COMPUTER

Apple has bigger plans than just song ID with Shazam deal

Analyst spells out how Apple could generate revenue by baking 'audio fingerprinting' technology into iOS

  

 Apple will integrate music identification technology created by Shazam into the next version of iOS, according to a report by Bloomberg.

But while most observers, including Bloomberg, focused on the obvious plays for Apple, others see much more in the deal and believe that Apple's intent goes far beyond simple song naming.
In a story Thursday, Bloomberg, citing "two people with knowledge of the product," claimed that Shazam's song ID feature would be integrated into iOS 8 in the same fashion that Twitter was earlier.
"It will be integrated into the mobile software in the same way that Twitter's service is currently incorporated, meaning consumers don't need to separately download it," said Bloomberg. "Among the ways it can be used will be through Apple's voice-activated search feature, Siri. An iPhone user will be able to say something like 'what song is playing,' to find out the tune's details, one person said."

Apple added Twitter to iOS 5, which went public in 2011, and since then has offered developers APIs (application programming interfaces) to connect their apps to Twitter. Apple is expected to showcase iOS 8 at this year's Worldwide Developers Conference (WWDC), which runs June 2-6 in San Francisco.
Shazam, a London-based company, and its flagship app by the same name, is best known for its audio fingerprinting technology, which uses an iPhone's or iPad's microphones to "listen" to a song, then match the audio sample with a title in the firm's database. The iOS app also offers links to iTunes for track purchases; Shazam receives a cut of those sales.
Bloomberg and others talked up the obvious reasons for Apple's move: increased iTunes sales, boosted iTunes Radio's usage and song sales from popular streaming services like Pandora and Spotify.
"At its simplest, Shazam has proven to be very effective in converting interest to purchase," said Russ Crupnick of the NPD Group in an email. "While there may be some deep competitive motive, the fact is we hear a lot of interesting new music, or songs from deep in our memory, and apps like Shazam create the identification that facilitates our ability to then buy them."
But other analysts thought Apple's decision to bake Shazam technology into iOS went far beyond what Crupnick called "at its simplest."
"I think this has very little to do strategically with music," said Aram Sinnreich, a media professor at Rutgers University. "I think this is about a new method of targeting consumers."
Sinnreich pointed out that Shazam has been indexing advertisements broadcast on television, as well as the pre-show ads shown in movie theaters, and in some cases, has stuck deals with advertisers to provide metrics of those who "tag" an ad. In some cases, tagging an ad presents the consumer with additional information, or even a special offer.

Apple has bigger plans than just song ID with Shazam deal

 

Sinnreich speculated that Apple could use the flood of data that would result from Shazam-iOS integration for a variety of revenue-driving models.

"Apple could do whatever a QR code is used for now, but sonically," said Sinnreich of the audio fingerprinting technology. "Someone tags a commercial, and that's entered into a database, effectively targeting [that consumer] for further ads," he said.
That fits with how Apple looks to make money now, Sinnreich argued. "Besides selling hardware at tremendous markups, Apple makes its money serving as a middleman for content service providers who want a relationship with its enormous customer base," he said. Any time a third party collected a new customer through the iOS technology, Apple would get its piece of the action, just as it does now for app or music sales, or in-app magazine subscriptions.

And Shazam's recent update that, with user approval, leaves the app always on -- always listening -- is a marketer's dream, Sinnreich continued. If Apple enticed its iPhone and iPad users to set Shazam as always on, or even set the option by default and disclosed that amongst all the rest of the terms users agree to when they approve an iOS upgrade, it would collect an amazing amount of market intelligence. "It would collect whatever media they consume," Sinnreich said. "Who needs Nielsen when you have millions of iPhone users?"
Apple would know who watches, say, Duck Dynasty, who watches Downtown Abby, and target each accordingly with advertisements or recommendations from the iTunes TV library.
That's not to say Apple would ignore how Shazam could boost its music business. "If I were Apple, I'd leverage this market intelligence. Say, 'We'll listen to anything, you don't have to tag things at the club, and then when you're home we'll have a playlist ready on iTunes Radio," Sinnreich spelled out.
Or Apple may have grander goals. "They could use the Shazam data to identify trending songs, spot up-and-coming acts," Sinnreich said. "I can easily imagine Apple creating its own record label, let's call it iLabel. Just as Netflix has become a TV network of sorts, Apple could come in with its Big Data, contact indie artists who aren't on iTunes, strike a distribution deal and underwrite a music video, everything sold on iTunes.
"Why give away the 30% to the record labels?" Sinnreich asked rhetorically. "And they could double the cut of the artists because there's no middleman."

U.S. commercial drone industry struggles to take off

State laws and a slow-moving FAA are stifling early growth, trade group says

 The U.S. commercial drone industry is still struggling to get off the ground more than two years after President Obama signed into law a bill that permits the civilian use of unmanned aerial vehicles (UAV) over the country's airspace.

