Before celebrity hip-hop mogul and businessman Jay Z came along, WiMP and Tidal hardly made an impact on music streaming. The two services are now operating under the name Tidal after Jay Z bought their Norwegian parent company Aspiro for $56.2 million. The new Tidal apparently offers a catalog of over twenty-five million songs, seventy-five thousand music videos, and an arsenal of editorials and interviews by established music journalists.1
This is a subscription only ad-free service with a $9.99 per month plan of Spotify type audio quality (320 kbps) and a $19.99 per month premium tier of high-fidelity audio and video streaming (1,411 kbps).2 It is available in thirty-one countries across Europe, North America, and Southern Africa and in the coming months is expected to be available in Poland, Australia, Hong Kong, Qatar, U.A.E., and Germany.3 Whether or not the hi-fi option will make a difference to consumers is an open question, but the service has seen support from celebrity stakeholders Beyoncé, Madonna, Kanye West, Arcade Fire, Deadmau5, Jack White, and others: their music appeals to a broad base of fans and cover the majority of today’s popular genres.
The launch of Tidal, on March 30th, was accompanied by a live feed video that featured the artist stakeholders themselves coming together in New York. #TIDALforALL trended on social media and the attending celebrities changed their avatars to a bright cyan-blue in support (see the picture above). Thousands of fans logged in. Thus far, Tidal can claim nearly six hundred thousand paid subscribers, which, as a matter of fact, pales in comparison to Spotify’s fifteen million and Deezer’s six million.4
A new contender?
The acquisition, though, is intended to be more than just Jay Z’s attempt to enter the streaming market. If the service becomes successful enough, it could very well push the music industry in a new direction. A rising tide lifts all boats—large-scale adoption of a subscription-only platform would likely increase per-stream royalties dramatically. This possibility has prompted artists to put exclusive material on the service to encourage consumers to join. Among these artists is Taylor Swift, whose entire catalog, which was famously pulled from Spotify last fall, is available on Tidal with the exception of her most recent release, 1989.5 Jay Z told Billboard, “People really feel like music is free, but will pay $6 for water; you can drink water free out of the tap and it’s good water, but they’re okay paying for it–it’s just the mindset right now.”6 Tidal, Jay Z, and others are hoping to turn around the free ad-supported mindset among consumers of digital services.
Aside from the high quality, ad-free audio and videos, another feature of Tidal is a song recognition element similar to popular music discovery application Shazam, that allows users to identify a track being played near them, and then takes them directly to its stream. Tidal also offers song credits with tracks, allowing users to identify producers, writers, engineers and any other contributors in their favorite songs. Rather than journalists and other so-called industry taste makers, Tidal claims playlists are curated by music creators—a branding advantage (Apple made the same claim when they re-launched Beats streaming last fall, but this did not seem to help better market Beats). Lastly, as with many other subscription streaming services, Tidal gives users the ability to listen offline.
However, Tidal’s premium subscription fee basically doubles the standard subscription rate and one wonders if there is enough there to justify its steep price. Spotify, for instance, has a well-developed social element to its platform that Tidal does not. In Tidal, users do not interact by ‘following’ each other, sharing playlists, and seeing what other people are listening to. Tidal is also lacking any sort of desktop app, and its music is available only on a mobile app and a web browser page.
The Hi-Fi Market
So just how well will Tidal perform as it targets consumers with a taste for lossless audio quality? The success of Beats headphone showed just how much consumers are prepared to pay for supposedly high quality product: the reviews were mixed so, arguably, celebrity endorsement seem to have mattered more.
Tidal, moreover, is not the first streaming service to enter the hi-fi market. French streaming service Deezer recently launched its Elite tier, which offers hi-fi streaming, though only through the Sonos brand of speakers, which Tidal has also partnered with.7 The biggest competition for Tidal is likely to come from either Apple’s Beats or the introduction of a high quality listening tier on Spotify. In the latter case, celebrity shareholders and a proprietary song identification engine would not be a sufficient competitive advantage for Tidal.
Music or Business
Perhaps the most significant and bold element of Tidal is its supposedly artist friendly approach. Fifteen different musicians own 3 percent stakes in the company and have pledged to offer exclusive content on the platform.8 When you add Jay-Z in the mix, musicians would own the majority of Tidal’s equity–a significant first in the streaming industry. Usher, one of the initial shareholders, has said that Tidal offers “control over artists careers.”9
This seems optimistic. Of course, it would be wonderful to see artists have more control over their careers, but the fact of the matter is that for most signed songwriters and any signed artist, their publisher or label owns their works, and controls all licensing and royalty distribution (public performance payments for songwriters excepted). So it is unlikely that Tidal will be able to offer music creators, particularly those who aren’t in the very top tier, any sort of additional power over their careers.
Two promises that Tidal could very well follow through on are its promises of greater payment transparency and higher royalty rates. Digital technology makes a tremendous degree of transparency possible, though the industry has largely been hesitant to adopt any sort of transparency driving tools. If Tidal were to adopt such tools, and somehow get the labels and publishers on board, which would be no small task, they could help artists and songwriters gain greater clarity as to the size and source of their royalty payments. In terms of royalty rates, large scale adoption of Tidal, particularly of its hi-fi tier, would dramatically grow the amount of revenue brought in by streaming services, and, assuming this extra money made its way to artists, increased royalty payments would follow. That being said, until the value of hi-fi to consumers is proven, and while “freemium” services exist, it seems a stretch to assume that many of the same consumers who adopted Napster will feel compelled to pay for streaming because they sympathize with underpaid artists.
Tidal is an exciting new service and the development of a viable digital music marketplace hinges, of course, on the willingness of both developers and music creators to try new platforms. On the other hand, Tidal is a business. Were it to fail, Jay-Z and his celebrity cohorts will likely still do well from a liquidation event with Apple or Google. Who knows, even Spotify might be a buyer. In short, the artists who are currently shareholders of Tidal seem to be thinking, above all, with their entrepreneurial hat.
By Erin Brick
1. Billboard Staff. “Jay Z’s Tidal Fully Integrates WiMP Streaming Service.” Billboard.com. March 23, 2015. Accessed March 25, 2015.
2. “How Good Is the Sound Quality on TIDAL?” TIDAL. Web. 13 Apr. 2015. <https://tidalsupport.zendesk.com/hc/en-us/articles/201594722-How-good-is-the-sound-quality-on-TIDAL->.
3. Billboard Staff. “Jay Z’s Tidal Is on a Wave of Expansion.” Billboard.com. March 25, 2015. Accessed March 25, 2015.
4. Flanagan, Andrew, and Hampp Andrew. “It’s Official: Jay Z’s Historic Tidal Launches With 16 Artist Stakeholders.” Billboard. March 30, 2015. Accessed March 30, 2015.
5. Bajaj, Vikas. “The Risks of Jay Z’s New Venture.” The New York Times. March 31, 2015. Accessed March 31, 2015.
6. Gervino, Tony. “Jay Z Talks Tidal, Jimmy Iovine, Rewriting the Music Business Rulebook.” Billboard. March 30, 2015. Accessed March 30, 2015.
7. Peoples, Glenn. “New Streaming Service Tidal Joins the Hi-def Trend.” Billboard.com. October 28, 2014. Accessed March 25, 2015.
8. Hampp, Andrew, and Glenn Peoples. “Tidal Addresses the Backlash: ‘There’s So Much More to Do'” Billboard. April 1, 2015. Accessed April 1, 2015.
9. Hollywood Reporter. “Usher on Tidal: ‘We’re Only Getting Started'” Billboard. April 2, 2015. Accessed April 2, 2015.