Actually looking at this it might not be recording audio – there’s a Quora discussion http://www.quora.com/What-cell-phone-apps-besides-Color-and-IntoNow-activate-your-phones-microphone-to-gather-data where a similar program uses fingerprinting http://en.wikipedia.org/wiki/Fingerprint_(computing)
to summarize the incoming stream before any analysis occurs. No recording = no breach of privacy. That’s how Shazam works, too.