Apple has bigger plans than just song ID with Shazam deal

Analyst spells out how Apple could generate revenue by baking 'audio fingerprinting' technology into iOS

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Sinnreich speculated that Apple could use the flood of data that would result from Shazam-iOS integration for a variety of revenue-driving models.

"Apple could do whatever a QR code is used for now, but sonically," said Sinnreich of the audio fingerprinting technology. "Someone tags a commercial, and that's entered into a database, effectively targeting [that consumer] for further ads," he said.

That fits with how Apple looks to make money now, Sinnreich argued. "Besides selling hardware at tremendous markups, Apple makes its money serving as a middleman for content service providers who want a relationship with its enormous customer base," he said. Any time a third party collected a new customer through the iOS technology, Apple would get its piece of the action, just as it does now for app or music sales, or in-app magazine subscriptions.

And Shazam's recent update that, with user approval, leaves the app always on -- always listening -- is a marketer's dream, Sinnreich continued. If Apple enticed its iPhone and iPad users to set Shazam as always on, or even set the option by default and disclosed that amongst all the rest of the terms users agree to when they approve an iOS upgrade, it would collect an amazing amount of market intelligence. "It would collect whatever media they consume," Sinnreich said. "Who needs Nielsen when you have millions of iPhone users?"

Apple would know who watches, say, Duck Dynasty, who watches Downtown Abby, and target each accordingly with advertisements or recommendations from the iTunes TV library.

That's not to say Apple would ignore how Shazam could boost its music business. "If I were Apple, I'd leverage this market intelligence. Say, 'We'll listen to anything, you don't have to tag things at the club, and then when you're home we'll have a playlist ready on iTunes Radio," Sinnreich spelled out.

Or Apple may have grander goals. "They could use the Shazam data to identify trending songs, spot up-and-coming acts," Sinnreich said. "I can easily imagine Apple creating its own record label, let's call it iLabel. Just as Netflix has become a TV network of sorts, Apple could come in with its Big Data, contact indie artists who aren't on iTunes, strike a distribution deal and underwrite a music video, everything sold on iTunes.

"Why give away the 30% to the record labels?" Sinnreich asked rhetorically. "And they could double the cut of the artists because there's no middleman."

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at  @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

Copyright © 2014 IDG Communications, Inc.

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