Critics say a growing number of state-level anti-drone measures as well as a continuing lack of federal aviation rules for operating civilian drones are to blame for the industry's slow start.
The Federal Aviation Administration Modernization and Reform Act of 2012 authorizes the FAA to issue licenses for commercial drone use in the U.S. It also requires that the agency draft rules governing the use of civilian drones by law enforcement agencies and private entities.
The FAA modernization law was widely expected to result in tens of thousands of commercial drones being licensed to fly over U.S. airspace. So far, however, all it has produced is a lot of noise.

Since the law was passed in February 2012, about 43 states have proposed a total of 130 bills and resolutions seeking limits on drone use. A total of 13 states have enacted anti-drone laws, and another 11 have adopted resolutions seeking some type of restrictions on UAVs.
Most of the legislation was prompted by concerns that UAVs will enable unprecedented privacy and civil rights violations, especially by law enforcement authorities. Privacy and civil liberties advocates have consistently harped on how drones with facial recognition cameras, license plate scanners, thermal imaging cameras, open Wi-Fi sniffers and other sensors could be easily used for surveillance of the general public.
Earlier this month, lawmakers in Louisiana and Pennsylvania became the latest to announce proposals seeking to ban the use of UAVs in certain circumstances.
Meanwhile, the FAA itself has yet to come up with any safety and operational rules governing civilian drone use.
Also, the agency has issued just two commercial drone licenses in the U.S, since the law went into effect, according to Ben Gielow, general counsel of the Association for Unmanned Vehicle Systems International (AUVSI), a drone trade group.
Of that, only one -- issued to energy giant ConocoPhillips -- is being used. Conoco currently operates a 40-lb. drone off the North Slope of Alaska to monitor oil pipelines and the movement of icebergs and to perform other maintenance-related monitoring.
The net result is that the U.S. is in danger of falling well behind other parts of the world in the use of drones for commercial applications, Gielow said.
In Europe and elsewhere, small UAVs, of the sort proposed in the U.S, are increasingly being used for a wide variety of purposes, including land management, crop monitoring, traffic management, real estate sales and news reporting. Even extremely privacy-friendly countries like Germany have permitted widespread use of UAVs in commercial applications, Gielow said.
Aerospace research company Teal Group estimates that sales of military and civilian drones will total over $89 billion in the next 10 years.
Drone use in the U.S., meanwhile, continues to be bogged down by misperceptions and overblown fears about privacy and security breaches, he said.
Many of those opposed to commercial UAVs tend to think of them as aircraft that are similar to military drones, not as the relatively small and lightweight vehicles that they are.

As a result, lawmakers want to impose new search warrant requirements on drone use even though no such requirements apply to the use of other aviation assets by law enforcement, Gielow said. Other proposed laws seek to restrict drone operators flying over private property from capturing images of people and private property without their explicit permission, even though there are statutes already on the books that prohibit such actions.
"This is a big data issue. It has nothing to do with the platform" that's used to collect the data, Gielow said. The same privacy and security restrictions that apply to the use of data collected by other means apply to data collected by drones, he said.
The mere fact that drones enable a new type of data collection does not mean that data collected by such aircraft is exempt from existing data security and privacy laws. "Things like Peeping Tom laws and stalking and harassment laws are just as applicable to unmanned aircraft as they are to manned aircraft," he said.
By proposing and adopting anti-drone laws, legislators are trying to curtail drone use even before people have really begun using the technology in the U.S., Gielow said. He argued that passing drone restrictions now would be "like trying to restrict the Internet or the telephone" before those technologies were actually widely used.

The FAA's continued inability to come up with rules for commercial drone use is another problem, he added. The lack of rules makes it harder for the FAA to claim authority over civilian drone use in the U.S., according to Gielow.
Earlier this year, for instance, the FAA attempted to fine an individual $10,000 for using a drone to capture promotional video. The FAA claimed the person had used a drone in a dangerous and reckless manner.
However, an administrative judge from the National Transportation Safety Board struck down the fine on appeal, noting that the FAA could not enforce rules for civilian drones that don't exist.
"Clearly, we have a lot more work to do," Gielow said. Many of the laws being passed or proposed are based on very little real information, he claimed. "Education is going to be key, but it is tough to educate people about drones if they are not being used," he said.
A spokeswoman from the FAA said on Wednesday that one of the top priorities of the FAA administrator is to publish rules for small UAVs later this year.
"The rulemaking is very complex, and we want to ensure that we strike the right balance of requirements for small [drones] to help foster growth in this emerging industry," the spokeswoman said in an email.
The FAA's task, she explained, is to figure out how to integrate drones safely into the busiest, most complex airspace in the world. To address that challenge, she added, "we are having regular conversations with a few distinct industries to see if we can expand authorized commercial operations for limited applications in very controlled environments."