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.
