As Tone Deaf reported yesterday, Jay-Z has officially launched Tidal, the little-known Swedish streaming service that he purchased for a reported $56 million earlier this year. The launch was only fitting for one of the world’s biggest rappers.
During an extravagant launch ceremony yesterday, Alicia Keys, Arcade Fire, Beyoncé, Calvin Harris, Chris Martin, Daft Punk, Madonna, Nicki Minaj, and more appeared to throw their support behind Jay-Z’s latest venture and to sign on as equity holders.
The crux of Tidal’s schtick is that it’s “the first ever artist-owned global music and entertainment platform”. This means that the artists featured on the platform have equity in the company, effectively making them part owners of the service.
The launch was coordinated with a fairly ridiculous marketing campaign that featured the likes of Kanye West, Calvin Harris, Jack White, and many more uber-celebrities gushing about how Tidal is “the beginning of a new world” and other platitudes.
However, while everyone agreed that the Tidal relaunch was certainly impressive, it didn’t exactly answer a lot of the questions that have been buzzing about since Jay-Z first purchased the service and began touting it as a game-changer for creatives.
In fact, the general consensus seems to be much called-for skepticism. For one thing, despite Jay-Z’s claims in a Billboard interview that Tidal would be more transparent than its competitors, no one’s quite sure just what Tidal offers.
That goes for artists and consumers. As Stereogum notes, while Tidal claims to have special content to entice subscribers (the service has no free tier and subscription rates are twice that of Spotify’s $11.99 a month), the offering seems to be rather spare.
Among the content discovered by Billboard during an ‘inspection’ was The White Stripes’ first TV appearance, Daft Punk’s Electroma film, footage of Alicia Key’s Set The World On Fire Tour at Madison Square Garden, and playlists by Coldplay, Beyoncé, and others.
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While this could well inspire some fans to sign right up to Tidal, much of the content is not exactly exclusive to Tidal, nor is it particularly appealing. As Stereogum notes, most of the content “feels a bit dusted-off”.
However, what may cause Tidal’s downfall is revealed once you look at the service’s business model, of which we don’t exactly have a clear picture. Regardless, what we do know is that the artists are owners, each owning some Tidal equity.
According to Jay-Z’s Billboard interview, each “round” will bestow the artists involved with “the same equity”, so the founders get a set amount of equity, the next round of artists will all get the same amount though less than the founders, and so on.
What this means that eventually you will get to a round where artists are receiving a micro-fraction of the equity held by Tidal’s founding members. This isn’t the most sensible model when almost all of your founders are past their commercial peaks.
What cut will the next Daft Punk or the next Jack White or the next Jay-Z get when they make their debut years after the initial rounds are over? Would a new artist who’s outselling the company’s founders be cool with owning far less of a company they’re now essential to?
But maybe Tidal will find a way around that and come up with a model that makes everybody happy. The real issue at hand is just what Tidal will be able to do for artists, i.e. the whole reason Jay-Z bought the company in the first place.
While the superstar rapper claims that his vision for Tidal is to ensure artists like Aloe Blacc don’t receive “a $4,000 check from 168 million streams” and that he would even sacrifice the company’s bottom line to serve artists, it’s not clear if this is even possible.
First of all, it’s important to note, as A Journal of Musical Things does, that one of the primary reasons that artists don’t receive adequate compensation from streaming is because the revenue is often cannibalised by their own labels.
“Spotify and Rdio are only paying what they have to under the terms of the agreements they negotiated with record labels, collectives and copyright boards,” writes A Journal‘s Alan Cross. “The artists should be yelling at their record labels and not at the streaming companies.”
Secondly, for Tidal, which would fall under the same tariff and royalty rates as its competitors, to secure bigger payouts for its artists, it would have to become the dominant streaming service in a market that already has Spotify and soon, Apple’s Beats.
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Spotify is hardly a profitable company, with most of its profits going towards labels and artists for royalty payments, and while we know nothing about Tidal’s payout system, if one of the biggest streaming service’s numbers are anything to go by, Tidal has the odds stacked against it.
The question then becomes whether users will flock to Tidal, which is really a question of whether or not it’s offering something consumers want. Presumably, what it’s offering is exclusive access to its owners slash artists, right?
Well, maybe not. After all, if Kanye West was to release his next album exclusively through Tidal, it would get significantly less exposure, unless all of his fans decide to start paying Tidal’s $23.99 per month subscription fee to get it.
Will they? Maybe. But more likely they’ll just buy the album on iTunes, and if it’s only on Tidal then Jay-Z just created a whole new generation of pirates, just as streaming was beginning to turn the tide on that whole battle.
