Shazam, the mobile phone music discovery service, could be on track for an IPO, with Kleiner Perkins Caufield and Byers taking a stake in the company. Shazam, which was the original service that allowed users to hold up their phone in a noisy bar to identify what music track was playing, has seen phenomenal growth over the last few months, reaching the 50m user milestone this week.
The company has seen rapid growth after launching the service free on the iPhone App Store in the summer of 2008. The iPhone app has been downloaded more than 10m times.
“We’ve been adding 500,000 users a week since February and we are confident we are accelerating,” said Andrew Fisher, chief executive. “We expect Shazam to have 100m users by the end of 2010, making us the largest consumer-facing mobile application.”
“Before, I would have dismissed the possibility of an IPO because I would have said Shazam was too small. Now I think Shazam will absolutely be of a size where an IPO is a possibility,” he said.
Mr Fisher is cagey about how much Kleiner Perkins is investing, making it difficult to value the company. Revenues, however, are in the “tens of millions” and the company is in profit. On those metrics, it already looks like a better proposition than some of the internet-based companies which have yet to figure out how to monetise their vast customer numbers.
Shazam runs on a “freemium” model. Around 70 per cent of Shazam customers take premium subscriptions, costing a one-off payment of around $5. The rest use the free service, which allows them to identify 5 songs a month, supported by advertising. Mr Fisher expects the free advertising-led proportion of the business to grow as mobile advertising rates begin to improve.
Shazam started off nearly ten years ago as a simple service where users dialed 2580, held their mobile up to a speaker or the radio and received a text message confirming the song in question. Its now turning into a much more complex social networking tool that allows people to tweet the song title to friends, receive all kinds of information from lyrics to trivia, and of course buy songs.
Rival service Midomi is providing a challenge for the company, but with 6bn mobile phone connections expected to be in use by 2011, there should be plenty more scope for growth.
