David Balfour wonders if there's any real substance to claims TIDAL will bring back value for artists
17 April 2015 - EditorialThere are a lot of unanswered questions around this week's 'launch' of the TIDAL service by Jay Z and his celebrity friends. Chief amongst these is whether the launch was a brilliantly-executed piece of impactful PR heralding the arrival of a game-changing new service, or an embarrassing demonstration of ill-informed artists engaging in ludicrous hyperbole and half-truths.
Perhaps the first and most important point here is that TIDAL is not a new service. It's an existing service under new ownership. Why is this distinction significant? It's useful to know what Jay Z's starting point is. To our mind, the TIDAL service created by Aspiro in Norway is not only the best-looking and best-sounding service in the streaming market, it's really the only streaming service which has cracked using editorial as a way of dealing with the tyranny of choice. We've been avid TIDAL users more or less since launch and it quickly became our go-to streaming service precisely because it has been such a great way to discover new music and navigate the disabling amount of content available. What's more, the combined TIDAL and WiMP services operated by Aspiro already have a pretty healthy subscriber base which was this week reported to be in excess of 540,000 paying customers. Jay Z's Project Panther Bidco certainly chose well with their acquisition. The key question now is, where will they take this service?
Watching the TIDAL press launch this week felt a little like being in a strange and slightly troubling dream. There was a lot of emotion involved and promises made, but tangible facts and logic seemed to be in very short supply. We think it's fair to paraphrase the message delivered as follows: “TIDAL will deliver better value to artists, and will provide a better experience for fans.” Which sounds great, but how exactly is this going to happen in reality?
It's clear how TIDAL is going to deliver better value for the 16 artists involved in the launch – they have all apparently been given equity stakes in the company. But how can that additional value possibly extend to the vast majority of artists who were either not invited to share in the company, or possibly declined to do so? It seems to us that the only way TIDAL can claim to deliver 'better value' is because of the absence of a free tier on the service. As such, it can probably promise to deliver a better per stream rate in comparison to services which do include a free, ad-supported tier. Fair enough, but it's hardly revolutionary or even new. There is already a bunch of premium only services out there which can all make that claim. So how exactly is TIDAL going to do better?
TIDAL has apparently promised 'double average royalty rate' to artists resulting from plays on its premium tier. Again, sounds great. But, when you considering that users pay double the standard end consumer price for its premium tier however, anything less than double royalty rate would actually be a con. Again, we're not seeing how any clear additional value is getting delivered to artists. Perhaps the main point of the 'additional value' argument is therefore really only that there is no freemium tier – meaning that TIDAL users deliver additional per-stream value when compared to average rates across the wider businesses of Spotify or YouTube, for example.
TIDAL is definitely well aligned with those in the industry who wish to see the free streaming tiers disabled or limited. Yet how can it hope to attract subscribers in the absence of a free tier initially tempting users in before encouraging them to pay for a subscription? Exclusive content seems to be the tool here. If you visit TIDAL today, exclusive content from artists such as Daft Punk, Alicia Keys and The White Stripes is already much in evidence.
Will the presence of exclusive content on TIDAL really tempt fans to subscribe? Perhaps in some cases it will, especially when it comes to superfans. In order to really play this hand however, the artists involved will have to deliver high value exclusive content that is genuinely valuable. This also means ensuring that same content isn't available on other services. We have to wonder if it is really a sensible strategy for artists to effectively punish their paying users on platforms like Spotify, for example, in order to strengthen TIDAL's position in the market? These artists have apparently decided that it is.
Could all this be a power play designed to force Spotify to also adopt premium only content in future? It seems far-fetched, but that's about the only explanation that really makes any sense to us. Otherwise, these artists are effectively deciding to limit their own distribution and to punish their existing paying customers, all in the name of promoting a service which they also happen to own and profit from. That doesn't sound like a great way to reward or win respect from their fans.
What will this exclusive content be? A little behind the scenes video footage is unlikely to cut it. For TIDAL to really leverage its exclusive content, it's going to need exclusive new releases from the artists involved. Anything less will feel inadequate. (Depressingly, the exclusive content already seems to have largely replaced the editorial content which was one of the main things we liked about 'old' TIDAL).
We're pretty unconvinced by the promises being made by TIDAL at this point. The intentions seem good, but the solid arguments and strategies seem to be missing. TIDAL itself openly admits this is a work in progress. Nevertheless, the supposedly altruistic motivations seem misleading, even dishonest. The MMF's Stephen Budd delivered what was for us the most useful analysis of the TIDAL launch in his Sky News interview this week, commenting: “This is all about money and control,” [for the artists involved]. Viewed through this lens, the TIDAL strategy suddenly looks more logical.
On a wider level, perhaps we're also starting to get fatigued with the argument that any service operating an ad-supported free tier must inherently be bad for artists, or delivering bad value. Yes, one can make a comparison of per stream rates and come to such a conclusion. But that's also to miss out the complexity of the modern music ecosystem, the problems of piracy and the DMCA, the inability or unwillingness of many users to pay subscription fees and, importantly, the vast differences between the various music services which happen to have free, ad-supported tiers. How many of the artists (and the labels) involved in the TIDAL launch would be prepared to make a really emphatic demonstration of their values by removing all their content from Spotify, for example, and forgoing the royalties they earn from that service? Is the massive value delivered by Spotify something they would happily live without? There are certainly arguments still to be made about value and the impact of the freemium model on that. But to pretend there's any kind of silver bullet – or indeed service - which will restore value to music, is to be pretty out of touch with reality. Maybe that's a nice place to be, for that 1% of artists that can maybe afford it.
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