Tidal, originally founded in Norway as WiMP, is a good example of a high-fidelity music streaming service that has struggled economically since it was bought by superstar rapper Jay Z and has since changed hands several times. This part of The Music Streaming Economy series tells the story of Tidal/WiMP and takes a closer look at its business model.
The Music Streaming Economy – Part 5: Tidal
Observers on Twitter (today’s X) already suspected on the night of 29-30 March 2015 that something big was about to happen. Pop superstars such as Rihanna, Usher and Beyoncé coloured their profiles blue and added the hashtag #TIDALforALL to their messages.[1] The superstars’ Twitter campaign was intended to draw attention to the launch of the music streaming service TIDAL, which took place that afternoon at the venerable James A. Farley Post Office in New York City and was streamed live on YouTube.[2] In front of a dark blue, futuristic-looking backdrop of oversized tiles, Vania Schlogel from the TIDAL team welcomed the crowd on a journey through the history of pop music over the last 50 years, embodied by 16 superstars who took to the stage one after the other: Alicia Keys, two members of Arcade Fire, Beyoncé, Daft Punk, Jack White, Jason Aldean, J Cole, Jay Z, Kanye West, Deadmau5, Madonna, Nicki Minaj, Rihanna and Usher, as well as Calvin Harris and Chris Martin of Coldplay, who were streamed in. After the parade of stars, Alicia Keys took the stage to announce the launch of the first artist-owned music streaming platform to offer a better deal for fans and artists alike and invited the stars and co-owners of TIDAL present to sign a joint statement.[3] Then the show was already over, but it had achieved its goal of maximising media coverage.
Whether the launch of TIDAL would be “a moment that will forever change the course of music history”,[4] as Alicia Keys boldly proclaimed, is doubtful, and shortly afterwards music industry observers began to wonder how a music streaming service owned by superstars in a winner-takes-all market could serve anyone other than those superstars.[5] As if to confirm this, TIDAL hit the headlines not for its affinity with artists, but as a self-service shop for Jay Z and his circle of artistic friends, because TIDAL had manipulated streaming figures in favour of some TIDAL artists, such as Kanye West and Jay Z’s wife Beyoncé, as revealed by investigative journalists in Norway in 2017, leading to investigations by the public prosecutor’s office.[6] In fact, TIDAL was not a new music streaming service at all. In September 2014, the Norwegian service WiMP launched as a high-fidelity streaming service for audiophiles in the US and UK[7] under the brand name TIDAL.[8] To differentiate itself from the competition, WiMP had already launched the Hi-Fi offer in Europe in October 2013 with music streams in CD quality for EUR 19.99 using the new FLAC software (Free Lossless Audio Codec).[9] This service was also available in the UK and the USA under the TIDAL brand.
Apparently, star rapper and music entrepreneur Jay Z became aware of TIDAL because he and ‘Project Panther Bidco’, a subsidiary of Jay Z’s business holding company ‘S. Carter Enterprises’, respectively made a takeover bid for Stockholm-listed Aspiro AB, the parent comapny for WiMP and TIDAL, for 464 million Swedish kronor, or the equivalent of US $56 million, at the end of January 2015.[10] The offer was originally rejected by Aspiro’s small shareholders, but was finally accepted in March 2015.[11] WiMP, which was founded in Norway in February 2010 by Aspiro, music retailer Platekompaniet and mobile operator Telenor as a response to Sweden’s Spotify,[12] has thus become a global music streaming service based in the USA.
From the beginning, TIDAL sought to differentiate itself from its competitors in the music streaming market in two ways: (1) the company was largely owned by musicians, and (2) the music could be streamed in CD quality. In particular, the Hi-Fi quality of the music stream was TIDAL’s USP (unique selling proposition), which justified the higher subscription price of US $19.99 per month.
