Shazam’s Free App Gets More Shazam’d

Music startup bets on advertising, more free tagging

Music startup Shazam is tweaking its business model today by removing one of the key limitations on the free version of its application—people will now be able to "tag" an unlimited number of songs.

Shazam claims that it has more than 150 million active users, and its technology, which can identify a song based on a few seconds of audio, has become so well-known that startups in other fields have been described as "Shazam for X." A couple of years ago, the company unveiled a paid app, and to make that utility more attractive it limited new users of the free version to five songs per month. Now, executive vice president of ad sales Evan Krauss says Shazam will offer unlimited usage to everyone again, a move that the company hopes will accelerate its transformation into a big media business. 

"At the end of the day, for us, the premium business is a wonderful business . . . but offering completely unlimited usage is really exciting," Krauss says.

Shazam will continue to support its paid app, which includes an ad-free experience and a feature for displaying lyrics in-time with the music. But without the cap on the free version, there's less incentive to pay, which Krauss admits. That loss in revenue should be more than balanced out, he says, by an increase in usage and advertising. Capital One has already signed up as the initial sponsor for the free app, and Shazam will be promoting the change with a contest whose winner will receive $25,000 and meet singer Kelly Clarkson.

Krauss also touts Shazam's success with TV, where viewers can use the app to unlock special content for shows—and for ads. When someone uses Shazam with a TV ad, Krauss says there's a 65 percent engagement rate. American Express, Old Navy, Smirnoff, and Paramount are among the advertisers that have used Shazam to enhance their TV ads.

The company is also looking at new ad formats and programs related to music, though Krauss says he can't offer any details yet.