Shallenge my Own Business Plan for Wharton Business School Capstone

hallenge:
listening streaming music has
never been so fun
Business Foundations Capstone Project
Alessia Fantoni
05.21.2016

Product or Service – Shallenge
Gamification inside Shazam – Listening the streaming music, playing the music and becoming a
community
“Challenge your Shazam friends with Shallenge!” Shallenge is the product, inspired by the concepts of Gamification, Social Challenges and
Communities built in top of typical game mechanisms, like: points, badges, challenges and rewards. Shallenge transforms the Shazam platform
in a virtual game - environment in which the User activities are directly connected to: - the amount of songs listened; - the time spent in
listening streaming music in one of the streaming services proposed by Shazam and provided by its partners.
Shallenge leverages the Social Network power to increase the effects created by itself. Indeed the Users can share on their Social Networks the
badges achieved and they can compare with friends and other Shazam/Shallenge Users with similar musical preferences.
“Are you going to be the most Jazz expert?” “How many days do you spend listening music?”
In addition on these “social and playful” features the Users will be able to convert the earned points in Promotional Codes for themselves or
for their friends. Such Promotional Codes can be converted in bonus tracks or monthly subscriptions discounts for streaming services.
How Shallenge works
The Users search on Shazam some songs.
They could decide between two options:
to listen the song with one of the
streaming service sponsored by Shazam
(in which Shallenge works) or to close
Shazam app and to search another
provider. The Users will decide to try the
streaming service offered inside Shazam
from its partner (Spotify) instead any other
providers of the same services, because
with the Shazam sponsored services they
can join the Shallenge Community and
play with others.
When the streaming offered by Shazam
through his Partners (Spotify) starts, the
minutes of listening are converted
in Minute Points (MiPs), the number of
songs listened and their genres are
recorded and, based on this data, the
Users can achieve specific badges and
access special Promotional Codes. Once
reached a given amount of MiPs the Users
receive a Promotional Code.
The Users can share their badges,
compare with other Users and invite
friends to join the Shallenge
Community of streaming listeners, and,
thanks to Promotional Codes, offered by
other Shazam Users, new users will start
using Shazam (and Shallenge both free)
and they decided to subscribe free
streaming services or, because of the
discount, they decide to subscribe the
premium versions of the streaming
services proposed inside Shazam.

Product or Service – Shallenge
Gamification inside Shazam – Listening the streaming music as new social challenge
Why Gamification?
“Games are the best tools for motivating people: for this reason more and more companies use the Gamification for improving the
engagement of their users, for increasing the brand loyalty, for enhancing the processes and for turning fun some boring tasks.” *
Shallenge is fun, social and creates a community of people that shares the same tastes in music. Via Shallenge listening the streaming music
will become more attractive due to the involvement of friends and others to compete with.
Shallenge is convenient: to participate to Shallenge is free, in addition more streaming music you play, more MiPs you collect to achieve the
Promotional Codes and less you spend for buying music or for subscribing premium version of the streaming apps proposed inside Shazam
app and provided by its current partners (like Spotify).
Thanks to the leverages discussed above, more and more Users are encouraged to subscribe the music streaming services sponsored by
Shazam and provided by its partners.
Due to the fact that the “free streaming” are limited in term of number of songs and minutes of listening per day, most of the users will take
into account the possibility of subscribing the “premium versions” of the streaming services.
Shallenge makes the difference between the streaming services sponsored inside Shazam app and all the other services offered by
competitors. Because of Shallenge, the Users will want to be part of that Community and will choose the streaming services proposed inside
Shazam.
* Fabio Viola: Academic coordinator for “Engagement and Gamification” IED (Milan), member of the Scientific Committee of “Master in Gamification” at Tor Vergata
(Rome) author of http://www.gamification.com

External Environment
Relevant economic, social, political, legal, technological trends
Reference Environment: Home Country
The presentation is located in Italy
Relevant Economic/Social Trends in Italy
According to the data of “JP Salary Outlook 2015, of the JobPricing Observatory “ the average wage (gross income) in Italy is € 29K.
For a complete picture of the Italian Reality we need to consider a couple of additional facts:
How the Total Income is Distributed Among People The Differences Between North and South Average Wages
As the first chart showed the 1% of the population earn more than €100.000. As showed in the second pic the difference between North and
South is quite big.
* Source http://www.repubblica.it/economia/2015/02/16/news/stipendi_salari_jobpricing_operai_dirigenti-107441843/

