Why Jay Z’s Plans for Tidal Are Doomed from the Start (And 10 Tough Questions for Jay Z)

So Jay Z is selling Tidal as an “artist-friendly” streaming site, is he? A streaming service that is the first artist-owned platform for music and video? An all-for-one-one-for-all venture where the artists and their music always come first?

Good luck with that. I see this as  one of those cases where those who don’t study history are doomed to repeat it.

Back in 1919, the biggest movie stars of the era–Charlie Chaplin, Mary Pickford and Douglas Fairbanks among them–banded together to created their own movie studio.They called it United Artists. The idea to wrest creative control and distribution away from the established studio system.

Richard Rowland, head of Metro Pictures, a partner with Louis B. Mayer, famously said “The lunatics have taken over the asylum.” He wasn’t wrong.

Oh, it worked–for a time.  But UA eventually ran into cost issues because they weren’t businessmen.  There were distribution issues because the big studios still controlled most of the movie theatres. And there were issues around the pecking order involving who got how much money for what and which stars received the lion’s share of promotion.

It did not take long for these United Artists to become, well, disunited. By the time the company limped into the 50s, they owned no assets, had to rent space to make their movies and found themselves relying on the big bad studios–the very people from which they tried to escape–to help them get their product to market.

Yes, United Artists still exists, but not in a form in which that its creators envisioned. Not even close.

Any of this sound familiar?

Jay Z dropped $56 million to purchase Tidal from a company called Aspiro, which also owned company known as WIMP (terrible name, that). Tidal has about 500,000 users, compared to the 15 million signed up for Spotify and the millions that use Rdio, Songza and other established players.  But he still convinced his fellow musical Illuminati to sign an agreement saying they’re committed to Tidal and its plans to deliver a better streaming experience for everyone. Signatories include Madonna, Kanye West, Rihanna, Daft Punk, Coldplay, Nicki Minaj, Jack White–17 in all.

That’s right: it’s a company run by the one percenters of the music industry for the benefit exclusively of the one percenters.

Tidal (or TIDAL, if you prefer) offers 25 million songs (about the same as every other service), 75,000 music videos and “curated editorial” (whatever that means) for $20 a month.

https://youtu.be/egShCjfvi9s

There was much talk about how this Tidal was going to be good for everyone, especially this group of artists all of whom have equity positions of some sort. The implication was that Tidal was going to offer higher payouts for creators–at least those who are co-founders of the service. Uh-huh.

I have some questions:

1. While there has been much bitching about the royalties artists received from the Spotifys and Rdios of the world, their anger is misplaced. Spotify and Rdio are only paying what they have to under the terms of the agreements they negotiated with record labels, collectives and copyright boards.  The artists should be yelling at their record labels and not at the streaming companies.  So why are they still making it look like the streaming services are the only bad guys in all this?

2. Tidal may be “artist-friendly,” but won’t it operate under the same tariff and royalty rates as the existing players? Sure, the fact that it doesn’t have a free tier will theoretically allow it to pay out more faster, but those payouts won’t amount to shit until Tidal reaches critical mass, something that will take a long, long time.

3. There’s a reason that Rdio and Spotify offer a free tier. It’s a way to get new subscribers into the tent. Tidal won’t have a free tier. Jay Z and his flock seem to think that their superstar power alone will entice people to fork over the $10 (for standard streaming) or $20 (for high-res audio) a month for access. That’s how the artists will immediately make more.  You really think that’s gonna work?  People are f**king CHEAP when it comes to music. The vast majorities of streaming customers are totally cool with the crippled service they get with the free tiers.

4. Tidal is home to established artists who are only as big as they are as a result of the existing record label system. So how to new acts get inducted into this fold? When do Imagine Dragons, Hozier, AWOLNATION or any new up-and-comers get invited? Or will Tidal forever be the club no one else can get into?

5. Sure everyone is united right now, but how long will it be before one of the Tidal signatories breaks ranks because they don’t feel that this socialist exercise is as equal as they were told? You don’t get to be as big as these artists are without being uber-alpha and always watching out for number one.

6. Do the new Tidal’s co-investors  realize that the service lost 11% of its subscribers in the last year? And do they know that a big chunk of those 500,000 subscribers (77%) are only there because they were bundled in under various deals with telcos?

7. How deep are Jay Z’s pockets? Rdio, Spotify and Apple (who are preparing to relaunch Beats later this year) have WAY more money and way more traction than Jay Z and his posse has. While Tidal is obviously setting itself up to be an upper-tier aspirational sort of streaming service–the  HBO/Netflix of the space–can it win the looming war of financial attrition? Nope.

8. Tidal says it will offer exclusive material from all its co-investors. Really? How will that go over with iTunes and other companies? Think they’ll retaliate? Think they’ll decline to promote the new stuff? What do you think?