At the beginning of 2017, TIDAL announced a collaboration with the British company Meridian Audio,[13] which has been offering high-end sound systems for audiophiles since the 1970s,[14] to maintain its quality leadership. In early December 2014, Meridian presented its Master Quality Authenticated (MQA) high-resolution audio format for music streaming to the public in London,[15] with several streaming services and major labels showing interest. Finally, TIDAL became the first streaming service to offer selected albums in MQA format under the title ‘TIDAL MASTERS’.[16] However, doubts soon arose in the audiophile community as to whether MQA really enabled lossless audio streams.[17] However, rock legend Neil Young’s announcement on his blog that he was pulling his music from TIDAL because his recordings were not of the same quality as his masters, as promised by TIDAL, caused a stir: “TIDAL is calling their files of my songs Masters. But Tidal’s MQA files are not my masters. I make my masters – not TIDAL. I don’t need some hocus-pocus file manipulation that claims to improve my work. I made my masters the way I wanted them to sound. If TIDAL referred to their titles as TIDAL MASTERS, I would have no problem, but they don’t. They call them Masters. I had my music removed from that platform. They are not my masters.”[18]
But worse was yet to come. In April 2023, the company MQA Ltd, which had been founded specifically to commercialise the MQA patents, had to file for insolvency because an important investor, Reinet Investments, had terminated its cooperation.[19] As a result, TIDAL had to rethink its strategy and switched back to the FLAC format.[20] This did not mean that TIDAL’s high fidelity strategy had failed, but it had suffered greatly from the media coverage.
Tidal’s image as a streaming service owned by musicians suffered a similar fate. The first to leave the company in 2017 was the erratic Kanye West, who now only calls himself Ye, after he filed a US $3 million lawsuit for breach of contract. Just a year earlier, his album ‘The Life of Pablo’ had been released exclusively on TIDAL, which West claimed had brought the streaming service an additional 1.5 million new subscribers.[21]
However, the artist music streaming service’s image had been tarnished months earlier, when it was announced in January 2017 that US telecoms giant Sprint, majority owned by Japan’s Softbank, had acquired a 33 per cent stake in TIDAL for US $200 million, reducing the artists’ share. Jay-Z immediately rushed to reassure them: “JAY Z and the artist-owners will continue to run TIDAL’s artist-centric service as it pioneers and grows the direct relationship between artists and fans.”[22]
However, there was another change of ownership when the financial services company Square, which was founded by Twitter founder Jack Dorsey in 2009[23] and who later was fired by Elon Musk as CEO, acquired a majority stake in TIDAL for US $297 million in March 2021.[24] Although the original artist owners remained on board and Jay-Z was added to the board of directors, Square, which was renamed ‘Block’ later that year,[25] now took control of TIDAL.
TIDAL was already struggling financially at the time, according to a lawsuit filed in 2022 by a pension fund that had invested in Square and Block respectively. The co-owner accused the Block board of breaching its fiduciary duty to shareholders by buying a “failed” music service, according to the civil lawsuit.[26] Although the judge dismissed the pension fund’s claim, she ruled that Block’s acquisition of TIDAL “seemed, by all accounts, a terrible business decision.”[27] She said that TIDAL’s entry into the music streaming market had been unsuccessful, pointing to the small number of subscribers (1.2 million) compared to Spotify, Apple Music and Amazon Music.[28] And she criticised the fact that TIDAL has lost millions over the last ten quarters and that co-owner Shawn Carter, aka Jay Z, had to support the company with a US $50 million loan.[29] A successful music streaming service looks different.
Although TIDAL does not publish financial data, the music streaming service’s economic situation does not seem to have improved. In December 2023, TIDAL announced that it would have to cut 10 per cent of its workforce, or 40 employees, as part of a cost-cutting strategy imposed by its parent company Block.[30] This is further evidence that artists are no longer in the driving seat of TIDAL, but a tech company that has other priorities than monetising music for the benefit of musicians. This is also reflected in the decision to stop the Direct Artist Payouts module in March 2023, which was introduced in November 2021 for the benefit of artists. The management argued that only US $500,000 could be paid out to 70,000 artists, and therefore replace it with the TIDAL Rising programme.[31] However, the real reason for the discontinuation of the programme, at least according to media speculation, could be the cooperation with Universal Music Group from January 2023, in which it was agreed to increase the number of paying users and better monetise the fans.[32] A model of direct remuneration for musicians was probably out of the question.
To sum up, all the visions TIDAL had launched in March 2015 have turned out to be marketing bubbles that have now burst. TIDAL has not become a streaming service by musicians for musicians, but an economically ailing company that had to be taken over by a technology group to continue to exist. Its market positioning as a high-fidelity music streaming service has also suffered massively following the MQA disaster. Finally, the accusation of manipulating music streams in favour of Jay Z and his wife Beyoncé’s circle of friends, which led to an investigation by the Norwegian public prosecutor’s office, has left a stale aftertaste of a self-service store for superstars. All in all, the future does not look bright for TIDAL, and it remains to be seen whether its strategy of positioning itself as a Hi-Fi streaming service will be successful.
