- Interview: Andrew Fisher, CEO, Shazam; "Not Just For Pub Quiz Night"

Dianne See Morrison
Thursday, October 9, 2008; 3:00 PM

Shazam announced today that it has struck a deal with Vodafone ( NYSE: VOD) Germany in which the operator will include its mobile music discovery application on its Vodafone Live! portal. Customers will be able to download the application called MusicFinder with Shazam and have unlimited use of the service for ?2.99 per month ($4.10). The application also gives users the ability to share the named track with their friends, and buy the song directly from the Vodafone Music Store using a "click to buy" button that will appear with the identification.

The Vodafone agreement is the latest big distribution deal for the company, which last week announced it had scored an important partnership with Samsung, in which its music application would be bundled on two of its music handsets, with more deals with the device maker expected. Its iPhone application has also been doing well, and is currently the number two music application in the App Store, behind Pandora. Shazam claims that the application was downloaded 1.5 million times in the first six weeks of its availability in the Apple ( NSDQ: AAPL) App Store and iPhone users have identified some 20 million tracks. Its growing popularity couldn't come sooner for the nine year old company which launched its first application six years ago--an IVR service, in which users texted in to a shortcode and were messaged back the name of the track. The company tried out several ways of expanding its service, including its own D2C efforts to sell ringtones and other content, with limited appeal. We caught up with CEO Andrew Fisher to ask him what's changed in the market and with the company to explain Shazam's rising usage, and what he sees as the company's strategy going forward.

The rest is after the jump

-- Articulating a new strategy: The new deals are part of Shazam's new strategy to help the company "go beyond name that tune" which was "great for pub quiz nights" but not so great at generating revenues for the company. The new strategy is all about getting consumers to buy and interact after they've identified a track. Shazam's initial shortcode service was billed per use--for example Vodafone Germany still offers it as 49 euro cents a go. But the problem with that model was that it was limited, and it was difficult for consumers to actually buy the track they'd heard. Instead of clicking on a buy button, which is how its application works now, users had to find the operator store, or other music store and search for the track. Fisher says Shazam's trying to get their application bundled onto more handsets and operator portals, and working with them to integrate it with the phones's FM radio, media player, and camera, among others.

-- The Right Time:"The mobile ecosystem has changed a lot in the last two years," says Fisher, noting just 24 months ago the music catalog for mobile wasn't that extensive. In the past, Shazam would have to refer a user to a ringtone, since full-track songs for mobile was still limited. Two years ago, he noted, there were maybe 10,000 full track titles available for mobile, while now its possible to buy some 3-4 million full track mobile tunes.

-- Usage Rates: Fisher claims that "regular" users of the service are accessing the service about 20 times a month, or three to four times a week, which includes both those who get the service for free, and those who pay for the application. For those regular consumers with a free music service, 40 percent will click through to get the track (does this mean that the other 60 percent really just want to name that tune?) For those who must pay for songs, the click through rate drops to 25 percent. At the "buy button," it drops again, so that in the end 15 percent of Shazam's regular users will purchase the track the service named.

-- "Magical Music Moments": No, it's not a CD compilation of pop ballads turned into schmaltzy instrumentals, rather it's Shazam's own catchphrase for how it will hook into the social media buzz. "Magical music moments," are created when you share the music you've discovered with friends or family. The company has created a Facebook application in which friends can see whenever you've discovered a new track, and it's also integrated its iPhone application with the device's camera, so you can add a photo of when you've found a new song and send it to a friend.

-- Mobile Ads to Support Free App: As expected, there's "far higher usage" with those consumers who get Shazam's service for free, but there's got to be a way to earn revenues from that, which Fisher says they will do with mobile advertising. It plans to integrate banner ads on its free iPhone application shortly, though Fisher says they are very much "looking to learn" to make sure that their users aren't put off by them. While Fisher thinks that the mobile ad market is still 18-24 months out, he says that he's fielded a lot of interest from mobile ad networks which are keen on their inventory, hence their decision to test the waters using their iPhone application.

-- Paying for mobile music: Will music on mobile eventually end up free? Fisher notes that people have paid for music after using Shazam, as it's a convenience purchase, as well as an emotive one. As for carriers, they want applications that give their users a value add, and sends them to their music service. But as Fisher notes, songs certainly get snapped up more if they are free, which is why he likes Nokia's Comes with Music and Sony ( NYSE: SNE) Ericsson's Play Now services. Of course, that model simply shifts the burden of paying for music onto device makers, which may or may not see any payback in handset sales. Plus, as Fisher concedes, the model is hard to sustain. If bundling "free" music just becomes another feature on a handset, what happens when everyone's got a similar service?


Samsung To Bundle Shazam Music Discovery App On Music Handsets

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