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Abu Dhabi, UAEFriday 22 June 2018

The acquisition of Shazam by Apple raises questions over control of our tastes

The buyout represents an ongoing stranglehold of our everyday entertainment technology by an elite few corporations 

Shazam is now a part of the Apple stable. Simon Dawson / Bloomberg
Shazam is now a part of the Apple stable. Simon Dawson / Bloomberg

A significant piece of niche-sounding industry news shone the spotlight deeply into the looming financial forces shaping the way we consume music moving into 2018. Earlier this month, Apple bought Shazam – the trailblazing music recognition software that has identified more than 30 billion tracks since it launched on the iPhone 2.0 just under a decade ago.

Never mind the fact that this might prove a fortuitous moment to acquire the ingenious smartphone app, at a reported bargain price of less than half of the billion dollars Shazam was last valued at. The buyout represents an ongoing stranglehold of our everyday entertainment technology by an elite few corporations – an enterprising UK-launched start-up now inevitably integrated into the world´s most valuable company. And with this homogenisation of our music tech, also comes a worrying confluence of money, and power, in a few square kilometres of Silicon Valley.

The deal blurs business and cultural ingredients in a revealingly 21st-century fashion, and Shazam’s worth in both worlds is undisputable.The app – which samples 10 seconds of ambient music, typically overheard in a restaurant, club or mall, and identifies artist, song and album – refers more than one million daily users to streaming services including Deezer, Spotify, Amazon Music and Apple Music, and links to YouTube uploads.

Presumably, first among the “exciting plans” Apple promises for its new toy is streamlining the link to its own platforms, and possibly cutting the others out of the pie altogether. The buyout also gives Apple its first brand name, which also functions as a verb – something Google has long dangled over its arch rivals. Shazam that.

Inked for a reported US$400 million (Dh1.47 billion), the deal is the latest muscle-flexing from Apple, which has snapped up 66 smaller businesses in the past decade alone. Safely ranked as the world’s most valuable company since 2011 – with a quoted market value of more than $790 billion, roughly the annual GDP of The Netherlands – the computer giant has been particularly aggressive in the music marketplace since launching its own bespoke streaming service, Apple Music, in June 2015.

Otherwise tech trailblazers, Apple was markedly late to the party, continuing to invest too much belief in the ongoing relevance of pioneering download portal iTunes when streaming had already taken hold.

Apple Music continues to underperform its industry expectations, struggling to compete in a climate currently dominated by Spotify. Live since October 2008, that Swedish company’s 140 million users – including 60 million paid subscribers – vastly outnumber the disappointing haul of 30 million customers Apple Music amassed in its first two years.

Seen through this prism, Apple’s acquisition of Shazam makes a great deal of commercial sense, in a climate where all the main global providers – Spotify, Apple Music, Tidal, Deezer, Amazon Music – offer a similar service at a comparable price in most territories. By integrating Shazam into its interface, Apple clearly hopes to establish a USP to attract floating voters and outright defectors.

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However, it could easily backfire – many loyal long-term Shazam users could feel betrayed if the streaming service is cut out, or functionality becomes too Apple-centric – and it is only an extra click to download any of Shazam’s competitors, such as independent SoundHound.

Tellingly, the Shazam deal, which was announced on December 11, reportedly came after a particularly violent bout of bidding which also included Spotify and Snap (the parent company of Snapchat). As well as holding the strongest suit, Apple was arguably the most natural victor, with Siri already integrated with Shazam – the virtual assistant has been able to recognise songs on demand since 2014.

But whichever multibillion bidder eventually prevailed, the auction-off appears to demonstrate that Shazam was condemned all along, a gazelle surrounded by circling big cats, with only a matter of time before they moved in for the kill. Those pawing jungle kings are only lately enjoying the evolutionary fruit of steadfast early effort. After years of business scepticism, artist criticism and financial instability, the handful of streaming services still standing began posting significant profits for the first time in 2016, according to a Forbes analysis. Commentators have begun to hail a new “golden age” of streaming in music, as well as television.

The streaming industry now enjoys the financial support of more than 100 million paying subscribers. While this forms the sector’s core income, millions of freeloaders still generate hundreds of millions in ad revenue, contributing to the $7.6 billion (Dh28 billion) generated by streaming in 2016 – forecast to double by 2020.

For anyone who grew up in the age of CDs – and the rebellion of early file-sharing platforms such as Napster – it seems remarkable consumers parted with cash without receiving any tangible product. Yet the legitimate questions millennial streamers overlook amid this gold rush of sound – with 30 million tracks just a click away on all major streaming platforms – is who is profiting, and how they seek to shape our listening experiences in the coming years. We already know it’s not the artists, who take home between $0.006 (Dh0.02) and $0.0084 per Spotify stream.

Here the Shazam deal chimes another alarm bell – Apple will now have access to Shazam’s vast archives of historical user data – pixie dust to its struggling music recommendation and discovery algorithms.

A worrying precedent has been set with the big business homogenisation of our media consumption in film and literature. Amazon ramped up the DVD adverts and streaming referrals only after subsidiary IMDb was established as the industry’s go-to source for film and television credits and trivia. Feathers were ruffled when Amazon bought Goodreads, in 2013 – after it had attracted 50 million members happy to paper the community portal with book reviews and lucrative user data about reading habits.

It is rarely remarked on that the $1.65 billion (Dh6 billion) Google paid for YouTube is about 25 times less than the video streaming site is worth today. One imagines such deals would be scrutinised or even blocked by governments if they took place within the legal framework of nation states – not an option in the unregulated, post-globalised online world.

As fewer companies control larger slices of our online life, we can expect ever-greater competition to acquire brands which, like Shazam, offer something not currently part of the presiding streaming apps. Among the ripest to fall prey to big dollar buyouts may be Germany’s SoundCloud and the United States-based Bandcamp, both established as specialist listening portals on which anyone can upload their music – a vital democratisation of the internet for unsigned and underground acts.

Indeed, with 175 million unique, unregistered monthly listeners, SoundCloud has the broadest streaming audience in the world – but an unsuccessful bid to break into the mainstream by licensing major label material for 2016’s offline SoundCloud Go subscription service exposed the concept’s strict limitations.

As well as innovation in existing markets, the big cat desire to conquer new territories will prove unquenchable. Here we might invest hope in the integrity of the entrepreneurial team behind breakout regional success story Anghami, which celebrated a dramatic ascent – growing between 250 to 300 per cent annually – on its fifth anniversary last month.

The Middle East’s first legal digital music distribution company, Anghami is the dominant platform in a core area of 13 countries in the Middle East and North Africa – including the UAE – where piracy has been rife. As well as licensing western major label libraries, the Lebanese firm has distinguished itself by collating a vast Arabic language catalogue from labels large and small – amassing an exclusive library available internationally to 33 million users.

Yet, while the service has revolutionised the way many locally listen to music, the projected $20 million (Dh73 million) profits Anghami expects to post this year are a trifling sum to an Apple or Spotify keen to tap into the region’s swelling affluent millennials. Another precedent: earlier this year, Amazon acquired home-grown Dubai-based e-commerce platform Souq.com for $580 million (Dh2.1 billion).

To many, it might seem a matter of moral urgency that Anghami, and its profits, remain in the Middle East rather than be subsumed – or Shazamed – into Silicon Valley.