Relevant Economic/Social Trends in Italy
All the Euro Zone is passing through a crisis period. The Italy naturally involved in this
crisis and the unemployment rate follow the average in the Euro Zone*.
Although the high rate of unemployment, most of Italians are able to own a mobile phone.
Indeed based on data of a eMarketer research 80% of the population has a mobile
phone, and 46% of Italians have smartphones. Based on the data of the same research we can forecast the number of smartphone users in
Italy for next years.
The chart show the forecast based on a research
of eMarketer.com**, for the Smartphone users in Italy.
*Source: http://www.programmazioneeconomica.gov.it/2016/04/19/andamenti-lungo-periodo-economia-italiana/
** Source: eMarketer April 2015 - http://www.statista.com
Unemployment rate in Italy compare with Euro Zone
23.8
28.1 30.9 32.9 34.8 35.4
48.7 49.4 50.1 50.7 51.3 51.7
0
10
20
30
40
50
60
2014 2015 2016 2017 2018 2019
NumberofUsers(Million)
Years
Mobile Phone and Smartphone Users in Italy
Smartphone Mobile Phone

Relevant Social/Technological Trends in Italy
If we take a look of the Italian habits in using smartphone, the picture showed that the
most used app are: games (56%), following by social media (46%) and music (34%).
The second crucial point for the presentation is the relationship between Italians and
Music.
A study, conducted by Deloitte, shows that in the first 6 months of 2014 Italians spend
for the music 53,6 Million of Euros. On average € 6.00 pro capite per month more than
any other European citizen. The interesting fact is that 43% of the purchases are made
in digital music. The data showed also that 33% of Italians use streaming services at least
once a week, and 29% prefer the download services(also these two data are bigger than
European average:31% for streaming and 28% for downloading). *
For the purpose of the presentation another data is relevant: although the Italia is of one the country of the European Union less penetrated
by internet, the Italians spend more time that other European Citizen online especially on social network**
*Source: http://www.repubblica.it/tecnologia/2014/10/30/news/italiani_i_pi_spendaccioni_d_europa_per_la_musica_digitale-99350365/
**Source: http://www.wired.it/internet/social-network/2014/02/17/lo-scenario-social-digital-e-mobile-europa-e-italia/
58%
42%
158%
68%
40%
139%
0%
50%
100%
150%
200%
Internet Social Network Mobile Subscriptions
Digital and Social penetration Italia VS Europe
Italy
Europe

Relevant Technological Trends
Shazam in 2013 was the most downloaded app in the world. In the chart below we can see the 10 worldwide music apps ranked by numbers of
download and by consumer spend.*
Mobile devices are the preferred way for the global
users for entertainment (music, games…)**
Regarding the specific Italian market the most downloaded and used apps are related to the social media: WhatsApp (downloaded and used
by 13.8 million of users) Facebook (13.6 millions) Google+ (6 millions) Instagram (4 millions) and Twitter (3.6 millions). After the Social apps, the
most downloaded apps from Italian users are games.
*Source: https://s3.amazonaws.com/files.appannie.com/reports/App-Annie-and-IHS-Technology-Digital-Content-Report-2013.pdf
**Source: http://info.inmobi.com/rs/inmobi/images/Global%20Mobile%20Media%20Consumption%20Wave%203%20Report.pdf

Nature and extent of demand (demand elasticity & size of the market)
Market size
The actual market size for Shazam/Shallenge is every person with a smartphone. According to data presented so far, currently on average 1
Italian out of 2 owns a smartphone. The Market size is composed by 30 million of potential users.
Shazam connects more than 500 million of people.* The Italian Market is very important for Shazam because, according with Filippo Vizzotto
(Shazam Country manager for Italy), each month there are more than 9 million of active users and more than 40 million of “tag”. These data
show that the Italian market is the second, for importance, after the U.S. for the Shazam target market. **
Demand Elasticity
The music market is an elastic industry, even though Shazam and also the Shallenge implementation are free apps, the prices of the providers
of the streaming services offered inside Shazam (e.g. the price for the premium subscription with Spotify) can modify the demand.
Although this sensibility to the offers and to the prices, it is important to remember that Music is really important for Italians, this makes the
demand a little bit less elastic.
*Source: http://www.shazam.com/it/company
**Source: http://www.corrierecomunicazioni.it/it-world/35551_shazam-filippo-vizzotto-country-manager-per-l-italia.htm

Nature and extent of demand (demand elasticity & size of the market)
Why will the market be receptive to Shallenge
Italians love music and spend more than other European user for buying music, especially digital music.
The best way to listen music is the smartphones, and the streaming and downloading services.
In addition of this, the previous slides demonstrate also that Italian smartphone users love the social media, being part of a community and
games.
Shallenge is a product built into Shazam, that leverage exactly on all these aspects: Music listening, Gamification and Social life.
For these reasons Italian Market will be responsive to a product that includes all these aspects. Because of Shallenge (that remember is free)
the streaming service offered inside the Shazam app by its partner (like Spotify or Rhapsody…) will be preferred instead the other streaming
services: without paying nothing the users will have additional funny features.
Because of Shallenge listening the streaming music will be more social, and all users can take part of a Community composed by similar
people who share same musical preferences and compete with them and invite more and more friends to join.

