have already invested time in the big social networks. That's been very well received, but we still face the challenge of being one of tens of thousands of apps out there. The success comes through viral word of mouth.

Music Ally
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