Shazam has entered into a strategic partnership with, and received an investment from, Mexican telecommunications company America Movil. Part of a conglomerate of companies owned by businessman Carlos Slim Helu, America Movil has put $40 million into Shazam that will aid its growth into advertising and television and help the audio recognition service expand in Latin America.
This deal isn't just about the money, Shazam executive chairman Andrew Fisher tells Billboard. "The reality is we have a very strong balance sheet and we didn't necessarily need to do a fund raise. We've actually preserved a lot of the cash we raised in the last round," he says.
Instead, the investment and partnership reflect the strategic value of a relationship with America Movil and Slim. Although the service is available worldwide -- the app is available for both smartphones and feature phones -- the company has recently focused on North America and Western Europe. Initiatives in advertising and TV have helped double its user base to 325 million since its previous funding round in June 2011.
America Movil is the largest component of the conglomeration built by Slim, Forbes' richest man in the world for the last four years. The company has operations throughout Latin America that cover fixed and mobile telephony, broadband and fixed-line Internet services and digital television. Slim's investments also includes mining, real estate and professional soccer teams.
"Carlos Slim is much broader than America Movil in terms of the portfolios of operations they have in the territory," Fisher says.
The partnership will help expand Shazam's user base -- the app will be pre-loaded on mobile devices in Latin America -- but also provide opportunities to change the way people in the territory access information over the Internet.
"As we got into that conversation about Latin America and partnering with America Movil," Fisher says, "we also saw opportunity in the emerging category of media engagement," or the way people access content through music, television and advertisements.
A larger Shazam that better engages consumers will have an impact on the music industry. The audio recognition tool is a popular way to discover and buy songs. The company says it is responsible for more than $300 million of purchases a year through affiliate partners such as iTunes. Moreover, that figure is almost doubling every year. Fisher says more than 500,000 tracks are sold through Shazam every day, or about 10% of the global value of digital sales value in 2012, and the daily rate is almost doubling annually.
"People will buy at the point of inspiration if you make it really easy for them," Fisher says.
The America Movil funding could provide the company with momentum toward an initial public stock offering -- although the company is not in a hurry. Fisher says Shazam still has plenty of cash from its last funding. That gives it the flexibility to make acquisitions and grow as a private company rather than a public company.
Shazam is already headed in that direction. Brent Hoberman, co-founder of British travel and gift business Lastminute.com, became a non-executive director in December and is helping navigate the company to an initial public stock offering. Lastminute.com went public in March 2000 and was acquired by Sabre Holdings in 2005.