Industry structure (entry/exit barriers)
State of the Industry
Among music industry Shazam Pandora and Spotify are the best worldwide 3 music apps.
Regarding the Streaming World (Market in which Shazam want to increase the number of subscription of the service for its users) Spotify and
Pandora are considered the bests. Spotify is the designed partner for implementing Shallenge in Shazam.
Possible Entry Barrier
• Technologies: to create Shallenge running into Shazam some particular technological knowledges are required. Even though Shazam has
its own great engineering team, the knowledge required for Shallenge are way different of those that are already inside Shazam.
• Capitals: The initial investment for develop the product (and maybe for hiring a new dedicated engineering team).
• Competitors: it will be necessary strong agreement with the actual partners of the streaming services to avoid that the current partners will
become competitors (for more clarifications, see next slides regarding competition).
• Shazam is strongly specialized in recognitions for this reason could be difficult to be considered also like a kind streaming platform by the
current users.
Possible Exit Barriers
• The investments in capitals, knowledge and partnership agreement could be considered like barrier in the market exit., because of their
costs for the company

Industry structure – Competition (nature of competition, profile of competitors (background,
resources, etc.), market shares, & stage of product life cycle)
For the analyzed two types of competition will exist for the Shallenge Implementation
General market competition
The most important competitors in Music Recognition are*:
• Soundhound: (Free, iOS, Android) the app can identify a song just by humming the melody or singing a few lyrics;
• musicXmach: (Free, iOS, Android, Windows Phone) is a lyric recognition with a catalog of lyrics;
• Spotsearch: (Free, Android) Type in any lyrics and Spotsearch will identify it and link you to it on Spotify.
For Streaming scenario some of most important competitors are**:
• Pandora: (free or $ 4.99 per month, all devices) you can plug in an artist or song title and the app will create a radio station with similar
music;
• Spotify (free or € 9.99 per month, all devices) streaming service, social features, great library and playists based on mood;
• SoundCloud (free, iOS, Android) combines a music streaming service with social media.
Horizontal Competition Between Partners
• Inside Shazam there are more that one streaming service providers (Spotify, Rhapsody…) inevitably it will create horizontal competition
between the service providers. Because of the partnership agreement and the advantages, in number of users, create by the Shallenge
integration in Shazam, a sort of competition between providers could start soon.
Shazam Market share and Stage of Product Life Cycle
• As the data of download showed before slides says, Shazam is the leader in music recognition.
Spotify and Pandora are the leaders in music streaming. For this reason if Shazam want to increase
the number of users that subscribe streaming services, Pandora will be the best partner for the
purpose, also because it is already a Shazam partner;
• The product of audio recognition is in its early “Maturity Stage”, it continues to grow but in a
slow rhythm than before, the visual recognition is growing. The streaming services are in its “Growth Stage” in the analyzed market.
* Source: http://evolver.fm/2012/10/10/top-5-apps-for-identifying-songs/
** Source: http://heavy.com/tech/2015/06/best-top-free-music-streaming-apps-for-iphone-android/

Marketing Channels
Current Marketing Channels:
• Sports events:
• The Manor F1 Team, MLB Postseason….
• Social media
• Facebook, Twitter, Google+ tags…
• Online Courses
• Wharton’s Business Foundation Capstone
• Online, Television and Magazine commercials thanks to
• Walt Disney (visual ads of Tomorrowland), Condé Nast, Nespresso, Time Inc, Guerlain, Coca Cola, Jaguar, ….
• Word of Mouth
The Italian market is particularly responsive to Social Media ads and tags (as I said Italians are the European citizens who spend more time on
social media) and TV commercial ads. Regarding this last point, a research conducted after the introduction of Image recognition by Shazam,
shows in Italy Shazam has about 21 million of active users and from these 75% of the subscriptions are made during the time spent in watching
TV.*
*Source: http://www.wired.it/mobile/app/2014/05/28/shazam-for-tv-un-milione-di-shazammate-in-un-anno/

Internal Environment
Resources (Top management, Marketing, Production, Finance, research & development)
The Shallenge Implementation involved the following Company Resources:
• Top Management: for deciding the initial investment of capital, for negotiating agreement with the partner involved and for negotiating
also the reciprocal costs and benefits of the agreements;
• Marketing Structure: it will be design a strategy for the development of Shallenge product in accordance with the current brand identity;
• Research and Development Team: it has a very crucial role. The team must create the frame in which Shallenge will work and how it will
work, it is responsible for the definition of the guidelines to follow for creating the new product;
• Software Engineering Team: according to the frame and the guidelines provided by the Research and Development team, this team is
responsible for the production of Shallenge, for resolving problem related to the app, debugging, maintaining and updating the Shallenge
Software within the Shazam app architecture;
• Finance Team: this team will define and evaluate costs and benefits of the project, it will built the budgets and it will check the real costs
and revenue of the project.

