Norwegian Report Claims Tidal Inflated Subscriber Numbers

Jay Z performs during TIDAL X: Jay-Z B-sides in NYC on May 16, 2015 in New York City.
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Jay Z performs during TIDAL X: Jay-Z B-sides in NYC on May 16, 2015 in New York City.

In a lengthy article published Friday (Jan. 20), Norwegian media outlet Dagens Næringsliv claims that Jay Z's company Tidal has been deliberately inflating subscriber numbers. The report says that although the company publicly touted that it had accumulated 3 million subscribers to its streaming service last March, a London-based record executive says they were told Tidal actually had 850,000 subscribers.

Dagens Næringsliv has made several similar claims about the company over the past year, particularly regarding legal battles between its current ownership and its former ownership, Swedish-based company Aspiro AB. In one particular legal filing, Tidal's complaint alleged that Aspiro's executives had misrepresented the number of subscribers the service had at the time of Jay's $56 million purchase, which was confirmed by Tidal, giving the paper some credibility on the topic. Friday's report goes into much further detail about the alleged inner-workings of the company that Dagens Næringsliv claims, without attribution, is losing as much as $70,000 per day.

A rep for Tidal declined to comment to Billboard.

The report details a degree of finger-pointing over who was dishonest about which numbers and who gave the order to do so. Jay's legal claim asserted that Aspiro execs were responsible for misrepresenting subscribers dating back to four years before his acquisition. Dagens Næringsliv, however, quotes former Aspiro and Tidal head of business intelligence Arthur Sund as saying this actually occurred after the takeover, intentionally, at the request of Roc Nation exec Lior Tibon by slowly activating 170,000 old and unused accounts from Denmark and Norway to inflate numbers. The report claims that at the beginning of 2016, around the time it says Sund resigned, that practice ended.

However, there are several reasons to question this report. For one, nearly every quoted source either left the company following Jay Z's acquisition, is actively involved in litigation against Tidal, or, in the case of one London-based record company director, outright states (according to Google Translate), "You can safely say that we are not particularly fond of each other." It also describes Jay Z as a crack dealer, Roc Nation exec Desiree Perez as a cocaine smuggler and Tibon as a former Israeli intelligence officer; while none of those descriptions are technically untrue, they are both devoid of context and leave out the fact that all three have been highly successful businesspeople for a decade or longer.

However, there are aspects that ring true, particularly when it comes to accurate subscriber numbers. Tidal hasn't released an updated subscriber number since that March 2016 claim of 3 million, which at the time also included those who signed up for free trials after the stop-start Tidal release of Kanye West's Life of Pablo. In May, the company confirmed to The New York Times that in the first week after the exclusive release of Beyoncé's Lemonade, 1.2 million additional people had signed up for the service, though again that came with an extensive free-trial promotional offering. That detail led to widespread reports that Tidal had 4.2 million paid subscribers, an easy mistake to make when the verbiage is carefully chosen as to almost encourage that conclusion.

However, the number of paid subscribers was always likely to be significantly lower than publicly stated. Last September, after Tidal's financials revealed a $28 million loss on $47 million in revenue, MiDia Research co-founder Mark Mulligan noted that based on its revenue, it was impossible for Tidal to have had north of 800,000 paid subscribers and concluded that it was likely it had closer to 2 million total users when including those on its free trials. On Jan. 6, Mulligan updated that figure to 1 million commercially active subscribers.

But while Tidal is likely still growing, albeit slowly compared to its competitors, 2017 will bring major changes to the streaming landscape, with acquisition rumors, new competitors and expected public offerings all set to reshape the sector. At this stage, many agree that the most likely scenario will see Tidal acquired by a larger company -- possibly Apple -- in the coming months.