Those that have been keeping a beady eye on Tidal, the supposedly revolutionary Swedish streaming service that Jay-Z purchased for a reported $56 million earlier this year and relaunched last month, will know it’s already encountered its fair share of criticism.
While artists including Alicia Keys, Arcade Fire, Beyoncé, Calvin Harris, Chris Martin, Daft Punk, Madonna, Nicki Minaj, and more have touted the new platform as a game-changer, industry figures have been more skeptical about just how successful Tidal could be.
For those who aren’t yet familiar with Tidal, what sets the service apart is its status as “the first ever artist-owned global music and entertainment platform”. This means that the artists featured on Tidal have equity in the company, effectively making them part owners of the service.
The part owners include all of the aforementioned artists and many more, almost all of whom appeared at the much-publicised relaunch of Tidal in New York City. Emceed by Alicia Keys, the ceremony saw each artist sign a ‘Tidal declaration’ cementing them as equity holders.
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However, despite the ostentatious ceremony, critics weren’t particularly enamoured with Jay-Z’s latest venture. For one, many were skeptical about Tidal’s strategy for competing with services like Spotify or Apple’s forthcoming Beats service, which most predict will be a juggernaut.
Issues with an equity system notwithstanding, Tidal has the odds stacked against it when it comes to dominating the market. Despite Jay-Z’s insistence that there’s enough room for everybody at the table, in order to secure the bigger payouts for its artists, Tidal would have to become the number one streaming service.
While the platform boasts numerous “exclusives” from its member artists, such as Daft Punk’s film Electroma and The White Stripes’ first TV appearance, it’s doubtful these will entice many new subscribers, particularly as they all appeared elsewhere online within minutes of release.
Presumably, the only way Tidal will see a wave of new subscribers (keep in mind that their subscription rate is twice that of Spotify) is if the member artists give the service exclusive access to their catalogs, especially any new releases.
However, there’s currently no indication that they will do so and as Billboard has argued, it’s doubtful they will. While it would make sense on paper, the reality is that the artists would have to weigh the tradeoff of being absent from more popular services.
For one thing, staying faithful to Tidal would affect a song’s rank on the Billboard charts, an important currency to any artist, particularly the superstar set that Tidal is supposed to serve. Simply put, the fewer people that listen to a single, the lower it will rank.
According to Billboard‘s calculations, if Nicki Minaj’s ‘Truffle Butter’ was streamed exclusively on Tidal, it would have dropped from number 15 to number 19, Beyonce’s ‘7/11’ would have gone from number 44 to number 52, and Drake’s ‘Know Yourself’ would have dropped off the Hot 100 completely.
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However, let’s suppose for a moment that artists are willing to lose chart rankings and ultimately royalties in the short term in order to ensure the success of Tidal, which is not entirely unreasonable, though rather unlikely (it’s still not clear just how labels view Tidal’s paradigm).
The artists will still have to deal with the inevitable pressure that will be imposed by Tidal’s competitors, most notably Apple. As Billboard notes, the tech and music retail giant could well demand certain music be available in both its download store and upcoming subscription service.
Furthermore, they could refuse to give holdouts prime placement within the iTunes download store. But hey, maybe the artists are totally okay with losing out on money and entering Apple’s bad books. This is when a quagmire begins to emerge.
As shareholders, each Tidal artist has an incentive to walk away from competing services where they don’t hold equity. Turning that equity into actual money, however, will require selling the shares or cashing out when Tidal is acquired – success is necessary for both.
