Sunday, November 16, 2008

Listening for a revenue model

Tonight Apple ran a TV ad for Shazam, an iPhone application that listens to a song and tells you what it is. It’s the latest in a series of Apple ads promoting Web 2.0 apps available for the iPhone, which have also included Loopt and restaurant finder Urban Spoon (with the cool randomizer feature).

A quick search on the Internet shows that Shazam once charged for use, but now is free thanks to competition from Midomi. In head-to-head reviews, some prefer Shazam, some prefer Midomi. Isn’t this great? Not just a cool technology, but a consumer choice as well.

So far, news accounts have said Shazam’s getting market share but not revenues. Back in September, Samsung announced it was bundling Shazam with its phones, revenue model unspecified. A week later, Shazam landed the world’s biggest mobile phone operator, Vodafone, where the service would be €3/month.

I can’t imagine why you’d need to charge. I would think that you could make a lot of money from the 5% commission for iTunes sales — given one estimate of a 25% click-through rate. But maybe on some platforms there’s no revenue share on music sales.

The Washington Post story quotes the Shazam CEO, Andrew Fisher, in his guess that somehow ads will solve his problems:

While Fisher thinks that the mobile ad market is still 18-24 months out, he says that he's fielded a lot of interest from mobile ad networks which are keen on their inventory, hence their decision to test the waters using their iPhone application.
In this regard, I guess Fisher is in the same boat as Facebook CEO Mark Zuckerberg.

So we’re back to the chronic Web 2.0 dilemma: it’s easier to get users than revenues.

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