That’s Business, Man: Why Jay Z’s Tidal Is a Complete Disaster
He set out to save the music industry from the economics of streaming, and make himself a fortune in the process. So far, Jay Z is doing neither
Like many rappers, Jay Z writes songs that have a paranoid streak. He lashes out against conservative cable news anchors, overzealous cops, lazy music critics, and less talented lyricists, all of whom, he insists, are out to get him because he’s famous. On May 16, Jay Z uncorked one of these bilious anthems, Say Hello, from his 10th studio album, American Gangster, at an exclusive performance for people who’ve signed up for Tidal, his subscription-only streaming-music service. Stalking the stage at New York’s Terminal 5, Jay Z addressed critics of his new venture, who have savaged it as tone-deaf, unimpressive, and—perhaps most wounding for a celebrity who famously boasted “I’m a business, man”—a lousy investment.
In a black baseball cap cocked to the side, several large gold chains, and a dark tunic with white stripes that looked like something a fashion-conscious crossing guard might wear, the mogul complained about how he’d been mischaracterized by his detractors. “They say I’m a bad guy,” he rapped. “That’s the picture they paint. They say a lot about me. Let me tell you what I ain’t.”
Jay Z unveiled Tidal at a press conference in late March, flanked by 15 of the biggest acts in the music business, including his wife, Beyoncé, Madonna, Nicki Minaj, Rihanna, Jack White, and Kanye West, all of whom were introduced as equity shareholders. Many seemed awkward and unprepared. Another owner, Alicia Keys, quoted Nietzsche and gushed about Tidal’s cultural significance: “We’re gathered … 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.” There was a lot of utopian rhetoric about restoring the value of music in the digital age. Less time was spent on new features, technology, or other reasons for listeners to try—and pay for—a Tidal subscription.
The backlash was immediate. Tidal’s detractors weren’t just the predictably vexatious music bloggers, who described the service as little more than a vehicle for musical plutocrats to line their pockets. The haters also included some of Jay Z’s peers. “They totally blew it by bringing out a bunch of millionaires and billionaires and propping them up onstage and then having them all complain about not being paid,” said Ben Gibbard, lead singer of the indie rock group Death Cab for Cutie. The habitually caustic Noel Gallagher of Oasis told Rolling Stone, “Do these people think they are the f---in’ Avengers? They are going to save the f---in’ [world]?” In late May Tidal hovered at No. 9 on the iTunes list of top-grossing music apps, trailing Slacker Radio.
At Terminal 5, Jay Z’s backup band halted in the middle of Say Hello to let him freestyle. He laid out the case for Tidal and skewered his competitors in verse: “So I’m the bad guy now, I hear, because I won’t go with the flow?” He said Apple executive Jimmy Iovine had offered him “a safety net,” presumably in the form of a payment for endorsing the company’s forthcoming streaming-music service, and that Google had “dangled around a crazy check.” (Apple and Google declined to comment.) Jay Z dissed “middlemen,” griping that YouTube paid him “a tenth” of what he deserved. “You know n----s died for equal pay, right? You know when I work, I ain’t your slave, right?” Jay Z even drew parallels between his situation and the police killings of young black men such as Michael Brown and Freddie Gray.
He may not have had Apple’s cash, but Jay Z had his own glittering friends, whom he could rally to his side to influence the debate over streaming. In March 2015 he acquired Aspiro, the publicly held owner of Tidal, which had 500,000 users. The company had lost money every quarter since the beginning of 2012, most recently losing about $5 million in the last three months of 2014, according to Aspiro’s public filings.
The losses didn’t frighten Jay Z. He offered a 60 percent premium over Aspiro’s market value, according to a filing, and repositioned it as an artist-friendly alternative to Spotify that would pay higher royalties to record labels and artists. “It’s left brain, right brain,” says Fader’s Stone. “I think his artist side is like, ‘Yo, the artists are getting ripped off. I could really help everyone.’ But his business side is saying, ‘Along the way, I’m going to make a s---load of money.’ ”
About the time the deal closed, Jay Z was in talks with an outside investor that could potentially put millions into Tidal: Sprint, the third-largest U.S. mobile phone company, which is controlled by SoftBank, the Japanese venture capital firm. He needed to act quickly, before the Apple service materialized. This would seem to explain the rushed quality of Tidal’s March 30 event at the James A. Farley Post Office in New York. It was a power play by Jay Z. His fellow artist-owners included his friend Chris Martin of Coldplay, who appeared via video link. They were joined onstage by West, Rihanna, and J. Cole, all of whom are clients of Roc Nation. Vania Schlogel, a Tidal senior executive, boasted about the company’s relationship with Sprint as though it were a done deal. “From Day One, Marcelo”—Sprint CEO Marcelo Claure—“and Jay have been aligned in the vision of creating the most revolutionary music and entertainment platform for the planet,” Schlogel said.