Endnotes
[1] Billboard, “Jay Z’s Tidal: Rihanna, Kanye West, Usher Among Artists Tweeting Support for Streaming Service”, March 30, 2015, accessed: 2024-06-25.
[2] YouTube, “Jay’z Tidal Opening Official Launching!!! (FULL CEREMONY)”, March 31, 2015, accessed: 2024-06-25.
[3] Ibid.
[4] Ibid.
[5] Billboard, “Behind the Scenes of Tidal’s Stormy Launch — and What’s in Store for the Future”, April 3, 2015, accessed: 2024-06-25.
[6] The case is discussed in detail in another part of the book. See also: Music Business Worldwide, “TIDAL ‘fake streams’: Criminal investigation underway over potential data fraud in Norway”, January 14, 2019, accessed: 2024-06-25.
[7] Variety, “Norway’s Streaming Service Wimp Will be Sound Investment for Audiophiles”, September 18, 2014, accessed: 2024-06-25.
[8] WiMP is an acronym for ‘Wireless Music Player’, which is not particularly suitable as a brand for a music streaming service in English-speaking countries.
[9] Digital Music News, “WiMP Thinks Consumers Will Care About HiFi Streaming…”, October 1, 2013, accessed: 2024-06-25.
[10] The Hollywood Reporter, “Jay Z Gets Into Streaming With $56 Million Bid for Spotify Rival”, January 30, 2015, accessed: 2024-06-25.
[11] Billboard, “Jay Z’s Bid for Swedish Streaming Company Reportedly Accepted”, March 11, 2015, accessed: 2024-06-25.
[13] MusicAlly, “Tidal becomes first streaming service to offer MQA music”, January 5, 2017, accessed: 2024-06-25.
[15] Expertreviews, “Meridian reveals MQA studio-quality music streaming technology” by Tom Morgan, December 5, 2014, accessed: 2024-06-25.
[16] TIDAL, “MQA Master HQ Playlist”, n.d., accessed: 2024-06-25.
[17] Audiophile Style, “MQA: A Review of controversies, concerns, and cautions”, March 2, 2018, accessed: 2024-06-25.
[18] Neil Young Archives, “TIDAL Misleading Listeners. Why I’m Not On TIDAL”, January 3, 2021, accessed: 2024-06-25.
[19] Billboard, “High-Res Stream Provider MQA Loses Backing, Enters Administration”, April 12, 2023, accessed: 2024-06-25.
[20] TIDAL, “HiRes FLAC is almost here”, Reddit post of June 29, 2023, accessed: 2024-06-25.
[21] Music Business Worldwide, “Kanye West quits TIDAL, claiming service owes him $3m – report”, July 2 2017, accessed: 2024-06-25.
[22] TIDAL press release, “Sprint Acquires 33 Percent of TIDAL and Creates Game-Changing Partnership”, PR Newswire, January 23, 2017, accessed: 2024-06-25.
[23] TechCrunch, “Jack Dorsey’s Square Is (Almost) Open For Business”, December 1, 2009, accessed: 2024-06-25.
[24] Music Business Worldwide, “Square to buy Jay-Z’s TIDAL for $297m”, March 4, 2021, accessed: 2024-06-25.
[25] The Wall Street Journal, “Square Changes Name to Block, Days After CEO Jack Dorsey Leaves Twitter”, December 1, 2021, accessed: 2024-06-25.
[26] City of Coral Springs Police Officers’ Pension Plan v. Jack Dorsey et al., Memorandum Opinion, Court of Chancery of the State of Delaware, C.A. No. 2022-0091-KSJM, submitted 10 January 2023, decided 9 May 2023.
[27] Ibid., p 1.
[28] Ibid., p 2.
[29] Ibid.
[30] Music Business Worldwide, “TIDAL cuts 10% of staff as parent company Block enforces cost-saving measures”, December 7, 2023, accessed: 2024-06-25.
[31] Music Business Worldwide, “TIDAL axes Direct Artist Payouts ‘experiment’ to redirect funding to emerging talent program TIDAL RISING”, March 1, 2023, accessed: 2024-06-25.
[32] Ibid.
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