British mobile entertainment firm Shazam has raised million in a funding round led by Silicon Valley venture capital firms Kleiner Perkins Caufield & Byers, Institutional Venture Partners, with existing investor DN Capital also chipping in.
The funding will fuel Shazam’s expansion beyond its original music focus to TV show and advertisement tagging, particularly in the US, where the company has been working with a number of broadcasters in the last year.
The news comes as Shazam prepares to sign up its 150 millionth user for its service, and cements its position as one of the few UK mobile startups to have secured several rounds of funding from prominent US venture capital firms.
“We’re profitable, but this is an opportunity to invest and grow even faster, investing in Shazam for TV and the core music proposition as we grow it from 150 million users to a quarter of a billion,” said executive vice president of marketing David Jones in an interview.
“The investment will fuel both sides of the business. The core music side is our bread and butter, and the reason we’re growing by 1.2 million new users a week. But with that reach, it’s a natural extension to start Shazamming television shows and the ads around them.”
Shazam’s approach to these two separate entertainment markets is slightly different. For music, the company built its own database of songs – currently 11 million strong – to enable users of its app to identify tracks playing in the real world, and then buy them or access related content.
For TV, the company is not currently trying to build a comparable database of all shows, choosing instead to work with US television firms on a more cherry-picking basis. The app works in the same way: when a supported show is being watched, the viewer can tag it using Shazam’s app – not to find out what it is, but to access more content related to it.
“We are working with the major networks and show creators to Shazam-enable specific television shows, and then making sure they provide a rich, satisfying experience for viewers,” said Jones. “We’re getting some of that extra bonus content that they can’t squeeze into the main show, and bringing it to the second screen.”
An example is Bravo talent show Platinum Hit, where viewers using Shazam can watch the full judges deliberations and full performances from the contestants on their smartphones.
The app thus taps into the current enthusiasm from the broadcast industry for second-screen interactivity – an area also being investigated by startups like GetGlue and Miso, as well as through broadcasters’ own applications.
“There are some TV check-in apps where you can check in, tweet and post on Facebook, but that’s not compelling enough,” said Jones.
“We think our reach is key too: nearly 150 million people have Shazam on their mobile phones. While some show creators and networks are building dedicated apps for each show, they’re finding that it’s pretty difficult to drive installs and regular usage for those apps. Consumers don’t necessarily want a separate app on their phone for every show that they watch.”
Jones says Shazam is making “pretty sizeable revenues” from its partnerships with brands to integrate Shazam into their TV advertisements in the US, and suggests that the app is providing the kind of interactivity once promised by red-button interactive TV ads, which have not gained any traction in the US.
For now, Shazam’s TV efforts remain focused on the US, although Jones says the company will “definitely” be expanding to other markets, including the UK and Europe, once it has proved its model on the other side of the Atlantic.
The million funding round will be crucial in meeting demand from US broadcasters to work with Shazam, rather than leave them to seek partnerships with other companies. The company is having to rapidly increase the headcount for its teams working on the TV tagging campaigns, with Jones saying this will be reflected in an expansion of the number of shows supported throughout the summer and autumn.
What does this mean for Shazam’s original music business, though? The company has continued to add new features to its app on that front, including a social feed of friends’ tags and, more recently, a LyricPlay option to see the words to songs in real-time as they are tagged. There is a valid question about how long one app can cater to music and TV tagging, though: might Shazam need to split into two apps at some point?
“It is one app today and that is working quite effectively,” said Jones. “We will keep our options open as things progress, but we think we can present the different experiences [music and TV] within the same app. In the short to medium term, you’ll see all of that in the same app, and probably in the long term too.”
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