Shlogel’s disclosure was followed by an anonymously sourced story in the New York Post claiming that Sprint and SoftBank had purchased a minority stake in Tidal in a deal that valued the streaming company at about $250 million. If that was true, Jay Z had quintupled the value of the company in little more than a month, an achievement that would have impressed Gates and Buffett.
It wasn’t true. Sprint issued a statement, saying that SoftBank hadn’t made an investment in Tidal and that Jay Z’s talks with Claure were platonic. “We are working together in partnership for the vision of the common cause of reestablishing the value of music,” Sprint said. “It is NOT a financial investment or exclusive partnership.” A Sprint spokesman declined to elaborate.
This was more than just an embarrassing public relations blunder. Jay Z was apparently counting on the investment to pay some bills. When he acquired Aspiro, the change of ownership meant he had to renegotiate its streaming contracts with the three major record companies: Universal, Warner, and Sony Music Entertainment. Universal distributes the records of some of Roc Nation’s artists, so Jay Z was able to quickly reach an agreement with that company. But music industry people who are familiar with the negotiations and forbidden from discussing them publicly say that Sony and Warner are asking Tidal for large advances in return for the right to feature their artists’ catalogs. (None of the record companies would comment on Tidal.) A source close to Tidal said that the company’s financial condition is fine and that it reached a streaming rights deal in late May with Warner.
Nonetheless, if Jay Z can’t come up with the cash for Sony, he faces the possibility that Tidal might lose albums from some of its co-owners, most painfully Beyoncé, a Sony artist. “I’m pretty sure most of the artists that were at the press conference don’t control their own streaming rights,” says Peter Mensch, co-founder of Q Prime, the talent agency that manages the Red Hot Chili Peppers and Metallica.
To keep his company from becoming a money pit, Jay Z also needs to line up many more Tidal subscribers. Tidal claims to have 900,000 users, but analysts suspect many have signed up for trials and will cancel when they have to start paying. Early on, Jay Z called some of his customers to see how they liked Tidal—a humbling act for a guy who calls himself J Hova (as in Jehovah). Tidal also hasn’t denied rumors that he will release a long-awaited album with Beyoncé exclusively on the service.
Exclusive content might be Tidal’s best hope of luring users away from more established competitors in the streaming space. The people involved in Tidal have made a lot of promises about music that would be unique to the service, but so far, the Tidal-only selection has been paltry, the highlights being a few videos featuring Minaj and Beyoncé, a J. Cole concert, and Jay Z’s Terminal 5 show, which quickly turned up on YouTube. You can still listen to the catalogs of virtually every Tidal owner on Spotify. Even Jay Z records such as The Black Album, Kingdom Come, and Magna Carta are there and can be streamed for free, which Tidal won’t allow.
Granted, some of the Tidal artist-owners can’t pull their work from rival services—because their record deals don’t allow it—but this raises a delicate question: If they could, do Jay Z and his partners really believe that their fans would flock to Tidal? “When you make music, your goal is to get it everywhere, not to make it exclusive,” says Alice Enders, a London-based music industry analyst. “That’s the way the music industry works.”
It’s too early to write off Tidal. But if the company does fail, it may be because Jay Z didn’t anticipate the skeptical response to his claim that he was working for some greater good of all musicians. He’s fundamentally a cynic. How could he not be treated that way, after dumbing down his music and attaching his name to everything from Budweiser to Microsoft? No wonder people have questioned his motives with Tidal. As Jay Z himself once put it, “I sell ice in the winter. I sell fire in hell. I am a hustler, baby. I sell water to a well.”
