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Tidal Exec Dismisses Layoff Reports as ‘Overblown’ at Variety Summit

Tidal senior executive Vania Schlogel said reports that the new streaming service was in trouble following a rocky launch were “very overblown,” as she spoke at Variety‘s Entertainment and Technology Summit on Thursday.

The music service was in the headlines recently after its major backer, rap superstar Jay Z, took to Twitter to hit back at reports that the company had undergone a series of layoffs and had failed to attract many customers.

In a stream of tweets last weekend, Jay Z, said the company had 770,000 subscribers, writing, “The iTunes Store wasn’t built in a day. It took Spotify 9 years to be successful…”

Schlogel defended her boss, saying he was responding to “click bait” media reports that exaggerated the challenges the company faces and the depth of its problems.

“Jay felt like I’m going to speak for myself and set the record straight,” she said, noting that Tidal has been in business for only a month.

Moreover, she argued that Tidal’s relatively small subscriber base is a problematic measuring stick. Unlike Pandora or Spotify, which offer both free and subscription services, users must pay to use the app. The service begins at $9.99 per month.

“Our business model, our viability as a business, is not driven by the number of app downloads,” said Schlogel. “It’s driven by the number of people who subscribe.”

She labeled the situation “very unfortunate,” but added, “there is an element of disparity between reality and perception.”

The layoffs at Tidal that spurred some of these stories were related to a decision to close a bureau in Sweden that had only three employees, she said, not a sign of cutbacks to come. “Overall, we’re focused on growth,” said Schlogel.

Panel moderator Todd Spangler, Variety‘s senior digital editor, asked Schlogel why Tidal CEO Andy Chen was ousted from the company in the midst of its launch. He was later replaced by Peter Tonstad,­ a former CEO of Aspiro Group, Tidal’s parent company.

“I’ll respect Andy Chen’s confidentiality,” said Schlogel. “I will say that we are excited to be working with Peter…he knows the ins and outs.”

At some point Tidal will find additional investors, Schlogel predicted, because licensing and technical costs of running a music streaming service are so high.

“We’re losing money hand over fist like every streaming service is….we’ll have to raise money,” she said.

Some elements of the streaming service do appear to be paying off. Tidal had success with a Jack White acoustic concert it streamed for users, and it’s planning a free concert in New York City next month for subscribers where Jay Z will play songs from his catalog that he rarely performs.

Tidal also made waves when Beyonce Knowles released a seven year anniversary video for Jay Z on the streaming service. The only downside was that the video, in which she performed “Die With You,” was widely pirated.

“The reality is [piracy] is going to happen,” said Schlogel. “It’s something we have to live with.”

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