Written by Ben Sisario — Don't count Jay Z out of the streaming wars quite yet.
Two years ago, the rap star and entrepreneur bought Tidal, a small streaming service, for $56 million, with lofty — if vague — plans to build an online music empire that would lure customers with exclusive content from fellow celebrities.
The news media pounced on early stumbles by the service, and with its losses mounting, Tidal was quickly put on death watch by the music industry. Almost since Jay Z took it over, the service has been the subject of speculation that it would fail or be subsumed by a deep-pocket competitor like Apple.
But Jay Z, whose real name is Shawn Carter, found a lifeline through a deal announced on Monday in which Sprint will buy a one-third stake in the service for an undisclosed amount. The arrangement injects some needed investment in Tidal and allows it, at least for now, to remain an underdog in a streaming market that has become dominated by giants.
"Tidal has struggled to make a dent in the streaming market and has shallower pockets than Spotify, Apple or Amazon," said Mark Mulligan, an analyst at Midia Research, a market research company. "The Sprint deal gives it access to a big customer base, free marketing and a war chest to take on the streaming incumbents."
As part of the deal, Jay Z and the group of artist owners who helped introduce Tidal, including Beyoncé, Madonna, Kanye West and Alicia Keys, will continue to run the service, and Marcelo Claure, the chief executive of Sprint, will join Tidal's board, the companies said.
"Sprint shares our view of revolutionizing the creative industry to allow artists to connect directly with their fans and reach their fullest, shared potential," Jay Z said in a statement. "Marcelo understood our goal right away, and together we are excited to bring Sprint's 45 million customers an unmatched entertainment experience."
In a joint announcement, the two companies offered few details of the partnership, saying only that Sprint customers who subscribe to Tidal would receive content available only to them and adding that more information would be revealed later. Sprint is controlled by SoftBank of Japan.
Jay Z's plan to offer early or exclusive access to music and videos has helped Tidal build an outsize public profile. After hosting new releases by stars like Rihanna, Beyoncé and Mr. West, the company claimed that it had gained millions of new subscribers, and Tidal became a major player in an industry arms race. Apple lined up its own exclusives from artists like Dr. Dre, Drake and Frank Ocean.
But Tidal has struggled financially. In a filing last year, Aspiro, the holding company for Tidal, reported that it had lost $28 million in 2015, and its board concluded that it lacked sufficient funding for 2016.
Tidal's claims of subscriber numbers have been under regular scrutiny by music executives and industry analysts. In March, about a year after Jay Z reintroduced the service, Tidal said that it had three million subscribers. But Midia estimated this month that Tidal had only one million paying users. A report in a Norwegian newspaper last week accused Tidal of inflating its subscriber count; a Tidal spokesman declined on Monday to comment on that report.
According to company reports and industry estimates, Spotify has more than 40 million paying subscribers and Apple Music 20 million. Pandora has more than four million customers for Pandora Plus, the premium version of its internet radio service, and the company also plans to release a full competitor to Spotify and Apple Music early this year.
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