The Basic Background
Yesterday, Jay Z and company relaunched Tidal, the new music streaming company that they’re convinced is “the future of music.” After a $50+M purchase of Tidal (in the form of Aspiro) last year, Jay Z has been bending our ears with how the rerelease of the new service will be the best thing ever for artists, revolutionize the music industry, provide the best listening experience…blah, blah, blah. Only it likely won’t do any of those things.
Not the First Anything
In order to understand why Tidal likely won’t make good on any of the things Jay Z and his companions have promised, one needs to understand how the music industry works. First, let’s get something out of the way that’s been bugging me since I heard it during the launch party last night: “Tidal is the first ever artist-owned music service.”
No it’s not. NoiseTrade has been around since 2006, and was founded by singer/songwriter (that means artist) Derek Webb. So already it’s clear that the Tidal team needs to do a better job of researching their claims before making them.
No, It’s Really Not “Artist-Owned”
Next, the phrase “artist-owned service” is nice and poetic, but it’s frankly wholly untrue in this respect. Let’s examine the laundry list of artists now attached to the Tidal moniker and company:
- Jay Z — Signed to Roc Nation (which he owns, and which had distribution deals with Sony Music (2009–2013) and Universal Music (2013-present)
- Rihanna — Signed to Roc Nation (see above)
- Beyoncé — Signed to Columbia (which is owned by Sony Music)
- Alicia Keys — Signed to RCA (which is owned by Universal Music Group)
- Daft Punk — Signed to Columbia (which is owned by Sony Music)
- Madonna — Signed to Interscope (which is owned by Universal Music Group)
- Kanye West — Signed to Def Jam (which is owned by Universal Music Group)
I could go on, but you get the point. This is not the “first ever artist-owned music service.” Frankly, it’s not really even “artist-owned;” it’s “label-owned by extension.” Let’s call it how it is, and pretending that these major label artists are independent operators is to fabricate an ideal (but false) reality. While it looks as if these artists belong to a whole slew of different labels, as my previous post on major label monopolies shows, this is a misleading thought process as they are more or less all owned by the Big Three. If anyone thinks that any of these artists will have the power to do things outside the interests of the three major record labels, they’re dreaming.
Basically the Same Layout
Next, let’s talk about why the business model of Tidal is fanciful and unrealistic. TechCrunch reported earlier some details demonstrating that Tidal’s layout and functionality are basically a ripoff of Spotify’s layout. From what I’ve heard, Tidal basically copped Spotify’s layout, changed the colors, and added a few tweaks — but it’s not really all that different.
Married to An Obsolete Business Model
In terms of business model, what seems to make Tidal the most different is its decision not to offer a free tier (as Spotify and most other music services do). Rather, they will offer a high-quality lossless music experience for $20/month, and a downgraded, “premium” lower quality experience for the same $10/month that Spotify and other services charge (which, by the way, is an obsolete business model anyway). Jay Z and others at Tidal are banking on the hope that the rabid music fans out there will want to pay more money for higher quality music, in addition to more exclusive content on the Tidal service first. While some music fans may in fact do this, it’s not a scalable hope because those fans are not the majority of music listeners.
Also, note that I said “more exclusive content on the Tidal service first“ — which means it will definitely be available on other services too, just maybe a week or two later. And why not? Do you really think that the major labels who work with these artists are going to forego any revenue stream, just to keep Tidal more exclusive than the rest?? I don’t.
So basically Tidal is going to offer the same major label music that is available everywhere else (including on non-music centered services like YouTube), but they’re going to nix the free tier (where most of Spotify’s conversions come from anyway) altogether and double the going rate for a monthly subscription. All the while, they will be aiming their service at a more niche market while providing non-niche music. Here’s my reality based on my experience in the music industry: high-fi, low-fi, it really doesn’t matter if your business model is outdated and your marketing strategy is insufficient for an overcrowded market. But yeah, this will definitely end well.
An Unscalable Model and Too Many Cooks in the Kitchen
Let’s move on, and I can’t believe no one has really focused in on this, especially those within the tech community (though it was mentioned a bit in the TechCrunch report): Jay Z has enticed these other major label names into becoming a part of this service not by offering them money up front, but by actually giving them equity percentages of the company. As reports that the equity numbers hover somewhere around 3%, this is an admirable shot by Jay Z. He’s trying to tie those artists’ respective loyalties to Tidal by making the service’s benefits their benefits. If Tidal does well and goes up in value, so do their stakes.
There are only two problems with this: 1) it’s not scalable, and 2) too many cooks in the kitchen. In an industry (tech startups) where founders are always told to limit the number of cofounders (the “too many cooks in the kitchen” nightmare”), Jay Z has amazingly disregarded the whole thought process and it seems no one has really noticed. What’s more, conducting company decisions in a “town hall” style is going to spell disaster for Tidal; you just can’t run a company like that. There needs to be one captain at the helm of a ship; any more and the ship will capsize. Also, keep in mind many of these artists don’t even work well with others in the studio — now they’re all going to run a company together? Right.
So to recap: unscalable business model and too many cooks in the kitchen.
More Dedicated to the Needs of Which Artists?
While I admire the desire by Jay Z and others to create a service that is more dedicated to “the needs and rights of artists,” let’s also be clear which artists those people are. They are not the artists the world-over who are coming up and trying to find their fanbases; they are the artists who already have legions of fans all over the world. We’re not talking about the girl from Minnesota who wants to be an R&B singer, or the punk band from Toronto who want to find their core fanbase. We are talking about (mostly) pop, rap, hip-hop, R&B, pop-rock, and other well-known stars who want to extend their control beyond their music to dip their toes in the music-tech industry.
I’m only critical because these are exactly the kinds of artists who really don’t need help right now. They have enough money, and even if they hop from label to label, their fans will follow. They have already found their fanbases and core listeners. It doesn’t matter which label or service they’re on, those fans will still find them and listen to their new albums and go see them on tour. So basically this is yet another rehashing of the same major label music that we’re already drowning in anyway. And while I’m a fan of some of these artists myself, I nonetheless am critical of what appears to be another desperate money grab. As the following screenshots demonstrate, though Jay Z and others may not see it that way, the point is that most of their fans will ( and do):
If these artists really wanted to distance themselves from the major labels and the current music business dynamic, they would look for ways to explore other paradigms, rather than look for ways to make an obsolete system work.
In the End
In the end, I commend these artists for taking a step into a new arena, but I question their motives and the realities surrounding Tidal as a company. Personally, I think Jay Z way overpaid for Aspiro, and is seeking to build a service that really only artists (and that is to say a select kind of artist) will really appreciate and use. I don’t think that Tidal sets itself apart enough to really take over the demographics targeted by either Spotify, Apple Beats, or even SoundCloud. I think it’s a lot of bluster, but without any real solid business prospects. Only time will tell, but I think that Tidal is going to have a very tough time right out of the gate. We’ll see if Tidal is part of a rising tide, or simply another ankle-slapper service.
Originally published at adammarxsmind.wordpress.com on March 31, 2015.