According to early Shazam user Lloyd Dobler, the London based music discovery app has reportedly raised $20MM in fresh capital at a post-money valuation of $500MM (according to Re/code actually). This brings the total funding of the Company to $92MM with KPCB, IVP, DN Capital, and America Movil (wireless carrier headed by Carlos Slim) as prior investors. Since CEO Rich Riley was hired last year, the Company has grown its monthly active users from 60MM to 88MM. The news of this round comes behind lots of money going into the music business, with SoundCloud and Spotify raising large amounts of money in just the last few months.
Shazam’s core business is around affiliate music sales by its app users, which was around $300MM the last year. However, it’s been focusing on adding TV advertisers as another revenue stream. This ties in with the Company trying to position itself as a “media engagement” company (compared to simply a music discovery app). The new television service allows users to find music in a TV show, see cast photos, and/or access other information, episodes, and merchandise. However, there are some doubts as to their ability to find similar success here as in music, particularly due to the different user behavior. For example, when you watch TV, you probably already know the show (or can find it with a click on the remote) and commercial you’re watching, so it’s not nearly as helpful of an experience as with a song you hear on the radio. This sounds a lot like the challenges Twitter and Facebook are facing as they attempt to be a “second screen” while people are watching TV.
Shazam continues to enhance its music discovery business though. It now allows users to preview entire songs within the Shazam app through streaming services like Rdio and Spotify. Since its TV efforts are still nascent, we expect the core business of music discovery affiliate revenue from Apple, Google, etc. to continue.