Five years on, Jay-Z’s Tidal is still fighting to make waves

Tidal Owners: Jay-Z, Beyoncé, Kanye West, Nicki Minaj, Daft Punk
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Imagine a cool, zeitgeist-capturing brand with a streaming music service co-owned by one of the biggest names in hip-hop history, which attracts the support of major celebrities, while rapidly ascending to the promised land of multibillion-dollar valuations.

Is this the story of streaming music service Tidal? No. It’s the story of Beats, actually: The Dr. Dre co-founded company, which sold to Apple in 2014 with a $3 billion price tag every bit as cool as the headphones it made, seen around the necks of stars like LeBron James and Michael Phelps.

Tidal has a different story. Launching not too long after Beats’ monumental acquisition, Tidal had all the factors that would seem to make it a similarly enormous hit. Its music subscription service offers the prerequisite tens of millions of music tracks. But it also differentiates itself with lossless FLAC streaming, pays artists more money per stream than competitors, and has one of the more attractive user interfaces for a streaming music app.

Oh, and name value? While Tidal doesn’t score close to the name recognition of a Spotify or an Apple Music, you’re far more likely to have heard of its co-owners than you are Daniel Ek or Oliver Schusser, the CEO of Spotify and the chief of Apple Music, respectively.

For starters, there’s none other than Jay-Z, the hip-hop media mogul who once accurately brag-rapped, “I’m not a businessman / I’m a business, man.” When Tidal hosted its first major press conference on March 30, 2015, Jay-Z was joined on stage by more than a dozen major music stars listed as Tidal’s co-owners and stakeholders. They included Usher, Rihanna, Nicki Minaj, Madonna, Deadmau5, Kanye West, Jason Aldean, Jack White, Daft Punk, Beyonce, and Win Butler. Billboard, in a breathless report published that day, hailed the launch as “historic.” The roster of artist partners, it noted, “features a golden god from each of the most-liked music genres.”

So what happened?

More to the story than that

As a private company, Tidal does not publish subscriber numbers. An analyst for the research firm Counterpoint Research told Digital Trends that it likely holds a share of less than 5% of overall music subscribers. This makes it more a minnow in a tidal pool than a figurative tidal wave sweeping over all in its path. Certain businesses, particularly online, seem to attract superstar players. We think of online shopping, for instance, and we immediately picture Amazon. With Spotify and Apple Music battling it out on the world stage for the souls (and wallets) of streaming music listeners, is there room in the market for a bit-player like Tidal?

“If you think about retail or e-commerce, [a company like] Amazon, because of its scale, can deliver things very efficiently and quickly to people’s homes,” Lior Tibon, Tidal’s chief operating officer, told Digital Trends. “That in itself creates kind of a momentum, right? In music streaming, it’s less the case because once you have the kind of the core capabilities set up and you pass a certain threshold, you can provide a good product.”

Rapper Jay-Z performs onstage
Debby Wong/Shutterstock

Tibon, who joined Tidal in April 2018 from a five-year stint as vice president at Jay-Z’s Roc Nation company, points out that Tidal is frequently reviewed very well. This is true. But to quote Jay-Z again: “If skills sold, truth be told / I’d probably be, lyrically, Talib Kweli.” In other words, it’s one thing to be critically praised, but it’s not the same as being commercially successful.

However, Tidal’s story contains some promising green shoots of both present and potential future success. As well as raising some interesting factoids about the state of streaming music, circa 2020.

Charging a premium

For one thing, Tidal charges. Unlike Spotify (although like Apple Music), there is no free tier. Prices for its services start at $10 a month and increase to $20 for the highest single user listening tier.

“While no doubt it’s more challenging in terms of reach and getting to broader audiences, from a value perspective and a company vision perspective, [we feel] it’s very important for us to stand clearly on the side of the value of music,” Tibon said.

In exchange for this, Tidal has doubled-down on features. Early on in its lifecycle, it embraced artist exclusives. When every streaming music service has the same 60 million tracks, you have two options: go cheap or offer something new. Tidal wasn’t going to go cheap — which, to compete with the most affordable options, would mean free. Instead, it offered content that was not available on any platforms. When it made its launch proper in early 2015, exclusive content included material by Rihanna, The White Stripes, and Daft Punk; alongside personally curated playlists from Arcade Fire, Coldplay, and others. Jay-Z’s back-catalog was exclusive to Tidal. Later, Beyoncé’s Lemonade, Kanye West’s Life of Pablo, and select others also debuted on Tidal before making it to additional platforms.

Tidal was not alone in trying this approach. Others such as Apple Music also dabbled in exclusives, before pulling back from the strategy — apparently after receiving disdainful feedback from record labels not being happy about lost revenue.

“We’ve never had the expectation or the plan that chosen artists will have back-catalogs fully only available on Tidal,” Tibon suggested. “That’s never been our strategy, frankly. It’s been, sometimes, a perception. But that’s never been an objective of ours or a strategy of ours.”

All about the music quality

Instead of music exclusives, Tidal leaned into the idea of not having different music, but on having the same music that sounds different. In other words, it’s focused on quality. One of its biggest selling points remains its high fidelity, lossless audio tier. Although not all of its tracks are available in this format, Tidal’s HD streaming has made it the preferred streaming service of many audiophiles who will pay a premium for quality. It has also placed it into a smaller niche within the streaming music marketplace, with only the likes of Amazon Music HD, Qobuz, and a handful of others as rivals.

