This past week, Jay-Z’s streaming music service, Tidal, fell out of the top 700 iTunes apps, marking a significant downfall for the overly hyped platform that was supposed to “revolutionize” the music industry. From the start, I was a major doubter of Tidal, mainly because it was marketed in such a pompous way. Tidal’s officially launched with a dramatic video that showed Jay-Z assembling a crew of super friends and detailing his mission to “change history”. A press conference followed where the same big name stars signed a Tidal declaration, proclaiming that music (and revenues) will be going back to the artists. Good concept, bad execution. I felt that Tidal was trying to hard to leverage celebrity influence to convince consumers to subscribe to the service, almost using these mega stars to mask the actual specs of the service. After all the hoopla, I had several discussions with friends about Tidal and how it wasn’t going to work. To summarize:

– Tidal’s main differentiating point from competitors (Spotify, Pandora, etc) is high fidelity music. For $20 a month, consumers will get superb sound quality. However, to actually enjoy Taylor Swift in high fidelity on Tidal, you’re going to need high-end headphones or studio equipment, things that a majority of casual music listeners don’t have. These sound files would also probably require more data to transfer since they’ll be larger in size. The concept of great sounding music is desirable, but the common person won’t be about to enjoy it.

– The streaming music space is getting way too damn crowded with more on the way with Apple and YouTube revving up. Acquiring subscribers will be difficult as those who actually pay for streaming services are loyal to their current platforms. It’ll be even harder for Tidal due to its high price point. To be successful, a consistent customer base needs to be established, and with the amount of options available, it’ll be a tough process.

– Streaming music as a whole still isn’t a profitable business. Pandora is the only one that’s reported profits (and they’re actually really meager) after year os being in business. Launching a new platform into a crowded space with no profits for anyone is extremely risky.

– Tidal wants to increase the amount of royalties paid to artists, which is commendable, but artists shouldn’t be blaming the streaming services for not getting paid enough. Spotify pays 70% of its revenue to the rights holders, who are dun…dun…dun…the evil record labels. Why aren’t artist renegotiating their royalty terms with their labels to see more streaming revenue? It’s not entirely Spotify’s fault, as they’re having trouble generating profits as is. Also, doesn’t Jay-Z own a label in Roc Nation? How much is he going to pay his artists because I’m sure he needs to recoup some of that $56 million investment.

– Lastly, Tidal wants to be a ad-less platform, relying solely on subscriptions. This is very risky because not many people pay for music in the first pace. Everyone knows that music sales have fallen off a cliff. With streaming music, a majority of consumers prefer the free version versus the paid. It’ll be hard to convert people who are satisfied with not paying anything to actually forking over $10-$20. If you calculate it out, a year of Tidal could cost $240, which equates to about 24 albums a year (assuming $10 an album). Have you bought 24 albums in a year?

So there were a lot of flaws in Tidal’s initial strategy. Additionally, Jay-Z and Co. seemed real cocky when introducing it and it just really rubbed me the wrong way. You have the highest earners in music complaining that artists aren’t getting their fair share. They practically weakened their sales pitched. Ultimately, consumers looked past the hype, leading to a decline in app downloads. However, with some tweaks, Tidal can make a solid push to stay viable and not underwhelm like Beats Music.

– I would drop their top-tier pricing to $15. This would make it seem somewhat more affordable and help acquire subscribers. If they really want people to join, they could also drop their entry-level plan to $5-$8 to incentive people to give it a try. Granted they’ll leave potential revenue on the table, but the increase in users can offset that loss.

– I would incorporate minimal, native advertising, like sponsored playlists. It’s not disruptive like a 30 second spot after song, so even with a paid subscription model, the consumer isn’t pestered and they still collecting another revenue stream. Other revenue streams like affiliate sales, tickets brokering, and experiential could also bring in revenue in ways that less intrusive.

– I would create a marketing campaign that demonstrates how up and coming artists can really profit from the higher royalty fees as this would be more fitting of Tidal’s mission, rather than seeing Kanye and Beyonce’s rich asses whine. Publicize how Tidal is the ideal platform for artists to raise awareness and earnings, and people who are willing to pay for music will support.

– I would really make a serious commitment to developing exclusive content that’s only available on Tidal. This would create an incentive for people to actually to pay for the service because they’ll be getting music, videos, and experiences they can’t find anywhere else. I think this is the most critical key to Tidal’s success because most people don’t give a sh*t about high fidelity music.

I don’t wish failure on Jay-Z, I just hope he takes more consideration on what the consumers want rather than force it onto them.  With the right game plan going forward though, Tidal can earn a spot in the streaming music world. I’m not sure it’ll “revolutionize” anything, but it could stick around.


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Rex Pham

Originally from the Bay Area, who then moved to Los Angeles, then out to New York City. NYU Stern MBA c/o 2014. Inspired by the grind of NYC to create something that has value. Lover of all things digital, culture, and brand strategy.

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