Tidal: On to the Next One

tidal3“That’s another difference that’s between me and them. I smarten up, open the market up,” Jay-Z once boasted in his 2001 album The Blueprint. The enterprising mogul, whose real name is Shawn Carter, has amassed a diverse and expansive empire that includes his record label Roc Nation, the 40/40 Club, and a sports agency, Roc Nation Sports. In his latest venture, Jay-Z acquired Swedish company Aspiro and its streaming service Tidal for $56 million in March 2015.

Much of Jay-Z’s success as a businessman stems from his foresight and willingness to take risks. With a multitude of sound investments, the rap impresario has remained at the forefront of the music industry. In a 2010 interview with Steve Forbes and Warren Buffett for “Forbes,” he explained that artists need to adapt to a changing music industry. “There was a time in music where a hit solved everything. That’s no longer true. I think the music business is still stuck in that place because we haven’t figured it out. One of the biggest things in business is to open yourself up for change. We don’t have to change who we are, we have to change the way we go about it.” As a veteran entrepreneur, Jay-Z continues to raise the status quo by staying ahead of the curve.

NEW YORK, NY - MARCH 30:  Madonna onstage at the Tidal launch event #TIDALforALL at Skylight at Moynihan Station on March 30, 2015 in New York City.  (Photo by Jamie McCarthy/Getty Images for Roc Nation)
NEW YORK, NY – MARCH 30: Madonna onstage at the Tidal launch event #TIDALforALL at Skylight at Moynihan Station on March 30, 2015 in New York City. (Photo by Jamie McCarthy/Getty Images for Roc Nation)

His most recent transaction is already paying dividends. Since acquiring Aspiro, Jay-Z’s net worth, as reported by Celebrity Net Worth, jumped from $580 million to $650 million. According to the New York Post, Tidal had 35,000 subscribers before Jay-Z acquired it and gained 100,000 subscribers once the acquisition was finalized. In a March 30 press conference, Tidal announced that it plans to pay double the standard streaming royalties. The streaming service has also garnered an impressive roster that includes high-profile artists such as Madonna, Kanye West, Nicki Minaj, Beyoncé, Rihanna,  Calvin Harris, Daft Punk, Jack White, Coldplay, Alicia Keys, and Jason Aldean. Unlike other streaming services, which are run independently of artists, Tidal offers artists the opportunity take ownership of their music. In addition to having their music available for streaming, each artist is a co-owner of Tidal.

In a recent interview with Billboard magazine, Jay-Z described how he convinced artists to join Tidal. “Music is … imagine your life without music. It’s a very valuable part of your life, and like I said, that’s why we got in this business. It seems to be going the other way. People are not respecting the music, and [are] devaluing it and devaluing what it really means. 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 OK paying for it. It’s just the mind-set right now.” As an artist himself, Jay-Z is personally and monetarily invested in Tidal. With the advent of an artist-owned streaming service, he hopes to alter consumers’ laissez-faire  attitude towards music. If artists are in control of their own content, then listeners may be more inclined to pay for music.

Streaming services, such as Spotify, offer free music streaming as well as paid subscriptions. Tidal offers a thirty-day free trial as well as premium and HiFi subscriptions for monthly fees of $9.99 and $19.99 respectively. While the lack of full-time free streaming might dissuade some listeners, it mitigates the risk of artists removing their content. Recently, artist Taylor Swift parted ways with Spotify because she was dissatisfied with their business practices.

As Swift explained in an interview with TIME magazine, “Everybody’s complaining about how music sales are shrinking, but nobody’s changing the way they’re doing things. They keep running towards streaming, which is, for the most part, what has been shrinking the numbers of paid album sales. With Beats Music and Rhapsody you have to pay for a premium package in order to access my albums. And that places a perception of value on what I’ve created. On Spotify, they don’t have any settings, or any kind of qualifications for who gets what music. I think that people should feel that there is a value to what musicians have created, and that’s that.” Spotify Free, which is sponsored by ads, provides free streaming with the hopes of encouraging users to upgrade to a premium subscription for $9.99 a month. Unfortunately, this leads to a disproportionate amount of non-paying users.

From a technical standpoint, Tidal offers CD-quality streaming. According to CNET audio product reviewer Steve Guttenberg, Tidal provides a maximum streaming 1,411Kbps bit rate using the FLAC or “Free Lossless Audio Codec” while Spotify’s maximum streaming capability is 320Kbps. However, the caveat is that FLAC-encoded streaming is only available with a HiFi subscription. Since Tidal’s HiFi subscription is twice the amount of Spotify Premium, people might be reluctant to pay that amount for streaming, even if it is CD-quality.

NEW YORK, NY - MARCH 30:  Beyonce onstage at the Tidal launch event #TIDALforALL at Skylight at Moynihan Station on March 30, 2015 in New York City.  (Photo by Jamie McCarthy/Getty Images for Roc Nation)
NEW YORK, NY – MARCH 30: Beyonce onstage at the Tidal launch event #TIDALforALL at Skylight at Moynihan Station on March 30, 2015 in New York City. (Photo by Jamie McCarthy/Getty Images for Roc Nation)

With artists such as Beyoncé and Rihanna releasing new music exclusively with Tidal, Aspiro has the potential to grow. If more artists follow suit, it could cripple the competition. The company’s business model seems very beneficial to artists who are interested in maximizing their music sales. The downside is that listeners might gravitate to cheaper streaming services or in a worst case scenario, resort to piracy. As of right now, $19.99 a month for high quality streaming is a bit steep. Jay-Z should definitely consider reducing the price of Tidal’s HiFi subscription if he wants to seriously compete with Spotify and Apple’s upcoming Beats Music.

-Elijah Yarbrough