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14
Oct
2009

Shazam music to VC ears

POSTED BY Global Administrator

I think it is fair to say that, for reasons we are all familiar with, VC funding for mobile content and applications providers has been thin on the ground over the past twelve months, at least in comparison with the relative largesse bestowed upon the industry in preceding years.


That said, the downturn has not managed to kill the goose that lays mobile’s golden eggs, but has rather made the goose a little more choosey as to when and to whom it dispenses those eggs, which is perhaps not altogether a bad thing.


Thus, we have the announcement that the music recognition service provider Shazam has attracted undisclosed investment from the Silicon Valley-based Kleiner Perkins, a backer of Google and of a number of companies developing apps for the iPhone and iPod Touch.


If you will indulge my avian fairytale metaphor for a little longer, one might say that, in this instance, the goose had taken a good long look at the apps formbook and plumped for a red hot favourite (I’m mixing an equine theme into the metaphor here, but what the heck).


For Shazam certainly has form: 50 million users worldwide, and – with 10 million downloads so far – is amongst the top 10 apps by download volume on the iPhone. The company has utilised a variety of business models: free via the iPhone (although now supported by ‘relevant’ advertising), and freemium via both the Blackberry App World and Windows Marketplace for Mobile (the basic version here limits the amount of tag tracks to five per month: for unlimited tags, plus access to charts and recommendations, users pay a one-off fee of $5). Shazam is arguably the most popular of any mobile music service: and that, at a time when mobile music is starting to take off in a big way, is saying something.


 


The opportunities presented by companies which offer mobile music services have not escaped the attention of other VC firms: the French music streaming and discovery company Deezer (around a million mobile users) has just received €6.5 million from AGF Private Equity and CM-CIC Capital Prive. Add to that the enormous interest in companies such as Spotify – apparently poised to be bundled by 3UK – and you have, on the face of it, a fairly vibrant sector.


However, the nagging concern for other golden-egg dispensers must be that, these companies notwithstanding, some fairly high profile mobile music services have failed to make the predicted impact: Nokia’s Comes With Music, while offering consumers quite remarkable value for money, has not yet achieved a significant user base; the industry remains uncertain as to whether music rental, rather than ownership, is the way forward. So we may have to wait a while before golden eggs hit the industry not just singly, but by the clutch.


 


Here endeth the fairytale metaphor.