9. Is Jay Z and his people capable of running the business end of things? How are they going to scale Tidal up to the same level as the industry leaders?

10. How long before Jay Z gives up and sells out?

I could be 100% wrong about all this and Tidal could end up becoming the company that changes the music industry forever. I could be wrong that this isn’t all about money and less so about creativity and artist protection. But somehow I don’t think so.

UPDATE:  I’ve been thinking more about this which has led to just more questions.

11. Tidal is going to have to offer something to fans to entice them to pony up the $10 or $20 a month. Most streamers don’t give a damn about high-res audio, so that’s not going to be much of a lure. What kind of “exclusive content” will Tidal offer to make it worth the coin?

Here are some examples: The White Stripes’ first ever TV appearance from 2000. A Daft Punk film. A curated Coldplay playlist. Nice, but how long before that stuff is ripped and posted to YouTube? There’s a limited amount of premium back catalogue material available, but what sort of new stuff will the artists generate? And how much is it going to cost to to create that premium content?

And if Tidal starts offering exclusive material (like the new Rihanna song), isn’t that some sort of restraint of trade? You can imagine the howls of protest from everyone from Apple to Spotify.  And what might the record labels say about this?

12. Still on that subject, what happens with artists who have 360 deals? Won’t their labels get their piece of the action from Tidal? Does that tip the balance in any weird way? Or is there “exclusive content” over which the labels have no control?

13. Is Taylor Swift part of this or not? There’s some confusion as to the level of her involvement. She was part of Tidal’s beta phase but her 1989 album is absent from Tidal. Just like it’s absent from all the other streaming services (except YouTube, but that’s another matter.)

14. What about the people who weren’t there? Dave Grohl, Drake, Eminem, Lady Gaga, Justin Timberlake, Bruno Mars, Justin Bieber, Pharrell Williams? Notice any one of them championing Tidal on their social media channels? Nope. Are they just not part of Jay Z’s Illuminati?

15. Make no mistake: this is part of a label-sanctioned all-out assault on free.  The question is: How will consumers react? But if you cut off your freemium users and force them to pay, won’t they just gravitate to other free services?  (HINT:  Yes.)

It comes down to this: “Cancel your free Rdio account and pay up to $20 for this service because it’s artist owned-and-operated!”

Uh, dudes: Are you high? Let’s go through the net worth of some of those 17 people who appeared at the Tidal launch.

• Jay Z and Beyonce: $1 billion
• Madonna: $800 million
• Usher: $180 million
• Chris Martin: $140 million
• Kanye West: $130 million
• Rihanna: $120 million
• Daft Punk: $120 million
• Alicia Keys: $60 million
• Nicki Minaj: $50 million
• Calvin Harris: $46 million
• Jack White: $30 million

Add those numbers up and you have a collective net worth around $2.7 billion. But that shouldn’t be held against them. They deserve their fortunes. But the optics are really, really bad. And at the end of it all they had a champagne toast? Are you f**king kidding me?

(For more on celebrity wealth, go to CelebrityNetWorth.com)

16. Record executive: “Oh, but this is a step in consumer education! Once people know that the money they’re spending is helping to nurture new talent!”  Consumer:  “Bullshit. You’ve already forgotten what happened with Napster, haven’t you?”

17. Piracy plummeted when streaming became ultra-convenient at a price people were willing to pay. That’s why Rdio, Spotify, Deezer and the rest of them are quickly becoming the most popular way for people to access music. Now Tidal proposes to create a new closed system that costs way, way more?  Nice going:  They just created a new generation of pirates.

18. By sandboxing their music, the Tidal artists are damaging the prospects of new and emerging acts. In other words, no matter how much they say “It’s all about the music,” aren’t they really saying “It’s all about OUR music?”

19. “You want me to spend $20 for music I can hear on the radio?”

Just so we’re clear, I’m in favour of paying for streaming music services. I far prefer being a subscriber because then I get all the features. Artists should be paid for their labour.

But let’s also be transparent about this:  artists ARE paid when their music is accessed through the ad-supported free tiers of streaming companies, albeit at a lower rate.  But I also know that the artists need to stop kvetching about that rate because THEIR FIGHT SHOULD BE WITH THE PEOPLE WHO NEGOTIATED THESE DEALS! YOUR RECORD LABEL!

The industry just wants to put the genie back in the bottle–a genie they willingly let out when they made their original deals with the streaming companies. Now they want to reverse course and get everyone to pay again for everything, Good luck with that.

Let me leave you with this great quote in the comments section of a Gawker article on Tidal:

March 1985: Artists band together and ask the public to help stamp out famine in Africa.

March 2015: Artists band together and ask the public for money for themselves.

It’s true, we’ll make a better day, just you and me.