CONTINUE READING WHOLE ARTICLE HERE
http://www.bloomberg.com/news/featu...l-streaming-music-service-has-been-a-disaster
He set out to save the music industry from the economics of streaming, and make himself a fortune in the process. So far, Jay Z is doing neither
Like many rappers, Jay Z writes songs that have a paranoid streak. He lashes out against conservative cable news anchors, overzealous cops, lazy music critics, and less talented lyricists, all of whom, he insists, are out to get him because he’s famous. On May 16, Jay Z uncorked one of these bilious anthems, Say Hello, from his 10th studio album, American Gangster, at an exclusive performance for people who’ve signed up for Tidal, his subscription-only streaming-music service. Stalking the stage at New York’s Terminal 5, Jay Z addressed critics of his new venture, who have savaged it as tone-deaf, unimpressive, and—perhaps most wounding for a celebrity who famously boasted “I’m a business, man”—a lousy investment.
In a black baseball cap cocked to the side, several large gold chains, and a dark tunic with white stripes that looked like something a fashion-conscious crossing guard might wear, the mogul complained about how he’d been mischaracterized by his detractors. “They say I’m a bad guy,” he rapped. “That’s the picture they paint. They say a lot about me. Let me tell you what I ain’t.”
Jay Z unveiled Tidal at a press conference in late March, flanked by 15 of the biggest acts in the music business, including his wife, Beyoncé, Madonna, Nicki Minaj, Rihanna, Jack White, and Kanye West, all of whom were introduced as equity shareholders. Many seemed awkward and unprepared. Another owner, Alicia Keys, quoted Nietzsche and gushed about Tidal’s cultural significance: “We’re gathered … 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.” There was a lot of utopian rhetoric about restoring the value of music in the digital age. Less time was spent on new features, technology, or other reasons for listeners to try—and pay for—a Tidal subscription.
The backlash was immediate. Tidal’s detractors weren’t just the predictably vexatious music bloggers, who described the service as little more than a vehicle for musical plutocrats to line their pockets. The haters also included some of Jay Z’s peers. “They totally blew it by bringing out a bunch of millionaires and billionaires and propping them up onstage and then having them all complain about not being paid,” said Ben Gibbard, lead singer of the indie rock group Death Cab for Cutie. The habitually caustic Noel Gallagher of Oasis told Rolling Stone, “Do these people think they are the f---in’ Avengers? They are going to save the f---in’ [world]?” In late May Tidal hovered at No. 9 on the iTunes list of top-grossing music apps, trailing Slacker Radio.
At Terminal 5, Jay Z’s backup band halted in the middle of Say Hello to let him freestyle. He laid out the case for Tidal and skewered his competitors in verse: “So I’m the bad guy now, I hear, because I won’t go with the flow?” He said Apple executive Jimmy Iovine had offered him “a safety net,” presumably in the form of a payment for endorsing the company’s forthcoming streaming-music service, and that Google had “dangled around a crazy check.” (Apple and Google declined to comment.) Jay Z dissed “middlemen,” griping that YouTube paid him “a tenth” of what he deserved. “You know n----s died for equal pay, right? You know when I work, I ain’t your slave, right?” Jay Z even drew parallels between his situation and the police killings of young black men such as Michael Brown and Freddie Gray.
He may not have had Apple’s cash, but Jay Z had his own glittering friends, whom he could rally to his side to influence the debate over streaming. In March 2015 he acquired Aspiro, the publicly held owner of Tidal, which had 500,000 users. The company had lost money every quarter since the beginning of 2012, most recently losing about $5 million in the last three months of 2014, according to Aspiro’s public filings.
The losses didn’t frighten Jay Z. He offered a 60 percent premium over Aspiro’s market value, according to a filing, and repositioned it as an artist-friendly alternative to Spotify that would pay higher royalties to record labels and artists. “It’s left brain, right brain,” says Fader’s Stone. “I think his artist side is like, ‘Yo, the artists are getting ripped off. I could really help everyone.’ But his business side is saying, ‘Along the way, I’m going to make a s---load of money.’ ”
About the time the deal closed, Jay Z was in talks with an outside investor that could potentially put millions into Tidal: Sprint, the third-largest U.S. mobile phone company, which is controlled by SoftBank, the Japanese venture capital firm. He needed to act quickly, before the Apple service materialized. This would seem to explain the rushed quality of Tidal’s March 30 event at the James A. Farley Post Office in New York. It was a power play by Jay Z. His fellow artist-owners included his friend Chris Martin of Coldplay, who appeared via video link. They were joined onstage by West, Rihanna, and J. Cole, all of whom are clients of Roc Nation. Vania Schlogel, a Tidal senior executive, boasted about the company’s relationship with Sprint as though it were a done deal. “From Day One, Marcelo”—Sprint CEO Marcelo Claure—“and Jay have been aligned in the vision of creating the most revolutionary music and entertainment platform for the planet,” Schlogel said.
