The New York press conference announcing Tidal and its 16 artist stakeholders in March 2015 proved to be a prescient sign of the streaming service’s trajectory.
Jay Z, Beyonce, Kanye West (pictured above), Rihanna, Alicia Keys, Jason Aldean, Madonna, Jack White, Arcade Fire’s Win Butler & Régine Chassagne, Usher, Nicki Minaj, Coldplay’s Chris Martin, Calvin Harris, deadmau5, J. Cole and Daft Punk all took the stage of the James A. Farley Post Office building in Herald Square to usher in what Keys called “a moment that will forever change the course of music history” in a manifesto she delivered on behalf of her artist partners.
“Tonight is still just the beginning of an exciting path ahead,” Keys said. “Tidal is a global and rapidly expanding streaming platform. We are here today to offer something different: a platform owned by artists… as dynamic as the artists behind it… Today marks the true beginning of a mission to change the status quo, to reestablish the value of music.”
As critics swiftly pointed out at the time, the optics of a service designed to “re-establish the value of music” with only superstars participating in the equity felt like a win for music’s 1% and little else. And with the announcement of Square’s $297 million majority stake in Tidal six years later, that’s only further proven to be the case.
On the surface, $297 million is a decent return on investment for Jay-Z, which purchased Tidal’s parent company Aspiro for $56 million in January 2015. But that’s paltry compared to the $200 million Sprint paid for a 33% stake in the company in 2017, effectively valuing the company at $600 million at the time. Sources tell Variety the Square news comes off as “fire sale” pricing, at a time when Jay-Z appear to be selling other assets for quick cash flow. Just last week, Jay Z sold 50% of his Armand de Brignac champagne to luxury goods company LVMH for a reported $600 million — netting him an estimated $300 million for his ownership.
Dorsey tweeted on Thursday morning, “Tidal started with the idea of honoring artists by being artist-owned and led, focused on an uncompromised experience of the art. It’s refreshing and right. The vision only grows stronger as it’s matched with more powerful tools for artists, inclusive of new ways of getting paid.”
But it appears that the big winners in the Square investment are Jay-Z and his 15 initial artist partners. As Billboard reported at the time, each act was gifted 3% in equity of Tidal in an effort to provide exclusive content that would help drive value for the subscription price. Based on the math of Square’s investment alone, each of those acts should expect to pocket a cool $8.91 million apiece for their time spent helping the service launch.
But who else wins with this move, and what did Tidal get for giving away that equity to begin with? Streaming exclusives became a fleeting thing of the past not long after Beyonce’s “Lemonade” was announced it would stream exclusively on Tidal “in perpetuity” in 2016 (a deal that eventually ended three years later) and a similar deal for Jay Z’s catalog that expired on his 50th birthday in 2019. New music from any of the Tidal’s 16 partners (and later, Indochine and Damian Marley, who are currently listed as artist owners on Tidal’s website) needs to reach a mass audience to turn any kind of profit in the streaming era, something that Tidal’s user base, which was last reported to be at around 3 million subscribers in 2018 — a far cry from Spotify’s recently reported 155 million — could never deliver. There are also long-running claims by the Norwegian newspaper Dagens Næringsliv that Tidal has manipulated its stream counts — which Tidal has denied, calling the allegations a “smear campaign.” (A rep for Tidal did not immediately respond to Variety‘s requests for comment on paid-subscriber numbers or equity shares for Marley and Indochine.)
After the eclipse of exclusives, Tidal’s main differentiation from its competitors has been its high-fidelity option — which is indeed excellent, and rivals dedicated hi-fidelity streaming service Qobuz — and, to a lesser degree, its extensive liner notes. But Amazon Music was the first major service to follow Tidal’s lead last year, tapping Keys for a 2020 CES panel on HD audio, and Spotify announced last month that it plans to roll out a HiFi tier this summer, which was praised by Billie Eilish and Finneas at the company’s “Stream On” event last week.
Square says its play lies in the opportunities offered by direct-to-fan business models. The company says the deal will extend its “purpose of economic empowerment” to musicians — a new category for the payments company. Square plans to bring new systems and tools to help artists find new ways to support their work and find “financial freedom.”
How viable those opportunities will be for Square and its new acquisition will be seen in the coming months.
Andrew Hampp contributed to this report.