Popular "name that tune" app expands into visual media

A company that less than a decade ago started as a way for fans to name that tune (and be able to buy it) has become the most promising digital frontier for television shows and brands looking to connect interactively with audiences — and to extend the depth of the viewing experience past on-air boundaries.

Shazam — it’s both a name and the root of a verb — has a user base approaching 150 million in 200 countries around the globe, including about 50 million in the U.S. — and it’s expanding worldwide at the rate of 1 million new users a week. With a recent infusion of $32 million in venture capital funded by Kleiner Perkins Caufield & Byers, the privately held U.K.-based mobile discovery company is positioned to capitalize on the fact that customers have already adopted the behavior of Shazaming for more information about media.

That reach is why networks including MTV and NBCUniversal are dipping their toes in the Shazam waters, which have mainly focused on music, and to great effect. The company says 4 million tracks are “tagged” per day, leading to 300,000 daily download purchases, mainly through iTunes.

The company will use a portion of its capital infusion to expand its “Shazam for TV” offerings, which already are making a splash this summer on programs including Spike TV’s “Guys Choice Awards,” and new cable series “The Glee Project,” “Alphas” and “Platinum Hit.”

Here’s how it works: The Shazam icon comes up onscreen, cueing users to point their app-enabled smart phone at it and tag it in order to unlock additional video content. The system can also be accessed during repeats or via DVR play.

Shazam for TV falls into two categories — program-driven content and brand-driven content. Programs like “Guys Choice,” “The Glee Project,” “Platinum Hit” and “Alphas” aren’t meant to sell anything. Their primary goal is to drive viewer engagement and loyalty by providing exclusive content, which fans download through the app when they see a Shazam icon onscreen.

Company execs knew they had a model that worked well on TV from its kickoff — a foray into brand-driven content for national advertiser Dockers on the Super Bowl.

“We started the entire TV side of the business two Super Bowls ago when Dockers approached us about making the music within its commercial Shazamable,” says David Jones, Shazam’s exec VP of marketing. The primary incentive of the ad was a khaki pants giveaway, during which 500 pairs of pants were claimed within 24 hours by viewers connecting with Shazam. “We realized we were on to something,” Jones says.

Other global brands — Old Navy, Starbucks, Paramount Pictures and Procter & Gamble — have climbed aboard, using Shazam to add value to advertisements or promotional materials.

“Twenty-seven percent of the people who Shazamed the Old Navy ad either shopped, downloaded the song featured in the ad or viewed additional content,” Jones notes.

Shazamable shows and commercials provide viewers with an unobtrusive second-screen experience that doesn’t interrupt what they’re watching on television. And by providing additional and often exclusive content, Shazam gives fans of shows much more than the simple “check-in” experience other mobile TV applications are touting.

Oxygen’s “The Glee Project,” which centers on seven contestants vying for a guest starring role on Fox’s “Glee,” gives viewers an extended experience of the competition through Shazam — part of an overall digital strategy.

“We use Facebook and Twitter to remind viewers to Shazam, and the response to those messages is very positive,” says Jennifer Kavanagh, senior VP of digital for Oxygen. “(Users) just can’t get enough (added content). They’re very appreciative.”

Each episode of Syfy’s recently launched superhero show “Alphas” is Shazamed so that viewers can get additional content and also enter sweepstakes, which could be partnered with advertisers in the future.

While there’s no metric to measure how traffic to Syfy’s mobile website translates into increased viewership, Blake Callaway, senior veep of brand and strategic marketing at Syfy, says it’s good for the brand to associate with a first-to-market, innovative platform like Shazam.

“Success is measured by getting buzz about the shows,” says Callaway. “We saw a huge uptake in mobile traffic; but people were engaged.”

Viewers of Bravo’s “Platinum Hit” get full song performances and playlists when they Shazam the program. Lisa Hsia, exec VP of Bravo digital media, says the cabler uses Shazam to unlock exclusive content in its Summer by Bravo campaign. “We’ve received over 72,000 tags so far this summer,” says Hsia, who adds that the “Top Chef” and “Real Housewives” franchises get the Shazam treatment as well.

Jones says the rapidly-growing, 120-employee company, headquartered in London with offices in New York, Los Angeles, Palo Alto, Chicago and Seoul, is operationally profitable, but doesn’t disclose what it charges for Shazamable programming or advertising.

The company draws from three revenue streams: affiliate income from iTunes and other music vendors, advertising and subscriptions from smartphone users.

The Shazam app is available on iOS, Android, Java, BlackBerry, Windows, Symbian and all other major platforms. The free, ad-supported version allows five tags per month, with the premium model ($4.99 annually or a one-time fee of $5.99 for lifetime use) permitting unlimited tags. Apple stats note that at the end of last year, Shazam’s was the fourth most-downloaded free iPhone app.

For the fifth annual “Guys Choice” awards that aired in June, those with the limited version of the app would have used up most of their monthly allotment quickly; there were three Shazamable moments. Two unlocked backstage content featuring award winners including Mark Wahlberg, Blake Griffin, Harrison Ford and Jim Carrey. The other was footage from Triumph the Insult Comic Dog, the puppet best known for mocking celebrities.

The idea was not to drive viewer engagement and loyalty by providing exclusive content.

“We’ve long been interested in the notion of interactive broadcasts and what you can do during a show,” says Erik Flannigan, exec VP of digital media, MTV Networks Entertainment Group. “Young guys in the audience already have the app on their phones. It gave us a fast-track path to enabling additional content relating to the broadcast. People love the idea of using applications for something new.”

Shazam’s revenue stream

1. Affiliate income- from iTunes, Amazon and other vendors

Shazam generates more than 4 million tags every day, including music and television. Approximately 8%-10% (more than 300,000) of these tags result in a sale of music, concert tickets, merchandise and other purchases, making Shazam is one of iTunes’ largest affiliates

2. Advertising- from mobile application and from television commercials

Shazam derives revenues from the ads within its app, including “Listening Screen Sponsorships,” which allow advertisers and marketing partners to own the Shazam listening screen while a song is being identified by Shazam users. It also receives undisclosed revenues from TV commercials that integrate Shazam for TV.

3. Subscriptions

Shazam supplies a limited, ad-supported free app, but many users upgrade to a premium unlimited subscription on an annual or lifetime basis, at an average of $4.99 per user.

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