Shlogel’s disclosure was followed by an anonymously sourced story in the New York Post claiming that Sprint and SoftBank had purchased a minority stake in Tidal in a deal that valued the streaming company at about $250 million. If that was true, Jay Z had quintupled the value of the company in little more than a month, an achievement that would have impressed Gates and Buffett.
It wasn’t true. Sprint issued a statement, saying that SoftBank hadn’t made an investment in Tidal and that Jay Z’s talks with Claure were platonic. “We are working together in partnership for the vision of the common cause of reestablishing the value of music,” Sprint said. “It is NOT a financial investment or exclusive partnership.” A Sprint spokesman declined to elaborate.
This was more than just an embarrassing public relations blunder. Jay Z was apparently counting on the investment to pay some bills. When he acquired Aspiro, the change of ownership meant he had to renegotiate its streaming contracts with the three major record companies: Universal, Warner, and Sony Music Entertainment. Universal distributes the records of some of Roc Nation’s artists, so Jay Z was able to quickly reach an agreement with that company. But music industry people who are familiar with the negotiations and forbidden from discussing them publicly say that Sony and Warner are asking Tidal for large advances in return for the right to feature their artists’ catalogs. (None of the record companies would comment on Tidal.) A source close to Tidal said that the company’s financial condition is fine and that it reached a streaming rights deal in late May with Warner.
Nonetheless, if Jay Z can’t come up with the cash for Sony, he faces the possibility that Tidal might lose albums from some of its co-owners, most painfully Beyoncé, a Sony artist. “I’m pretty sure most of the artists that were at the press conference don’t control their own streaming rights,” says Peter Mensch, co-founder of Q Prime, the talent agency that manages the Red Hot Chili Peppers and Metallica.
To keep his company from becoming a money pit, Jay Z also needs to line up many more Tidal subscribers. Tidal claims to have 900,000 users, but analysts suspect many have signed up for trials and will cancel when they have to start paying. Early on, Jay Z called some of his customers to see how they liked Tidal—a humbling act for a guy who calls himself J Hova (as in Jehovah). Tidal also hasn’t denied rumors that he will release a long-awaited album with Beyoncé exclusively on the service.
Exclusive content might be Tidal’s best hope of luring users away from more established competitors in the streaming space. The people involved in Tidal have made a lot of promises about music that would be unique to the service, but so far, the Tidal-only selection has been paltry, the highlights being a few videos featuring Minaj and Beyoncé, a J. Cole concert, and Jay Z’s Terminal 5 show, which quickly turned up on YouTube. You can still listen to the catalogs of virtually every Tidal owner on Spotify. Even Jay Z records such as The Black Album, Kingdom Come, and Magna Carta are there and can be streamed for free, which Tidal won’t allow.
Granted, some of the Tidal artist-owners can’t pull their work from rival services—because their record deals don’t allow it—but this raises a delicate question: If they could, do Jay Z and his partners really believe that their fans would flock to Tidal? “When you make music, your goal is to get it everywhere, not to make it exclusive,” says Alice Enders, a London-based music industry analyst. “That’s the way the music industry works.”
It’s too early to write off Tidal. But if the company does fail, it may be because Jay Z didn’t anticipate the skeptical response to his claim that he was working for some greater good of all musicians. He’s fundamentally a cynic. How could he not be treated that way, after dumbing down his music and attaching his name to everything from Budweiser to Microsoft? No wonder people have questioned his motives with Tidal. As Jay Z himself once put it, “I sell ice in the winter. I sell fire in hell. I am a hustler, baby. I sell water to a well.”
CONTINUE READING WHOLE ARTICLE HERE
http://www.bloomberg.com/news/featu...l-streaming-music-service-has-been-a-disaster
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