Business Operations Business Models

How Does Shazam Make Money (Business and Revenue Model)

The Shazam business model

How Does Shazam Make Money?
Here’s what you should know:
  • What is Shazam, and how does Shazam work?
  • How does Shazam make money?
  • Referral Fees
  • Shazam Partnership Deals
  • Shazam’s old business models
  • What is the Shazam business and revenue model?
  • Shazam’s funding and valuation
  • Shazam’s profit and revenue

How does Shazam make money if it’s free? Well, in this article, we’ll provide a full, in-depth, breakdown of their two (2) revenue streams and the different products and services they offer, as well as the Shazam business model, their year-over-year revenue, and how Shazam works.

What is Shazam, and how does Shazam work?

Shazam, a subsidiary of Apple, is an app that can identify music, movies, TV shows, and advertising based on proprietary sound recognition clips by using the microphone on the device and matching it to their database of over 8 million songs/audio files.

Founded in 1999 by Chris Barton, Philip Inghelbrecht, Dhiraj Mukherjee, and Avery Wang, Shazam has since been acquired in 2018 by Apple for a reported $400 million.

Shazam App in Apple App Store | Shazam Business Model | How Does Shazam Make Money?
Source: Apple App Store

How does Shazam make money?

In 2019, Shazam crossed a major milestone of 1 billion app downloads. On top of that, Shazam has over 200 million monthly active users and gets more than 20 million Shazams per day.

So how does Shazam make money from all of this?

Below is a breakdown of how much money Shazam makes and its revenue model. Including all revenue streams and how much they make off each service. We’ll also briefly go into Shazam’s old business models of how they use to make money before their current model.

Note: Shazam didn’t make its first profit until 2016, 17 years after being founded.

Here are the 2 ways of how Shazam makes money (in 2021):

Shazam generates revenue for the company in two (2) ways.

#1. Referral Fees

Shazam makes the majority of its money by referring users to platforms so they can purchase what they just Shazamed in the app. For doing this, Shazam gets a referral fee, or a “commission”, for each sale they generate for other platforms.

It was reported by Shazam in 2013 that they generated roughly $300 million in revenue for iTunes and Amazon through referring Shazam users to their platforms to make purchases.

With over 20 million Shazams per day, 5% to 10% of those lead to a purchase, according to Investopedia.

Note: It’s unclear how much Shazam makes from each sale.

#2. Shazam Partnership Deals

Shazam has a long list of partnerships with companies since expanding their reach outside of music and using their sound recognition app for things like television shows, movies, advertising, books, etc.

Some of Shazam’s partnerships over the years include The Walt Disney Company, Target, Snapchat, HarperCollins Publishers, Spotify, Esquire, SELF, Time Inc, The Wall Street Journal, Warner Bros. Interactive Entertainment, and many more.

Shazam’s old business models

Advertising [Stopped in 2018]

One of Shazam’s main sources of revenue was advertising in-app up until 2018 when Shazam was acquired by Apple, Apple got rid of the in-app ads.

$5 paid app [Stopped in 2018]

Back in 2009, Shazam changed its business model a bit to feature two downloadable versions of the Shazam app. One was a free version that was limited to just 5 Shazams per month. The other, Shazam Encore, was a paid version that listed for $5 on Apple’s App Store in 2009. It later reached $6.99 before being offered for free when Shazam was bought out by Apple in 2018.

Note: Once Apple completed the buyout of Shazam, they made the service ad free, which also then made their paid app, Shazam Encore, redundant.

What is the Shazam business and revenue model?

Shazam makes money through a few revenue models that they combine within their company, they are:

  • Commission based business model
  • B2B2C (partnerships) business model
  • Advertising based business model

Shazam’s funding and valuation

According to Shazam’s Crunchbase profile, Shazam has raised $143.5 million over 14 rounds.

On September 24, 2018, Shazam was acquired by Apple for a reported $400 million.

Shazam’s profit and revenue

Shazam’s last reported earnings before getting acquired by Apple back in 2018 was a revenue of $38.3 million, according to Shazam’s financial reports.

Since then, no financials have been released and Apple seems to be more focused on Shazam’s streams rather than sales.