What remains to be seen is whether enthusiasm for this can spread beyond a small number of early adopters to a mass audience? Does a customer base who grew up listening to music on their phone speakers care about what Tidal is selling?

“Only a minority are subscribing to a higher-quality music like what we have.”

“Clearly [right now] most subscribers to music streaming worldwide are on a more basic [lossy] option with the various services,” Tibon said. “Only a minority are subscribing to a higher-quality music like what we have.”

The question is whether that will change. “There is a very big education factor, particularly for younger folks who have never even had the experience of listening to something which is not an MP3 or a more lossy format,” he continued. “For them to listen for the first time to something which is higher quality is really kind of an eye-opening — or ear-opening — experience. In that way, I think it’s very similar to what we all went through with the HD-type TV experience over the last few years.”

This may sound optimistic (and, for a company that’s banking on customers waking up to the joy of lossless audio, it is), but it’s also something that’s been evidenced in other markets. For example, look at the way that customers’ expectations for video quality has shifted over the past couple decades. From pan-and-scan VHS quality in the 1980s to widescreen DVD in the 1990s to Blu-ray in the 2000s — or the 320 x 240 pixel resolution YouTube launched with in 2005 to the 1080p resolution it offers today — we expect our video to look better all the time. Audio, for whatever reason, has yet to go on that same journey. Tidal is hoping that it will.

Royalty rates for artists

Like audio quality, another selling point of Tidal is its approach to paying artists. It claims to have among the highest (if not the highest) royalty rate of any streaming music service. This racked up plenty of favorable column inches (rows of pixels?) in Tidal’s early days — particularly compared to negative stories about the amounts paid by other streaming companies. But it’s not clear whether this moves the dial in terms of user numbers.

Smart phone with the Tidal logo
DANIEL CONSTANTE/Shutterstock

“For whatever reason, [it] doesn’t seem to have registered with a majority of fans,” Andrew Bottomley, assistant professor of media studies at State University of New York College at Oneonta and author of the book Sound Streams, told Digital Trends. “It’s always tricky to get ‘average’ people to care about policy; it just seems too abstract or too torpid and unchangeable. We see this all the time with government and public policy, even with things like net neutrality that can [and] do directly impact most people’s everyday lives. You’d think the ethical grounds for supporting one’s favorite musicians would gain more traction. However, all the op-eds with musicians revealing the miniscule royalty paychecks they get from the likes of Spotify doesn’t seem to have shifted the needle much.”

That is no reason not to do it, of course. Provided that Tidal is indeed delivering a better deal to artists at all levels, that can only be a good thing. However, it seems that Tidal cannot rely on this as a way to prompt your average person to subscribe.

Market share and mindshare

“It really comes down to market share and mindshare,” Bottomley continued. “Spotify has picked up the most users, to the point where they’re practically synonymous with music-streaming at this point — the way YouTube is with video or Google is with web search. Most people are only willing to drop money on one, maybe two, streaming-music services — if they’re willing to pay for music at all. After Spotify, they’re probably inclined to go with the one that’s tied into their smartphone — Apple — or the one that’s tied into their online shopping account [meaning] Amazon. The cards are stacked against Tidal.”

But there are reasons to be optimistic. Abhilash Kumar, a research analyst for Counterpoint Research, told Digital Trends that, albeit from a smaller base, Tidal subscriber numbers grew more than 70% year-on-year and 31% quarter-on-quarter for the first three months of 2020.

It might be a “best-kept secret,” but its creators are convinced they’ve developed something special.

“This is driven by attractive promotions it came up with during COVID-19 times,” Kumar said. “It partnered with Best Buy, wherein the latter gave free subscription on selected device’s purchase like headphones, smart audio devices, [and] speakers. Also, a discounted subscription price after the free subscription period was offered to the buyers. In addition, podcasts helped Tidal engage more users.”

Last month, Tidal introduced two new listening features: Contributor Mix and History Mix. The first of these spotlights behind-the-scenes creatives with in-depth looks into their discographies. Meanwhile, History Mixes provides members with a new way to explore their own listening history on the platform. The addition of new features like this will help Tidal maintain a competitive edge. It might be a “best-kept secret,” but its creators are convinced they’ve developed something special. If only people will tune in.

Playing the long game

In a sense, Tidal has been a success. The music industry has changed a great deal in the past five years alone, and Tidal is still part of the conversation — even if it’s a small one, on the fringes of the conversation, squeezed up against the edge of the bar, waving to try and get the bartender’s attention. But it’s an achievement nonetheless. Carving out one subscriber out of every 20 (if Counterpoint’s 5% subscriber rate is accurate) is impressive, even if it’s hard to fully quantify without knowing how much is spent on retaining these customers.

Part of Tidal’s strategy is a long-term one. Will customers be willing to pay more for a quality listening experience as subscription services continue to take hold? Will the growing size of the overall streaming music pie make smaller players more economically viable, even if they remain comparatively small? Will we care more about things like royalty rates for artists? And will new strategies like the recent Best Buy promotion continue to pay off? We’ll have to wait and see.

In Michael Eric Dyson’s 2019 biography Jay-Z: Made in America, Tidal gets just a single mention: a throwaway reference about the 2017 launch of Jay’s 4:44 album. As J-Hova enters the next phase of his career as a 50-something in his fifth decade in the music industry, will Tidal be his Beats — or does all of this end in defeat?

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