Universal Music Group, Sony Music Entertainment and Warner Music Group all bought small stakes
in privately held Shazam Entertainment in recent weeks, according to several people familiar with the talks.
News of the transaction was first reported by the Wall Street Journal.
Shazam’s most recent round of funding valued the business at $500 million. Depending on the terms,
each major’s stake would be less than 1 percent. Given the 14-year old company is expected to be exploring
the possibility of an IPO, the majors might stand to make a significant profit on their stakes. Leveraging the
value of music and music-based relationships was highlighted last week with news that Universal Music’s
early 14% stake in Beats Electronics for next to no cash investment could produce a windfall of nearly $500
million in total after Apple made a $3.2 billion bid to buy Beats. This latest Shazam deal is slightly unusual in
that the stakes are being bought for cash from a third party, rather than based on a valuation of the respective
labels' licensing rights to the start-up.
Warner Music, which is owned by billionaire Len Blavatnik, struck an alliance with Shazam in February, which
would see the third major identify popular new artists early on and potentially sign them to a jointly owned label.
Shazam’s song ID system has been one of the music business’ biggest discovery tools, referring nearly $300
million worth of music sales last year according to sources.
Shazam, which was founded in 2000 as a mobile app that can identify songs quickly developed into a data and
research company that has expanded its technical capabilities to also recognize television shows and movies.
Its app is used to identify about 500 million pieces of content a month, or roughly 16 million a day. The British
technology company has a reference database of more than 35 million songs and is adding about 1 million
new tracks a month. In addition, Shazam has employed a team of several dozen people who scour music
venues throughout the world to capture new and local music in an effort to make its database as comprehensive