Tidal and the Streaming Music Ecosystem
Early #’s are in on Jay-Z’s artist-owned streaming service, Tidal, and they aren’t pretty. In fact, initial marketing seems to have primarily helped rivals Spotify and Pandora. With a bit of glee, I posted this article from BGR on Facebook, and the two comments prompted a long response that grew into this post.
TL;DR: Jay-Z, being who he is, will likely break even or make money on this endeavor, either by acquiring higher per-play fees for him and his roster of artists via Roc Nation by carefully driving up the cost of the streaming music ecosystem or through partnership/merger/acquisition, but I have a hard time seeing Tidal becoming competitive with Spotify and Pandora in the streaming space.
Jay-Z is a savvy dude, and he has a team of experts and superstars around him, so first and foremost I don’t see a real nuclear scenario here. On the other end, I get the sense people want(ed) to compare Tidal to Beats, and I’m not inclined to believe that is a fair comparison either.
It is hard for me to see Tidal getting acquired, (though if it would be anyone it would have to be Beats/Apple, right?) and just because Apple paid $3 billion for Beats doesn't make Jay-Z's $56 million acquisition cost, plus marketing, etc, to acquire and then “re-launch” Tidal a small gamble.
Most people simply will not pay $20 a month (as evidenced so far), because in standard iPod headphones you really can't tell the difference in sound quality, and I don't see Tidal's content being worth enough to justify being 2x the cost of Spotify.
What’s more, despite all the star power rolled out for what was surely intended to be a strong launch, BGR points out:
As a matter of fact, something curious can be seen in Spotify’s download performance right after Tidal media campaign started bashing its allegedly meager payouts. Spotify surged back into the iPad top 40 download chart on March 31st, right when Tidal’s anti-Spotify invective hit its peak in American media.
People love Spotify (me included) and they are getting huge! Unfortunately for Tidal, my sense is that Spotify already occupies the the high end of monthly streaming costs at $10 - a dollar more than Netflix! - while TIDAL ($20 a month) costs more than HBO ($15 a month)! Pandora, the middle road, is $5 a month, but YouTube and SoundCloud are basically free; you can use Spotify and Pandora free if you are willing to listen to ads; the radio is free; and so are rampant illegal downloads.
It is worth noting the list of TIdal artists is heavily populated with Roc Nation artists, so in many ways Jay-Z already “owns” a lot of this music. Furthermore, though Daft Punk was a good get, as pointed out in this Verge article, they are essentially the only artist affiliated with Tidal who does not have an affiliation/deal with Live Nation:
Though its name has been nowhere around the proceedings of Tidal, Live Nation could be involved. Jay Z has deep ties within the company (Live Nation signed Jay Z to a $152 million contract and funded Roc Nation back in 2008), and he’s not the only one. Nearly every artist that owns equity in Tidal has a working relationship with Live Nation
Indeed, Live Nation and Jay-Z have already worked together to change the music industry once before. Certainly, Jay-Z envisions this endeavor in much the same way: it’s about the artists (right?).
All this (imagining Live Nation doesn’t get involved) leads me to believe that, rather than a streaming service, Tidal, is more like an elitist Artist's Union - the music version of the NBPA of NFLPA. That is not a bad thing, as it will provide leverage in negotiations with Spotify/Pandora/Beats for licensing fees (plus, if they can drive the monthly streaming ecosystem toward $20, it will likely make Tidal seem more reasonable in the process).
But when other artists come out against it, like Mumford and Sons calling Tidal’s ownership group, “new school fucking plutocrats,” clearly not all artists are on board with this "union" in its current form. Even if the intention here is “revolution,” as indicated by the comments at Tidal’s launch and “declaration of independence” signing, all flanks must pull together to fight the common cause. One site went so far as to publish an article titled, “If Jay-Z Really Wants a Tidal Revolution, He Must Become a Lunatic.”
But if Tidal artists start pulling their catalogs Taylor Swift-style, consumers will simply go back to downloading hi-def .mp3 files like they did before Spotify & Grooveshark came along, once again relegating these artists to live shows, merchandise, and label deals.
So it is a fine line this group has to walk, and the early indications are not promising, but I'm certainly curious to watch how Tidal and Jay-Z with his (wealthy) band of adventurers play this game in the coming months (or even years).
We will find out whether there is a market for a "luxury" streaming app, though the early numbers (just like Apple's shiny new gold watch) point to no. And we will find out if there is truly a new era in the artist-label-distributor relationship on the horizon.
I even truly believe music is worth more than what we pay for it (that’s why I buy records in addition to my Spotify subscription: because they are art), and I hope this Tidal experiment can enable more great, up and coming artists to reach our ears.
But I doubt we are all deleting and canceling our Spotify or Pandora or Rdio subscriptions for Tidal anytime soon.