Brand diagnosis (current brand positioning, current pricing strategy, current distribution strategy,
& current promotions strategy)
Current Brand Position
For analyzing the Brand Positioning we should consider the elements of the positioning Statement
• Target Segment: the target segment for Shazam is the mobile users;
• Points od Different (PoD): Shazam is the leader in music recognition, it was the first that doing this, it is user friendly and this is
demonstrated by the constant growth in term of number of active users and “tags”;
• Frame of References (Point of Parity PoP) Shazam is not the only Music recognition app, a lot of competitors are growing in this particular
industry. This is the reason why Shazam should move on and include other features and services inside its activity, compatibly with the
brand identity.
Current Price Strategy:
After an initial period in which Shazam Encore was not free, Shazam became completely free app. This is the reason why also its
implementation, presented in this project, will follow the same path and will be free.
Current Promotion Strategy
• Shazam has a strong marketing strategy which cover any type of communicational channels: magazines, social media, TV, Sports event. In
addition it is pre-loaded in some smart TV and cars;
• Thanks to the recent project “Shazam for Brands” the company enters in a series of partnerships that assure its presence everywhere.
Some example are Coca Cola and Nespresso ads;
• Since the end of 2015 Shazam opened also to the Sport Event becoming the sponsor of a F1 team.
Current Distribution Channel
• Shazam is available in all mobile market (Apple Store, Google Play and Windows Phone market). It is available also for Desktop and
recently for smartwatches.

Problem definition & Critical Factors
Factors within the organization that will help Shallenge
• Shallenge doesn’t require to sign other partnerships, because the best partner for it, is Spotify and it is already a Shazam partner;
• Inside Shazam already exists a team of Research & Development and a team of Software Engineers that know how Shazam works, how the
partner works inside the app and how Shallenge can interact with Shazam and with the partner.
Factors within the organization that may hinder your proposal?
• Technological aspect: the current teams of R&D and Software Engineer could need more knowledge for build Shallenge inside Shazam and
they don’t have yet, or they need to increase their number to manage two different app;
• Financial Capital: it could be possible that Shazam has to increase the team of R&D or Software Engineering with new engineer and
obviously new capitals occur;
• Partnership: Spotify (the chosen partner) could decide to change the actual arrangement or could not want an app that track the users
behavior;
• Identity: Shazam could think that this implementation will be not completely fitting with the brand identity.

Segmentation, Targeting &
Positioning

Market Analysis & Segmentation
Who is/are the market?
Demographic Breakdown – Who is the Market
• Shallenge /Shazam market: all Italians with a smartphone (with internet access) who can potentially download Shazam.
• The Italian population is 59,8 Million of people. According to the data showed previously, today almost the 50% of the Italian population
own a smartphone. Shazam potential users market counts about 30 millions of Italians who own a smartphone.
• The Italians are music lovers and are the population who spend more for the music than any other European country for a total amount
for the first 6 months of 2014 of 53,6 Million of Euros. 43% of these purchases are made in digital music and 33% of Italian use streaming
services at least one a week. *
• Shazam Italy in numbers:**
• 27 millions of downloads;
• 9 millions monthly users;
• 43 million monthly recognition requests (tags)
*Source: http://www.repubblica.it/tecnologia/2014/10/30/news/italiani_i_pi_spendaccioni_d_europa_per_la_musica_digitale-99350365/
**Source: LinkedIn profile Shazam Italia Country manager Filippo Wizzotto https://www.linkedin.com/in/filippovizzotto
*** Source: http://www.millennialmedia.com/mobile-insights/blog/mobile-italian-style-a-snapshot-of-italian-mobile-data
65%
34%
1%
Mobile Operating System (Italian Market) ***
Android
iOS
Windows Phone
INTERNET ACCESS FROM MOBILE FOR AGE AND GENDER

