Tuesday, August 25, 2015

Tidal looks like a time bomb — here's what went wrong with Jay Z's music-streaming service

Written by Travis Lyles — It seemed like a happy marriage in January this year when rapper Jay Z bought Aspiro, the parent company of the streaming platforms WiMP and Tidal. All the products were rolled into one premium music-streaming service, called Tidal.

The new company, which relaunched on March 30, said it would offer customers higher-quality listening than the other streaming services on the market while helping subscribers discover music through curated playlists.

The goal for Jay Z: challenge far more established streaming giants such as Spotify and, hopefully, win.

A billion-dollar roster of artists joined the endeavor, including Coldplay, Deadmau5, Daft Punk, Alicia Keys, Calvin Harris, Jack White, Madonna, Usher, Arcade Fire, and Rihanna. Also on board was Jay Z's wife, BeyoncΓ©, among many other artists who assumed co-ownerships of Tidal.

Jay Z touted Tidal as the artists' platform, reportedly offering millions of dollars and equity stakes in the company to some choice talent.

Artists initially praised Tidal for presenting their music in such a high-quality format. And musicians would be paid "double the royalties of other streaming services," according to former Tidal CEO Andy Chen.

Chen told the International Business Times in November, "It's a win-win for everyone."

Maybe not. Tidal had a rough launch less than six months ago, and things have been turbulent ever since.

Now the company looks like a time bomb.

What went wrong

For starters, Tidal's biggest selling point — high-fidelity audio — requires a $20-per-month subscription.

Tidal's cheaper $10-per-month service doesn't offer much incentive to switch from a different option, because it is nearly identical to its similarly priced competitors.

"They probably could've did something more exciting," rapper 50 Cent said in a radio interview in May. "Why would you actually buy Tidal to get something that would be everywhere else?"

Interest in the app has been crashing, too. According to App Annie, it was not among the 500 most downloaded apps in the US earlier this year and as of Tuesday was the 107th most downloaded app in the music category.

Another problem, often overlooked, is that Tidal's high-fidelity service streams songs at 1,411 kilobits per second. That is roughly 40 megabytes of data for one 3-1/2-minute song. Some subscribers could end up maxing out their data plans if they're not careful.

The revolving door

Tidal's executive suite has been unstable. Chen exited as CEO in April amid reports of further shake-ups within the ranks.

Peter Tonstad stepped in as interim CEO but left less than three months later.

"It was a wasted opportunity," streaming expert Russ Crupnick told The Wrap, referring to Tidal's rough start. "I think they had a window in which people were listening, but unfortunately that opportunity was squandered."

Last month Tidal lost yet another key executive in US sales and marketing manager David Solomon, who was hired to pump up Tidal's US presence.

Most recently, the company's senior vice president of label and artist relations, Zena Burns, quit two months into her tenure. Jeff Geisler, the chief marketing officer for Roc Nation — another of Jay Z's companies — left last month, though it's not clear whether he worked directly with Tidal.

What could happen if Jay Z leaves

For what it's worth, Jay Z and his associates have offered no indication that they plan to give up. Last Friday, Tidal neither confirmed nor denied reports Jay Z was thinking of jumping ship, responding on Twitter with only a loosely quoted Mark Twain reference:

"Lies can spread around the world while the truth is putting on its slippers."

Madonna, a co-owner of Tidal, told the Associated Press last week, "It's just the beginning, so we're working out a lot of kinks."

Jay Z may not leave right now, but mounting legal troubles are adding to the pressure. Tidal is entangled in a $50 million lawsuit filed by Cash Money Records over a Lil Wayne mixtape that was streamed exclusively in July. Cash Money says Tidal's use of Lil Wayne's music was "a desperate and illegal attempt to save their struggling streaming service."

With Apple Music's relative success and Spotify still enjoying a huge following, the streaming space could prove to be a tough code for Tidal to crack. And Jay Z's rumored departure could strip away some huge name recognition from the app and possibly cast its future to the wind.

Business Insider has reached out to Tidal for comment.

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