Jay Z's Tidal: Is streaming set for a new wave?

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Jay Z has grabbed the headlines with the launch of his own music-streaming service – but will it work and is it really necessary at all, asks Daniel Harvey, experience design director at SapientNitro.

In November I spoke at The Drum’s Disruption Day. The topic was the ongoing changes in the music industry. In that presentation, Neil Dawson [SapientNitro’s chief strategy officer] and I recapped 2014’s key events. We also gave our opinions about what would come. Two months later and Jay Z announced plans to buy his own music-streaming service.

Fast-forward to this month and the marketing push for Tidal. Jay Z and his equity partners crashed over social media like a celebrity tsunami. The hubristic ‘launch’ event saw the artists sign a declaration of independence. From what? Ad-supported free tiers from services such as Spotify. As Rihanna would say, “bitch better have my money”. The bitches are you, me, and the 45 million other active but free users of the vilified service.

Despite the middlemen being cut out in digital, the structure of the industry remains the same. There are artists, labels, distributors and fans. Tidal is both artist and distributor. It is pushing the financial onus to the far end of that spectrum. More fractions of a penny-per-stream from fans seems a dubious path to success. It seems motivated more by greed than principle. The lesson learned by Dre & Beats is that it’s not enough to be an entertainer. You have to be an entrepreneur too. The stage and studio is secondary to the boardroom.

Tidal would be better served fighting the labels if recompense is the issue. Yet it won’t as the labels still provide value around discovery, funding and promotion. Artists such as Macklemore have proven labels aren’t the only paths forward in those areas. Tidal should challenge the cut of revenue the labels take for its efforts.

This is all stagecraft against a backdrop that includes:

• Artist pay-out might not be as challenged as the Tidal 12 would have us believe.

• Streaming music made more revenue than CDs.

• The labels are pushing against free streaming via contract negotiations.

• Apple/Beats failed to drive the labels below the $10 paid-tier standard.

• Sony Playstation has thrown in with Spotify.

• Universal is building its own white label service with mobile carriers.

• And Nest is looking to challenge Sonos.

Is Tidal a small fish in a big pond or a shark with real teeth? Right now it seems the latter. The only allure for fans is the implication of artist exclusivity. If the “exclusive” content at launch is any sign, Tidal will fail. And industry polls reinforce that dismal view by three to one.

Is streaming music a winner-take-all market? Or is it like streaming movies/TV in that it has room for a few major players? If it’s the latter (and that’s a massive if) the market-fit questions are:

1. How do you create market size (US paid streaming music subs are only at 7m)?

2. How will they know which services carry which artists?

What happens to the fan if this becomes the norm? Do we want a future where we’re hopping from one service to the next? Streaming music fragmentation could throw the baby out with the tidal wave.

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