Making technology simple - Shazam’s story
We caught up with Andrew Fisher, CEO of Shazam, to find out more about their innovative music discovery technology, how you drive a digital brand in the twenty first century and why smartphones have changed the way we listen to and buy music.
Shazam has been an overwhelming success in the mobile application sector. The mobile app allows people to find out the artist and title of any published music recording. How does the technology actually work?
“We take a segment of the song you’re listening to, typically five seconds long, and we look at the spatial difference between the peak and the trough in the audio waveform. We plot them like points on a map to create a pattern. Shazam works on what we call ‘fingerprinting’ or pattern recognition. It’s taking a sample of the song, creating a pattern and matching that pattern with the songs that we have on our database.”
The speed at which Shazam identifies a song seems almost magical to a first-time user. What were people’s reactions when you first introduced the technology?
“People were amazed. Shazam has always had this magical experience associated with it – it’s the genie in the box. But I think one of the reasons the company has been so successful is because it’s taken advantage of the technology to improve somebody’s experience. Initially, Shazam was about ‘naming that tune’ but it’s moved on from there to convenience.
What it’s doing is helping someone to find a piece of music they like, buying that music and sharing that experience – but doing that in a much shorter timeframe than previously possible. Within a five to ten second experience, we’ve taken the sample and matched it against the pattern on our database of 10m published recordings.
The mobility factor is also really important – that’s why it’s what we call a made-for-mobile service. People tend to hear music when they’re out and about and buying music can be a very impulsive experience. I hear a track and I want to buy it immediately and get the immediate gratification.
Shazam is moving from being a ‘name that tune’ service to connecting the buyers and sellers of music. People buy 10% of the songs they identify and that means every year we sell over $100m USD of music through our platform. And it’s because we make it incredibly easy and simple for people to do. That’s very much part of our principle.”
You’ve been with Shazam since 2005. When you first took over as CEO there were no smartphones and no tablet devices. Did you have to wait for technology to catch up with the idea of Shazam?
“Shazam was a technology ahead of its time and that’s a consideration for a lot of start-up businesses that are using technology. Three years into the business, we recognised that there were some macro factors that were going to affect the success of Shazam’s product in the market. Those were: people buying digital content through online music providers; unlimited data tariffs; smartphones and pricing parity. Once all those macro factors were in place, that influenced the success of Shazam.
It’s a rare company that can influence the macro environment out there in the world. The important thing is to make sure there’s sufficient cash in the business and operate in a way that allows the market to develop around you. As consumer behaviour changed and people started buying smartphones, using them for data services and buying music, we started to see amazing take-up rates for the app.”
The database of music recordings is vital to Shazam’s success. How do you keep this database up-todate when so many major and independent recordings are now available online?
“It’s really important for us because our service is about the application of content and technology. We work really hard to stay ahead of our competitors in terms of technology and innovation, but one of the key differentiators is our content sourcing. We work really hard on acts or songs that haven’t been signed to a record label.
We have people on the streets and in clubs in over 200 countries worldwide. They pick up new content for the database. That’s really important – in a nightclub, with a new song being played four or five times in an evening, it could be ‘Shazamed’ 200 or 300 times. That means that there could be up to 1,500 times in an evening that Shazam doesn’t give a result, so we have to have that content on the database.
We’re very much an influencer and a trendsetter in the music industry. We publish our chart on a Monday and very often what’s been Shazamed over the weekend will lead the music industry to either sign that act or put more marketing spend on the song, or even rerelease the song.”
You now have 150 million users of the Shazam app, across multiple platforms. With the app itself being free, where do the main revenue streams come from with this business model?
“The app is free at the entry level, but there’s a premium component to the service. The reason we have a hybrid model is because of the state of the mobile advertising market. You’ll see that change over time – ultimately, Shazam’s mission is to be become ubiquitous and be the world’s leading discovery service on mobile. To achieve that, being able to give free access to the service is really helpful.
