Apple’s recent
acquisition of Shazam might be a great way for the company to drive subscriber growth, according to one early Shazam investor.
DN
Capitol chief executive, Nenad Marovac, gained a deep understanding of
Shazam’s business model after his firm invested in it back in 2004.
Marovac says Shazam will be a great way for Apple to try to catch up
with Spotify in terms of subscribers, if it can convert enough Shazam
users.
Apple reportedly spent $400 million for Shazam in December. iOS
integrated with Shazam for a number of years now, but the service gives
Apple Music a host of new tools. It also brings in hundreds of millions
of users that Apple Music could turn into paid users.
“Since Apple has launched Apple Music, it’s still a way behind the curve, behind Spotify,”
Marovac told Business Insider.
“Shazam has 150 million active users a month, and about 300 million to
400 million uniques per year. If you convert 1% to 5% of those users to
Apple Music, the investment will pay for itself in spades.”
With
over 30 million subscribers, Apple Music still wouldn’t catch up to
Spotify even if the best-case scenario happens on conversions. 5% of
Shazam’s base would add about 7.5 million paid users. Spotify currently
has 60 million paid users.
Other
analysts see the Shazam acquisition being much more useful than for
adding to Apple’s subscription numbers. Apple’s got enough reach that it
doesn’t need to worry about how to add users as much as it should work
on making Apple Music better. Data from Shazam’s tools could make it
more appealing over the long term, says Midia analyst Mark Mulligan.
“In
relative terms, it’s behind Spotify in terms of playlists and weekly
active use,” Mulligan said. “Those are the metrics it needs to do more
to drive. The Shazam dataset will be an important asset.”
By
accessing Shazam’s data on how customers respond to certain songs,
Apple could add a lot of valuable AI based playlists and other features
to Apple Music.