Market Analysis & Segmentation
What does the market buy?
According to the behavior regarding the most used apps in the analyzed market, Italians love Games, Social and Music Apps
Data are confirmed from the following chart which showed the most downloaded apps in Italy
When does the market buy?
The research conduct by Audiweb* shows an interesting fact: in Italy the mobile phone are preferred until 12pm. After that time Italian
audience are more interested in TV instead Smartphone. Another important fact support this theory: In Italy 75% of Shazam downloads were
made during the time spent in watching TV.
Where does the Market buy?
Shazam is always available on the app stores.
Why does the market buy?
Users download Shazam because it is the best audio and visual recognition app. It is free and has a clear and user friendly interface, the users
can find a song and figuring out all the information about it. They can create a sort of history of search in the tab “MY SHAZAM” and they can
see explore the top track in the world tapping on the tab CHARTS. Shazam is social and you can share with your friend your Shazammend
song. At last, but not least, and thanks to the partnership (Spotify and Rhapsody, Google Music…) they can listen the music in streaming,
downloading the music and they can do that without close Shazam App.
*Source: http://www.audiweb.it/news/newsiab-forum-2014/

Market Targeting
Who is/are the target audience(s)?
Target Audience
The audience of Shallenge/Shazam is all smartphone users who love music in Italy.
The best market segment, the specific target, are the millennials. Millennial People (18-34 years old) are the major users of mobile phone, they
are social and spend a lot of time online especially via smartphone, they have technological competences and they enjoy most than other
market segments the playful side of the smartphones. They are the better educated and those with higher incomes are much more likely to
own smartphones.

Market Positioning
Proposed brand positioning
Brand Positioning and Objectives
• Building Shallenge inside Shazam, with the purpose of increasing the number of users that subscribe streaming services, is the best way for
enhancing the users loyalty and for increasing the number of new users, while supporting the current brand positioning. Shallenge is
inspired by the concepts of Gamification, Social Challenges and Communities and use some typical game tools (points, badges, challenges
and rewards) directly connected to the time spent in listening streaming music using Spotify but inside Shazam.
• Shazam is the leader for audio/music recognition and Spotify is leader, also in the analyzed market, for streaming services. Because of that
the market will find interesting the strengthened partnership reaching the goal proposed.
• Shallenge makes the difference between the streaming services sponsored inside Shazam app and provided by Spotify, and all the other
services offered by competitors. Because of Shallenge the Users will want to be part of that Community and will choose the streaming
services proposed by Shazam/Spotify.
• Shallenge support the brand position of Shazam: Shazam statement says proudly “ Shazam connects more than 500 million people”* .The
way in which Shallenge works, the community that it creates, will allow to Shazam to connect more and more people in an innovative way
from different channels.
• Rumors* talk that Shazam is starting to considerer and explorer the Streaming market. Maybe in the future Shallenge works only with
Shazam and the company will be able to provide the streaming service directly without a partner support.
*Source: http://www.shazam.com/company
**Source: http://blogs.wsj.com/digits/2016/01/28/shazam-tests-new-waters-distributing-songs/ and http://www.theverge.com/2016/1/28/10860878/shazam-music-distribution-
sony-ray-lamontagne

Market Positioning –
Communication objectives
Communication goals and objective
• The first goal is to increase the current users engagement with the brand.
The users should see Shazam not only like the audio recognition app, but also like their favorite tool for listening
music in a playful way.
For doing that it is necessary a communication strategy which push on “Community of listeners feeling” and on
“Gamification and Playful” mechanisms. The objective for achieve this goal is a series of specific advertisement through the channels that are
most sensitive to this goal: Social media, Web and Television advertisement.
• The second goal is to increase the total number of user.
For doing that it is necessary that new potential users see Shazam and Shallenge ads through channels like Social Media, web and television
advertisement, but, in my opinion, the most powerful ways that the company must leverage, for this particular case, are Word of Mouth and
other customer referrals.
• The goals are related: referrals made of current users are more targeted that any other ads. Of course the users will invite only the friends
that will enjoy the app, friends are more sensitive to a friend invitation instead a generic advertisement, because they trust each other. This
kind of Communication is the most successful in this specific case.
• The sequence of these goals are important. For well achieve both it is necessary first increase the users loyalty and then use these users in
addition of the customary channels, for achieve the second goal.

