Will Tidal be the next music streaming service to drown?

The company bagged exclusives from Kanye West and Rihanna, who released the biggest albums of 2016, but it still has daunting challenges

Spotify beefed with Taylor Swift and got sued by songwriters; Apple messed with people’s iTunes collections and was accused of sexism; and Deezer abruptly cancelled plans to go public in 2015.

Yet it was another music streaming service that has been generating the most negative headlines over the past year: Tidal. The star power of its co-owners – Jay-Z, Beyoncé, Madonna and more – hasn’t spared it from criticism and derision.

The latest bad news for the company range from misfiring launches of new albums from Rihanna and Kanye West, to being on the wrong end of its own songwriting-royalties lawsuit, to the sudden departure of two senior executives, who according to the company’s own statement were “terminated”.

Throw in an awkwardly public row with the world’s biggest record label – “They are trying to pass blame for their own incompetence,” said a spokesperson for Universal Music after Tidal blamed the label for problems with Rihanna’s album launch – and you get a sense of Tidal’s talent for leaping between frying pan and fire.

Yet this is a streaming service that managed to bag those exclusives on the two hottest albums of 2016 so far. It also claims to have grown from 500,000 paying customers in March 2015, to one million by October, and now reportedly 2.5 million in February 2016 after a Kanye-fuelled surge – even if it is unclear how many of those new subscribers are on a free trial.

Tidal also has a recently appointed CEO, Jeff Toig, who has a good reputation within the music industry from his past launching Muve Music, a US mobile operator-owned music service that reached two million subscribers at its peak.

Tidal isn’t a complete basket case, in other words. Why has it been so regularly written off, then? There are two reasons: the media narrative of Tidal as gaffe-prone and doomed; and real questions about its long-term survival prospects in the brutally competitive streaming market.

That media narrative is partly of Tidal’s own making. Before being acquired by Jay-Z and his co-owners, Tidal (under its original name, WiMP) was a well-regarded streaming service based in Norway, and available mainly in Scandinavia.

WiMP was no pushover when it came to features: it was the first streaming service to wrap magazine-style music journalism and music videos around streaming audio. It was also one of the first to add higher-quality “lossless” streams – something still lacking from Spotify and Apple Music.

In global terms, WiMP was a niche player but it was an interesting and inventive one. But then came its acquisition by a company owned by Jay-Z, and an infamous relaunch event in New York featuring its starry cast of new co-owners.

Madonna stuck her leg up on the table. Daft Punk and Deadmau5 were separated for fear of “helmet clash”. Calvin Harris and Chris Martin grinned mutely on screens in the background; the artists present signed a mysterious contract; and then everyone stood around awkwardly at the end like wedding guests unwilling to be the first to storm the buffet.

More seriously, nobody on the day talked about why Tidal would work better for small artists who didn’t have equity in the company, leaving it open to accusations of being just a rich-stars-get-richer club.

The event set the tone for much of the media coverage that followed: Tidal as a laughing stock, with its mistakes covered much more widely than its successes.

That is not to say there haven’t been mistakes. Rihanna’s ANTI appeared accidentally on Tidal before its official launch, and was soon all over torrent sites, sparking the argument with Universal Music.

The launch of Kanye West’s The Life Of Pablo was rife with confusion: fans trying to buy the download version discovered that it had been pulled within hours of going on sale. They were then told that what they were listening to might not even be the final version of the album.

Exclusives on big albums such as ANTI and The Life of Pablo were supposed to be one of Tidal’s biggest weapons in its battle with bigger rivals, yet in quick succession these launches have been co-opted into the narrative of Tidal troubles.

As fun as “Jay-Z has yet another problem with Tidal” intros are for journalists, the service’s past PR headaches aren’t the reason why its future may be in doubt.

For all its co-owners’ personal wealth, Tidal is a small fish in a sea of 900lb sharks. Talk to some of the sharper minds in the music industry and they’ll fret about whether the biggest independent streaming services – Spotify and Pandora – will survive long-term competition with Apple, Google/YouTube and Amazon.

In 2014, Spotify grew from 36m users to 60m, including 15m paying subscribers. While its revenues that year were €1.08bn, its losses were €162.3m, and while it has yet to publish its 2015 figures, they are likely to show more heavy losses.

If Spotify’s secures the up-to-$1bn funding round it is currently pitching, it will have taken $2bn of investment to build a streaming service that reaches more than 100m people and 30m subscribers.

Pandora is a streaming-radio service with the vast majority of its listeners in the US, but it has ambitions to expand globally, with Spotify-style fully on-demand streaming.

Yet building its audience of 81.1m listeners has taken more than $1bn of marketing spend since 2009; another $212m of product development costs – with $120m more earmarked for its expansion plans. Pandora’s net loss in 2015 was $169.7m, from just under $300m total net losses since 2009.

Those are the medium fish in the streaming pond, recording heavy losses but fuelling their growth with heavy funding rounds – or to be more accurate from their latest rounds: debt – hoping to compete with Apple, Google and Amazon’s financial might. Deezer has ambitions to join them, having recently raised its own €100m funding round.

The outlook for companies below them, such as Tidal and Rhapsody/Napster, which reached 3m paying subscribers in 2015 but saw its losses grow by 66% to $35.5m that year, the best-case scenario is to sell up to avoid shutting down, as another rival Rdio did late in 2015.

This is why, if Tidal isn’t around in a year’s time – for example, if Samsung acquires it – it’s less likely to be about misfiring press conferences or arguments with labels, and more about the streaming-market dynamics.


Stuart Dredge

The GuardianTramp

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