Jay-Z’s master plan for conquering streaming music

31 Mar 2015 | Author: | No comments yet »

Is Tidal Music the next wave of streaming? Why Jay-Z, Madonna and Rihanna could be scary for Spotify.

Rapper and entertainment mogul Jay-Z reintroduced his streaming music service Tidal to the world Monday, which has the support of top-level artists from Beyonce to Daft Punk. Madonna, Rihanna, Beyonce and Jay Z are among the A-List musicians who are co-owners of Tidal, a streaming service being billed as the first artist-owned platform for music and video. The idea behind the platform, according to executives, is to tip the music business’ scales in favor of artists, who will have a stake in the company.

Beyoncé Knowles, Kanye West, Daft Punk, Jack White, and Madonna took the stage to listen to Alicia Keys give a vague, stirring speech about the power of music, with quotes from both Jimi Hendrix and Friedrich Nietzsche. So stacking a whole bunch of multi-zillionaires on a stage and watching them declare that they don’t make enough money from Spotify is pretty entertaining. But Tidal isn’t an entirely new product: It was originally run by Swedish company Asprio, which Jay-Z quietly bought earlier this year for $56 million. Many artists have felt cheated by the financial arrangements offered by dominant streaming services such as Spotify and Pandora, so an alternative that lines their pockets directly will be welcomed.

The celebrities — who also included Jason Aldean, Usher, members of Arcade Fire and deadmau5 — stood in a line onstage as Keys spoke to the audience at Skylight at Moynihan Station in Manhattan. Most people seem quite happy with things as they are, probably because some of the frequencies removed in normal streams are only audible to dogs anyway. No one on stage on Monday seemed the starving artist type — and there was no shortage of cynicism on Twitter as artists used the platform to hype the launch in the hours before the press conference. Keys called the event “a graduation.” “So we come together before you on this day, March 30th, 2015, with one voice in unity in the hopes that today will be another one of those moments in time, a moment that will forever change the course of music history. Again, we’re talking about respecting the music and respecting the art … and we can’t play around with that, so we need something that’s authentic and honest.

In exchange for enduring ads or ponying up a monthly price on par with a few lattes, listeners can access vast catalogs of albums from past and present that would have cost a small fortune to amass in the compact disc era. Jay Z joined the attending artists to sign an unexplained ‘declaration’ on stage at the Tidal launch event Monday. (Jamie McCarthy/Getty Images for Roc Nation) “Our mission goes beyond commerce, it goes beyond technology. That made it pretty attractive pretty quickly, that the sound quality was so high, and I would know, because I’ve personally heard 70 mixes of a single record, you know what I’m saying?

Apple was unsuccessful in its attempts to offer a Spotify-like service for US$8 a month, and there is increasing hostility among artists to free versions of streaming subscription services. It’s the world’s true, true, without question, universal language.” The rise of streaming services like Spotify and Apple’s Beats has dealt a serious blow to CD sales and changed the way fans consume music. No, but it could actually spell bad news for the wider streaming market, because if it doesn’t do the numbers Jay-Z would like then it isn’t hard to imagine him and his fellow megastars giving Tidal exclusives – which would be great for anybody on Tidal but terrible news for fans who subscribe to rival services. Its more expensive $19.99 per month service, which could free up some more money for artists, streams music in lossless CD quality, which is actually audibly different than the compressed audio we’re mostly listening to right now.

It’s not as different as it used to be—you need sharp ears to tell the difference between CD quality and Spotify Premium’s 320kbps MP3—but it doesn’t require ridiculously superhuman hearing like Neil Young’s PonoPlayer system does. In a recent analysis, Silverman found that the average revenue per user to the music industry for paid subscription services was US$57, compared to US$7.47 for digital radio and under US$4 for YouTube, Vevo, and the free tier of Spotify. There’s a reason the industry settled on CD quality all those years ago, with upgrades like Super Audio CD failing; it’s the psychoacoustic sweet spot of sound quality. There’s a significant challenge for the worker’s paradise that is Jay Z’s streaming music: Tidal expects consumers to willingly pay more than they do now.

A month of Tidal costs US$9.99 in the U.S. for desktop-only access, the same price as an ad-free Spotify account that includes mobile access and high-def audio. There’s a lot of skepticism about hi-res audio, which some experts believe is above the threshold of human hearing; most industry observers think it will be a niche product. It seems more likely that a star-studded service such as Tidal will focus on exclusive content, and senior record label executives told Bloomberg News that Jay Z’s company is pursuing exclusive deals. That could make Tidal similar to Vessel, a new video-subscription service that charges a monthly fee to watch videos before they are posted to YouTube. This kind of windowing would be relatively novel in music, although some artists have started to keep new releases from streaming services at first in a bid to drive record sales.

Even then, however, artists will face a trade-off between cashing larger per-stream checks from Tidal while sacrificing the reach of competing services. If Jay Z hopes to appeal to people’s sense of justice, he’s probably going to need a better pitch than guaranteeing that Rihanna will get a bigger paycheck.

Here’s where competition comes in—if Tidal and Spotify get into a bidding war for artists and genres, offering higher royalty rates to secure quality music, artists could win (at the cost of consumers, who would have to subscribe to multiple services.) But the Tidal event didn’t give any insight into the royalties the company is paying to artists who aren’t major partners in the service. And there’s no reason to trust that Jay Z would give a better deal to other, competing artists than Spotify would; after all, he’s a businessman, too. Which means we’re back to the tired arguments we’ve been rehashing for years about creative work: artists should make money from touring, merchandising, crowdsourcing, marrying Neil Gaiman, or, ideally, all of the above. Dre, lurking in the background with Apple’s Beats Music system) really wanted to encourage artists other than his super-rich partners, he’d talk about how much he’s paying them.

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