Why Shazam’s free iOS app has unlimited music tags

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Shazam, a popular music tagging mobile app, announced on Thursday that it would remove the five-song limit from the free version of its iOS software. The change is a result of fast growth in Apple iOS devices combined with revenue opportunities from mobile advertising and sales partnerships.

Shazam’s free Google Android app removed limits in April of this year, and I wonder if the company learned something from that action. It provided Shazam with several months of data on user behavior, which I expect showed that the more music tags users share through the app, the larger the overall Shazam audience, which ultimately leads to more overall revenue through ads and content sales.

In a press statement, Shazam CEO Andrew Fisher alluded to this combination of income opportunity by pointing out how the software generates music purchases from partners, and of which Shazam receives a cut:

Shazamers already identify over 1 billion songs each year and go on to purchase over $100 million in digital music via our service. Now, with no limits, people can Shazam even more songs they don’t know — or they already know — to conveniently purchase them, see the lyrics, watch the official music video, share on Facebook, Twitter or email, get recommendations and purchase concert tickets instantly. Unlimited free access means people can use Shazam even more as part of their daily lives.

By limiting the free software to just five tags then, Shazam was essentially limiting the chance for additional music sharing and, therefore, limiting potential music purchases. This same concept applies to last week’s Facebook news with music applications such as Spotify’s, Rdio’s and MOG’s having hooks into Facebook for “frictionless sharing”: As Facebook-connected apps are used, more people are exposed to content and potential purchases.

The news is also a bright spot for Apple’s iAd platform, which debuted last April. Earlier this year, Apple cut the minimum ad spend in half, from $1 million to $500,000, amid suggestions that the mobile advertising platform wasn’t meeting expectations. It also illustrates that mobile advertising in general continues to grow but can be supplemented with additional revenue streams, even for free or freemium applications.

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