Operations Plans
Describe your plan for cost, quality, variety and responsiveness of the new line
How Shallenge will work:
Shallenge is a product built inside Shazam app, created with the purpose to facilitate and incentivize the listening of music in streaming,
directly inside the Shazam app, through a streaming service provided by Spotify. Shallenge functioning is based of mechanism of gamification
such badges, challenges, rewards and also community.
The main idea is: thanks to Shallenge listening the streaming music will be more social and more fun. Because of Shallenge listening to music
will no longer be a solitary activity but a portion of time to share with friends
It works in 5 easy steps:
1. The User search a song on Shazam;
2. When the song is discovered, a Shallenge Pop Up suggests to the Users to join the Shallenge Community and Game by listening the song
through this app (the streaming services is provided by Spotify inside the Shallenge/Shazam app);
3. By accepting to participate, the streaming service starts and the User’s behaviors are tracked and recorded by Shallenge. In particurar
Shallenge track the minutes of listening and some specific aspects of the songs (such as genre, artist…);
4. The Shallenge’s algorithms work in 2 ways: on one side: they convert the minutes of listening in MiPs (Minute Points). For certain amount
of MiPs recognize specific rewards for the Users, such as bonus track for free download and promotional codes for the subscription of
streaming service on Spotify or for purchasing songs in the partners stores. In the other side the algorithms track the features of the
songs and compute specific badges to achieve and suggest to the User other listeners with similar taste to challenge with or to compare;
5. At the end, after the streaming service, or after a particular achievement earned, Shallenge proposes to Users: - to share on socials media
the achieved badge or rewards; - to join community with other people with same musical tastes; - to challenge other users; - to invite
new users to join Shallenge (and of course Shazam).
Distribution Channels
The main app, Shazam, is available into each online application store (Google app Store, Apple Store, Windows Store…). Shallenge will be
builded inside Shazam and for this reason it will use the same distribution channels.

Operations Plans
Describe your plan for cost, quality, variety and responsiveness of the new line
For valuating the Performance of the new product Shallenge and for building a proper strategy, we need to consider the four dimension of the
performance itself. Of course the company cannot excel in all 4 dimensions, a trade off which combine the 4 aspects will be necessary
especially in the short term strategy.
As I said before, Shallenge must be a plus inside Shazam, for this reason at the beginning the focus will be on the product quality and
performance/process quality both, to avoid further costs in term of money and reputation. The customer rating and feedback will be crucial to
be able to match perfectly the users expectations and needs.
Cost Efficiency
• Labor Costs: Team R&D for designing the framework of the project,
development cost from Software engineering team, Marketing Team
for the merchandise strategy, Top Management for the agreement
with partners and Financial Unit for budgeting;
• Fees required by the partner Spotify;
• The most efficiency points are: Spotify is already a Shazam partners
(the firm won’t need to find new partners), the internal team of
software engineers knows the architecture of Shazam and they can
easily update it with Shallenge.
Quality
• Shallenge is a sort of “plus inside Shazam” and it must be “user
friendly” and easy to understand and to use (Performance Quality);
• It must be able to work without crashing with Shazam or Spotify or
inside different operating systems (Product Quality);
• Shallenge must provide a survey to the customers for acquiring
feedback for measuring the process quality and for being responsive
to suggestions and customer questions.
Variety
• The customer heterogeneity is one of the Shallenge pillars: the app
track the single customer behavior for giving personalized badges,
promotions and community suggestions;
• The system of badges, rewards and promo codes are tailored and
built on the specific user habits (e.g. the bonus track earned will be
fitting with the taste of the customer).
Responsiveness to demand (time)
• Time for customer to figure out Shallenge inside the Shazam app or
in the online market store;
• Time to access the streaming services through Shallenge (Number of
“user’s tap”);
• Intuitiveness and speed in which the user can access the additional
features (share on social, achievement….).

Financial Plan
Estimate of costs and revenue for the new line
What will the customers pay?
Shazam is a free app, Shallenge is a feature of Shazam built inside the main app. For this reason Shallege will be free as well.
Where are the Shazam Incomes from?
Shazam revenues are driven from:
• Refferal fees: Shazam link the searched songs to to major providers, such as Apple, Google, and Spotify, and receives a portion of each
purchase for the referral.
• Advertisement: Shazam operates primarily through its mobile app, and advertising is an inherent element of its app platform. The company
has been a part of 450 ad campaigns. Each campaign costs between $75,000 and $200,000 and runs for a couple of months. *
Assumptions and Variables
*Source http://www.investopedia.com/articles/personal-finance/010815/how-shazam-makes-money.asp
Data Values / Assumptions Sources
Actual Market Size 120 million of users http://www.billboard.com/articles/business/6678831/shazam-earnings-fall-user-growth-strong
Market size growth rate
12% same that growth rate of
mobile users in the world
https://insights.ap.org/uploads/images/eMarketer_Estimates_2015.pdf
Shazam ‘s Revenues $ 65.57 million http://www.digitalmusicnews.com/2015/08/30/shazams-matching-algorithm-cant-identify-any-money/
Revenues per User Revenues 2014/users 2014 $ 65.57(millions)/Users 100 (millions)
Conversion rate GBP to USD 1.447827 may 2016 http://www.x-rates.com/average/?from=GBP&to=USD&amount=1&year=2016
REVENUES FORECAST
2015 2016 2017 2018 2019
Whole Market
Actual Size (millions) 120
Growth Rate (%) 12.0% 12.0% 12.0% 12.0%
Market Size (million of users) 120 134.4 150.53 168.59 188.82
Revenue Strategy
Revenue per users 0.52 0.52 0.52 0.52 0.52
Revenues (million of $) 62.57 70.08 78.49 87.91 98.46