As the mobile advertising market matures over time we’ll drive a high proportion of our revenues through selling advertising. The other important revenue stream for us is selling content, such as music. Premium content will be a component in the future, but will be based around innovation and new services like our lyrics product.”
You talk a lot about Shazaming. Did a lot of thought go into coming up with a brand name that could be used as a verb?
“There were a lot of discussions. We’ve always held a vision that Shazam can become a mass-market phenomenon and change consumer behaviour. One example of that was being ambitious around our branding and we’ve intentionally tried to position Shazam as a verb. It’s been a lot of hard work, but we do increasingly hear people talk about Shazaming a piece of content, so that really delights us. We do want it to become embedded in people’s consciousness and psyche.
Many of the big technology and social media companies haven’t invested heavily in marketing. They’ve been built through virality and word of mouth, where you do have to have a memorable name.”
Do you make a lot of use of social media for your marketing?
“Yes, but we haven’t been successful for that reason. We’ve been successful because we’ve built a product that people engage with and want to tell their friends about. The important part about society, particularly with the younger demographic of users, is that you can’t tell a consumer today what’s a good product. They need to believe that they’ve discovered that service themselves and if they own that social currency, that badge of honour, then they’re more inclined to tell their friends.
The real focus has to be to build a great product that adds value to people’s everyday lives. And then they will sponsor you and promote you to their friends.”
Having been so successful in the music market you’re now moving into television. How does Shazam bring something new to the TV experience?
“As far as TV goes, there are two groups that Shazam can provide value to: one is the advertising group, who recognise that there’s an increasing amount of people in the living room now who have a second device open when watching TV – 60% of North American homes have a second screen open on social networking sites when watching television.
For the broadcasters, they want to engage people with the show in real time and encourage them to not fast-forward during the ad break. And the advertisers want to create valuable propositions and get people to interact with the brand. We facilitate that and add a lot of value.
With the advertising, we have the mobility factor. So, for example, we’re doing adverts with a home cake mix company. When you Shazam the adverts you’ll get sent a list of all the ingredients to make the cake downloaded onto your phone and a video of how to bake it. Those kinds of value-added experiences will encourage people to Shazam the advert or the TV show. It’s getting people to have a deeper and more immersive experience of the show.”
What do you feel is most important when building a digital business: the technology itself, or the way you market it?
“It’s important that you bring things to market in a user-friendly way that people can access easily. For us, it’s about reaching the mass market and bringing very compelling experiences that are simple to access. That’s the essence of a consumer-facing, digital media company these days.
The consumer has so many opportunities to engage with products and services today, especially given how many different devices we all have. It’s all about making something very accessible, very easy to understand and very easy to start using. We’re very conscious that it’s not about applying technology for technology’s sake: it’s about applying technology so that it adds value.”
Shazam is still a privately-held company. What strengths do you think being a private company brings to the way you do business?
“It really means that we can invest in the opportunity as it develops. We’re in a rapidly developing world in terms of changing consumer behaviour – just look at what’s happened with social networking over the past two years and how it’s become entrenched in the social fabric at large.
People are changing their behaviour faster than ever before. What’s really important for us, from an investment perspective, is that we can pursue the opportunities when we need to. We don’t have to manage a public market sentiment or run the business on a quarterly or six-monthly cycle. If we need to invest very heavily and it has an impact on our operating results, we can do that. That’s a huge benefit for us.”
Next year will see the tenth anniversary of the original music discovery service. Where do you see Shazam in another decade, in 2022?
“In ten years, we aim to be the service of choice for people who want to discover products and services on a global basis. If you look at the trajectory we’re on, every week we get over a million new users on Shazam. So our ambition is to become a ubiquitous service worldwide with over 1bn users. In ten years time, we’d hope to be part of a large proportion of the global population’s everyday lives.”
You can read more entrepreneurial interviews from our Spotlight on... series here