Apple confirmed Monday that it plans to purchase the music identification and streaming service Shazam for around $400 million.
The announcement ends months of rumors regarding a Shazam acquisition, as Spotify and Snapchat were also said to be bidding for the startup. Judging from Shazam’s last fundraising round in 2015, Apple is getting a pretty good deal: Investors at the time valued Shazam at $1 billion, even though it hadn’t yet made a profit. (Shazam said it became profitable in 2016.)
Apple didn’t immediately make its intentions for Shazam clear, beyond coyly saying it has “exciting plans in store.”
But the planned purchase coincides with a rumor, also out Monday, that Apple is considering dropping music downloads from iTunes in favor of a streaming-only model. Per industry publication Digital Music News, Apple plans to make the musical shift sometime in early 2019, just after the lucrative holiday season. DMN said it confirmed the news with multiple sources at the company who spoke on condition of anonymity.
While Apple didn’t immediately confirm that news to HuffPost, and it has denied similar reports in the past, a phase-out of music downloads wouldn’t be entirely unexpected.
Music streaming services have grown rapidly in recent years. As of October 2017, media analysts estimate 132 million people subscribe to streaming music services, a figure that outpaces Netflix subscriptions.
At the same time, music downloads ― a category dominated by iTunes ― have dropped sharply, falling from a peak of $3.9 billion in sales in 2012 to a projected $600 million by 2019.
The Shazam purchase could help Apple improve its music recommendation engine and thereby level the playing field with Spotify, which currently owns the category.
“Spotify has made the discovery of new music front and centre of what makes it a compelling proposition,” Mark Mulligan, a digital content consultant at Midia Research, explained to the BBC.
“Apple just doesn’t have the same amount of data about listening tastes as Spotify, meaning it can’t drive recommendations with as high a degree of accuracy and precision,” Mulligan added. “Shazam essentially gives it a shortcut to having a massive database.”