Financial Plan
Assumptions and Variables
Data Values Source
Shazam’s COGS $ 4.09 millions http://www.digitalmusicnews.com/2015/08/30/shazams-
matching-algorithm-cant-identify-any-money/
Shazam’s SG&A expenses SG&A 2014 $ 63.02 million + assumption of 7% annual growth http://www.digitalmusicnews.com/2015/08/30/shazams-
matching-algorithm-cant-identify-any-money/
R&D Expenses 10% of annual revenue + Costs R&D for Shallenge
R&D Shallenge’s Upfront in
2016 of $ 460,000
Wages: 1 Senior engineer ($ 120,000) + 3 Junior engineers (3 x $
90,000) + 1 Dedicated designer ($ 70,000)
https://www.glassdoor.co.uk/Salary/Shazam-Entertainment-US-
Salaries-EI_IE37565.0,20_IL.21,23_IN1.htm
R&D Shallenge’s recurring
starting in 2017 $ 370,000
Wages: 2 Junior engineers( 2 x $ 90,000) + 2 Social Media Market
experts (2 x $ 60,000) + 1 Dedicated Marketer ($ 70,000)
https://www.glassdoor.co.uk/Salary/Shazam-Entertainment-US-
Salaries-EI_IE37565.0,20_IL.21,23_IN1.htm
COSTS FORECAST
2015 2016 2017 2018 2019
COGS analysis
COGS (millions) 4.09 4.09 4.09 4.09 4.09
Selling General and Administrative SG&A
Expenses growth rate
0.07 0.07 0.07 0.07 0.07
SG&A (millions) 67.43 72.15 77.20 82.61 88.39
R&D
R&D Shallenge Upfront 0.46
R&D Shallenge Recurring 0.37 0.37 0.37
Recurring R&D 6.26 7.16 8.20 9.39 10.76
Tot. R&D (millions) 6.26 7.62 8.57 9.76 11.13
Total Costs ($, millions) 77.78 83.87 89.87 96.46 103.61

Financial Plan
The table above shows the Shazam EBITDA, it means the profits (or losses) before interest and taxes.
The number is negative, so also in the forecast assumptions, Shazam continues in its negative trend. Indeed although the user growth is
strong, the final annual results from 2008 highlight a strong growth in the revenue but also negative Net Incomes.*
Shallenge purposes are:
• Increasing the loyalty of current Shazam Users and
pushing them to subscribe streaming services plan (more
referral revenue);
• Increasing the number of Shazam/Shallenge Users and
the average time spent on the Shazam app (more ads
revenues).
Shallenge will help Shazam to increase again the revenue and, more important, to reduce the losses. The ability to the company to make
money and good results will be critical especially if the Shazam will decide to become a public company quoted on the Stock Exchange
Market.
*Source: http://www.musicbusinessworldwide.com/shazam-has-lost-25m-in-past-three-years-but-its-close-to-120m-users/
SUMMARY TABLE PROFITS AND LOSSES
Sales 62.57 70.08 78.49 87.91 98.46
Cogs (4.09) (4.09) (4.09) (4.09) (4.09)
Gross profit 58.48 65.99 74.40 83.82 94.37
Sga (67.43) (72.15) (77.20) (82.61) (88.39)
R&D (6.26) (7.62) (8.57) (9.76) (11.13)
EBITDA (15.21) (13.78) (11.37) (8.55) (5.14)
-40.00
-20.00
0.00
20.00
40.00
60.00
2008
2009
2010
2011
2012
2013
2013(H2)
2014
Shazam Revenue and Net Income Trend
Revenue Net Income

Timetable of Activities
SHALLENGE PROJECT TIMELINE
Implementing Shallenge inside shazam will require 6 months and 5 different phases each one divided in different sub-phases and check point:
• Concept and Initiation phase: In these phase the R&D team will design the framework and the guide lines that Shallenge should follow.
According to the customers needs, to the firm and brand policy and to the marketing strategy, a draft of the idea will be set. This phase will
end with the Concept Review for evaluating the goodness of the idea.
• During the Concept Review the R&D team will present to the Management and also to the engineering team the project, the
expectation and the guidelines. With the consensum collcted the idea become a real project.
• Definition and Plannig the Goals are defined and the steps for the implementation are scheduled. According to the feedbacks and
suggestions from the Concept Review members, a drafting schetche is created whit the collaboration between R&D department and
Software Engeneering Team. At the same time, Top management start to negotiate new arrangements with the partner Spotify. At the end
of the second month the project status is presented for the Design Review.
• In the Design Review the project draft, including the user interface, is presented to the internal top management and to the Spotify
executive. After the Consensum of the members the the Engineers start to code Shallenge.
Definition and
planning
Execution
Performance
& Control
Product Launch
1-Jun 1-Jul 1-Nov 1-Jan1-Sep1-Aug 1-Oct 1-Dec
Start
Concept
Review Design Review Test
Prototype
Review Last Review Release
Idea Concept and
Framework
Beta Test
Implementation
with Shazam and
SpotifyGraphic design
Development of
prototypeProject Draft
Last update and
Marketing
Campaign
Concept &
Initiation

