The music industry is worth more than $130bn globally.
One player that is delving into all aspects of the sector is Jay Z. Half of a major power couple and with a vast amount of contacts, the music mogul has used the notion of ‘star names’ to his full advantage. Jay Z has parted with $56m of his $520m empire’s worth, to purchase Tidal, a music platform that aims to differentiate from other music streaming companies such as Xbox music, Google Play and most notably music giant Spotify.
Due to sheer popularity, music streaming services have recently been added to ONS’s price of a basket of goods to determine UK inflation rises.
Retailers can benefit from successful music streaming sites which provide them with an advertising platform. However, Tidal seeks to prevent this by ‘avoiding greed’, with artist Alicia Keys commenting, “We believe it’s in everyone’s interest - to preserve music.”
Tidal was originally launched October 2014 by Norwegian firm Aspiro. The company offers exclusive music from major artists with demo tracks and 16-bit FLAC format songs available.
Tidal says that its audio is ‘CD quality’ and that it will stream this same experience online, as well as to the business’ app.
Jay Z’s aim is to change the way music is streamed and to compete with dynamo Spotify, declaring that he, “didn’t like the direction music was going”. Instead, artists will receive more money through Tidal, with rumours that they will be paid double the royalties other music streaming services can offer – a controversial fact that has caused debate among many thrifty music service users.
Tidal will charge £19.99 per month for its service, with a cheaper cost of £9.99 to compete with Spotify’s premium price.
Co owners of the company include musicians Chris Martin and Calvin Harris, who both seek to push the business’ influence wider than its current use in 31 countries.
Tidal holds 25m high quality tracks and 75,000 music videos are available to its current 540,000 users.
According to a report issued by market research firm Mintel, Spotify is the current music streaming favourite, accounting for 87% of music streaming subscriptions in 2013, making it an attractive advertising destination for retailers.
The brand possesses a massive 45m free users and 15m paying subscribers, which has led retailer Sony to collaborate with the company to release its new Playstation Music streaming service. The venture has been launched in 41 countries and replaces Music Unlimited, Sony’s past streaming service. Once again, Spotify’s option is free, with advertisements available as a platform for retailers looking to profit from Sony and Spotify’s vast audiences.
The Spotify and Sony partnership is exclusive and will be a difficult alliance for Tidal to battle.
Will it work?
One major drawback for Tidal is the fact that British consumers appear less than willing to pay for music, even though it is included in inflation calculations. Mintel reported that only 24% of customers were willing to pay for Spotify’s service, meaning that the majority of its users experience advertisements.
Many are left unconvinced with the way Tidal will increase profits for artists but charge consumers more money. Several astute music listeners took to Twitter, with one individual posting the wealth of numerous artists involved (Madonna worth $800m and Jay Z - $520m).
While Spotify offers free options and a maximum cost of £9.99 per month, Tidal charges up to £19.99 each month. It all comes down to whether consumers are really concerned about the quality of music or would prefer the cheaper option which includes adverts - statistics suggest the latter.
Having launched in 2006 and with over £46m users, retailers can relax, Tidal has some catching up to do before it triumphs over its ad friendly competitor.