Maybe they use the location information to improve their service (i'm really just imagining here). You hear a song somewhere, a club, a bus, wherever and Soundhound is able to identify it. Somebody near you hears the same sound, but Soundhound can't identify it, maybe it is to noisy, the sound to low, for whatever reason they can't tell you what song it is, but they have the good recognition from somebody close to you, so they might be able to narrow it down... Again, just hypothetical, that's just what i would do from an engineer's perspective, i'm almost sure, they are not doing anything fancy like this.