Thursday, May 15, 2014

Warner, Universal, Sony Buy Stakes in Music App Shazam

HANNAH KARP/Wall Street Journal

Shazam Entertainment, the music-identification app, landed small investments from the world’s biggest record companies, according to people familiar with the matter.

Warner Music Group owner Access Industries – the holding company of billionaire Len Blavatnik – along with Vivendi’s Universal Music Group and Sony Music Entertainment, are each taking $3 million stakes in Shazam, these people said. All of the shares were purchased from a single third-party investor, according to people familiar with the transactions.

Shazam’s most recent valuation was $500 million, a spokeswoman said. She declined to comment on the labels’ stakes.

Shazam, which is based in London, helps people identify music playing on the radio or other public setting. For the labels, Shazam’s biggest value lies in its role as a marketing partner: The app lets people share the song’s name on social media, download it from Apple iTunes Store or stream it on subscription services such as Spotify.

Warner, Universal and Sony all own a stake in Spotify, while Universal owns 14% of Beats Electronics, the headphone maker and music-streaming service that Apple is in talks to buy for $3.2 billion. Blavatnik’s Access Industries is also an investor in the Beats subsidiary Beats Music, as well as the French subscription music service Deezer. Shazam declined to comment on a Bloomberg report last month that it is in talks to license its song-ID technology to Apple to use in its next iOS update.

For Blavatnik, the investment bolsters a partnership announced last month that allows Warner to more heavily promote its existing artists on Shazam, as well as use the app’s data to ferret out buzzy new acts whose music is frequently being “Shazammed.” The partnership also includes a joint record label that will feature artists discovered by the service, though much of the music Shazam recognizes is by artists who are already signed to record deals.

The labels’ investments are modest compared with the $40 million Shazam raised last year from Mexico’s América Móvil as part of its drive to reach one billion users through Latin American expansion.

Before landing investment from the Mexican mobile service company, which is controlled by billionaire Carlos Slim, Shazam said it counted 350 million users. It now says it has more than 450 million users world-wide, and more than 90 million monthly active users. Last year, Shazam said it was preparing for an initial public offering.

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