Back in January Jay-Z spent $54 million on acquiring Tidal from Aspiro, a music streaming service with a focus on high definition music, but will it fall flat on its face?
The hip-hop star once bragged that he could "sell fire in hell" and that is precisely what he tried to do during a recent live-stream, wherein Jay-Z re-launched his music service Tidal with a star-studded press conference. Shares of the streaming music company Jay Z bought have since spiked 938%, according to Reuters.
The service offers users two payment options ranging from $9.99 to $19.99 with varying feature options between the two, but with the main focus on the audio quality of the music that is advertised as a far superior sounding engine than its competitors.
Check out the press stream below:
The problem Tidal is looking to solve
Artists feel like technology companies are squeezing them. The likes of Apple, Spotify and Google are considered the worst culprits in this respect. These companies do not make money by selling music directly but by selling hardware, tech and apps off the back of it, as well as ads embedded into search results and email.
It has long been the belief of many artists that the fate of their music is in somebody else hands. This includes the small royalties they receive from the streaming services themselves as well as the ad-supported free tier on sites like Spotify.
During the press launch Jay Z came out to combat these worries saying that he had collected some of the worlds biggest recording artists saying that they will become part owners in his streaming service called Tidal. Meaning that artists have equity in the tidal business in exchange for early releases and extra content.
In this way the artists are actively invested in the company. Artists making his list include Deadmau5, Daft Punk and Calvin Harris as well as Kanye West, Jack White, Coldplay, Madonna, Rhianna, Nikki Minaj and wife Beyonce. Taylor Swift has made a deal to only put her music on the Tidal service.
Tidal is ultimately a music streaming service, where for just under US$20 a month you can get infinite access to high definition recordings. For the lesser price of US$10 you get access to the same quality of music in line with other streaming services.
One of Tidal’s defining features is the early releases and extra content it houses. This means that if Jay-Z puts out a song, he will do so on Tidal before any other streaming service – most likely accompanied by other video content.
Tidal is also offering other services like videos in a bid to drive traffic to the site and bolster the content available to subscribers.
The move looks to combat the notion that streaming music is a soulless affair and that music lovers are looking for a richer experience when it comes to playing and buying music. Physical music still offers a holistic experience with cover art, inserts and pullouts attached to limited edition vinyl and low-run CD releases. But streaming has always appeared a sterile affair. Jay-Z is looking to bring back some of this excitement by offering a rounded music experience.
The problems with Tidal
1. Does anybody care about HQ streaming?
Where Tidal may fall down is that this works on the assumption that users care about this wholesome listening experience. The problem is that history seems to say that they do not. Where Tidal are prompting the HQ music streaming service, most listeners would not even be able to tell the difference between high and lower quality streams. In order to get the most out of the stream, you also need to have the technology in order to best service it. It is doubtful that low quality headphones and off the shelf ear buds will best serve the interest of the consumer.
Will consumers purchase better tech to take advantage of an expensive streaming service? And will users pay twice the amount for Spotify to get this HQ experience? That is yet to be ascertained.
2. There is no free tier/ad supported tier
When users sign up they do get a week free of charge in order to sample the service, but after that week they are subject to the US$20. The problem with limited services is that consumers do not actively engage with the product. They do not build play lists because they may not get access to them later and if they have to cancel their subscription for some reason, the community they have built cannot be saved or dropped to a free tier.
Spotify has had immense success, in part; because of the free tier they offer and converting free users into full subscribers. Tidal does not have that option. Right now it is thought that Spotify has 60 million listeners and 15 million paid subscribers but many of those paid subscribers were free listeners at first.
To put that into a wider context, at the height of the CD era it was thought that the average user would pay US$20 a year on CD’s, Tidal is asking consumers to pay US$240 a year in order to get access to music they ultimately do not own.
3. How does giving away part of the company to artists REALLY work?
Billboard suggests that the 16 artists Jay-Z has signed up, such as Beyonce, Calvin Harris and Deadmau5 will received a 3% equity stake. But how does that’s scale and how many artists can Jay-Z feasible sign up that way? You can only give out so much equity. In order to get lots of artists on board there needs to be another incentive.
4. Tidal was built for artists, not consumers
Tidal smells very much like it was made for artists and not the listener. It was not conceived with the average user in mind and only seem to consider the rich devout music lover who follows the latest marketed trend.
However - Tidal could hurt Apple
On April the 8th Apple are thought to officially launch their own music streaming service which will function as a part of Beats by Dre and Beats Music. Apples big pitch is thought to be exclusivity and exclusive content. If Jay Z can do this, it could devalue Apple’s proposition.
The concept behind Tidal is interesting and any platform that seeks to better the consumer experience should be heralded, but as a business model it is ultimately floored and consumers will decide on whether or not 20 bucks is just too much.
Listen to Pulse Radio