Shazam, the mobile app company whose software helps your phone identify which song is playing on the radio, at a bar, etc., is making big changes to its pricing structure for the iPhone.
- Its free app, for new downloaders, will only be able to tag five songs per month.
- A new, $5 “pro” app will be able to tag an unlimited number of songs, plus it has some other features.
- The 10 million-plus people who already have the free Shazam app that can tag unlimited songs will get to keep theirs.
Why the changes?
Shazam tells the WSJ that it simply can’t make enough money from mobile advertising and iTunes referrals to support the app.
Shazam’s iPhone ad inventory is “sold out,” according to the WSJ, but ad rates must be minuscule. (The app is running Google ads this morning — we can’t easily tell if that’s backup, or their primary ad network. But either way, it’s apparently not enough to make a difference.)
“Shazam had hoped that mobile advertising and iTunes downloads would sustain the free app, but with the recession, that has not happened,” Niraj Sheth writes for Digits, the WSJ’s tech blog. Shazam CEO Andrew Fisher “doesn’t expect ad rates to bounce to levels to sustain free apps for at least two years.”
Meanwhile, Shazam — which is reportedly profitable — “makes most of its money by selling the app to paying customers, such as on BlackBerry smart phones or through deals with carriers such as Verizon.”
Will the pricing moves work? $5 seems like a lot for tagging music, so we think most people will still stick with the free edition.
But perhaps it’s not as crazy as it sounds: Rival Melodis switched its Midomi app to $5 in June — it also used to be free — and has kept that price level since then. Midomi is currently the no. 3 best-selling paid music app in the App Store.