Timetable of Activities
• Execution Phase: this is the most important phase. All the suggestions, reviews and feedback of the design review are incorporate in the
project. This phase will take 2 months during which the software engineering team develops a prototype of Shallenge. At the end of the
prototype building, the graphical part and designe is updated. The execution phase start a second critical step with the Prototype Review.
• During the Prototype Review a beta verion of Shazam including Shallenge is presented to the Shazam and Spotify executive.
• After this review, the Engineering team of Shazam and Spotify write the final code for including Shallenge in their apps.
• Performance and Control phase: during the month of November the new update version of Shazam integrated with shallenge start to be
tested. In this period all bugs are finded and fixed and the product it’s almost ready. This phase ends with the Final Review.
• During the final review the finished version of the product is presented to Shazam and Spotify and approved for the relase.
• Product Relase phase: the last month is dedicated to fix possible minor bugs, for the collection of the whole project documentation and for
launching the marketing campaign for the new feature of Shazam.
• Shallenge will be relased the first of January 2017

Evaluation
Collection of data: How
• Most of the data are collected directly by the Shallenge application during its execution: indeed the data regarding the customer behavior
(time spent on Shallenge, number of songs listened…) are tracked constantly by Shallenge;
• The number of new users, subscription and downloads are provided by the online application markets;
• The rating score is detected on the online market as well, but inside the app it will exist the possibility for the user to send a personalized
feedbacks and suggestions;
• The data regarding number of tag and share are provided from the social media themselves ;
• The data regarding the profits from partnership are provided by the partners.
Collection of data: When
• The data related to the customer behavior tracked by Shallenge are available in real time because these data are in the Shallenge database;
• The data provided by partners are collected at defined time frame based on the agreements;
• The data from social media and from the online market store are showed almost in real time.
Evaluation Measure Criteria
Growth Loyalty Customers + new
customers
• A positive trend and an increasing of time spend by users on Shallenge;
• Growth of tag and shares on social media
• Growth of new users of Shazam/Shallenge (ate least 15% per year) in next 5 year.
Customer responsiveness and
feedback
• Good rating (at least in average more than 4 out five points) for the Shazam app in the
online stores.
• Good rating (at least on average 4 out 5 points) for the Shallenge application
Growth of streaming service
subscription
A positive trend (at least 10% per year) in number of new subscription of streaming services
featured in Shallenge in the next 5 years
Growth of profits from
partnership
• Positive trend in the profits from partner Spotyfy (referral revenues)
• Positive trend in the profit from advertisement (Ads revenue)

Evaluation
Failure Scenario Action to Take
The customers don’t show
interested in Shallenge
• Checking on the customer review and feedbacks the suggestion regarding the new
product and fix the possible issues;
• Starting an aggressive marketing campaign for enhance the concept on gamification and
social life, if needed with celebrity sponsors;
• Starting a survey campaign (like Google surveys) to figure out the customer needs and
taste;
• Change the policy regarding the achievement such the promotional codes and discounts
for push users to try Shallenge.
Shallenge doesn’t work properly
with Shazam and/or Spotify
• Fixing the bugs and hiring more or new engineers for facing the issues quickly.
Shazam doesn’t make referral
profit because the users don’t
subscribe streaming plans
• Checking the agreement with the partner;
• Try to push the users to subscribe streaming services with marketing campaign or
enforcing the rewards.
Although we are confident that Shallenge will gain a good success and interest from the users, some failure scenarios could be possible, and
the company must be ready to face all possible issues..
This project is addressed in Italy, except for the part of financial analysis because there aren’t enough data. In any case, the Italian Market is a
good target for Shazam because of its property and it could be considered a representative market for a lot of country. At the current
moment it represents almost the 8% of the whole Shazam market Share in term of active users.
Gamification is the new frontier especially for mobile use. Shazam is a smart firm devote to the innovation and in fast and continuing growth.
For this reason Shallenge could be a good innovative product to consider if Shazam intent to embrace the gamification strategy and also
evaluate the possibility to join a new market and became itself provider of streaming services.

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