“You have a music streaming service, don’t you?” asked the questioning attorney. “Yeah, yeah. Forgot about that,” replied Jay Z.
So what’s the way forward? Most agree that the company is in great need of strong management. Tidal has churned through two CEOs -- Andy Chen and Peter Tonstad -- since March, and sources say many of its executive functions are handled by staffers at Jay Z’s Roc Nation. (Tidal reps declined to specify its current management structure.) Multiple industry sources say the company suffers from poor communication and little interaction with labels, although Tidal senior vp Tim Riley disagrees, telling Billboard that Tidal “maintains constant communication with its label and distribution partners.”
If the 1 million-subscriber number is accurate, it comes with a caveat: Tidal has added about 490,000 subscribers in the Jay Z era. Approximately 510,000 already were onboard when he acquired the tech company Aspiro and its subscription service WiMP, which launched in the United States under the Tidal brand prior to the acquisition.
Even so, gaining 490,000 subscribers in six months is an achievement for this relatively small company, and Tidal’s high-definition, lossless-audio option, which costs $20 per month, seems to be helping to differentiate it from peers: Riley says 45 percent of new subscribers opt for lossless.
And from a purely financial standpoint, Jay Z, 45, may have already made his money back: $56 million was not a huge price for a fully functioning streaming service. He paid $110 per subscriber, a fraction of Spotify’s $425-per-subscriber valuation at its last funding round; Deezer is hoping its upcoming initial public stock offering will fetch up to $330 per revenue-generating subscriber.
“Tidal’s selling price was a bargain for a legally licensed and vetted ingestion engine, with multiple territory and currency support and an active recurring transaction engine,” says digital music consultant Vickie Nauman. "Regardless of the number of subscribers, the infrastructure is incredibly difficult to build, fraught with deep industry problems and complexity, and would take years to build from scratch." (Although Tidal has been shopping itself, according to an industry source, an acquisition or merger doesn’t appear imminent. Another source downplays rumors of a deal with Samsung after a photo circulated of Jay Z exiting the company’s Silicon Valley office.)
Of course, the service's artist-owned status is a major selling point to the creative community. "Jay Z knows what it is from all three sides of the game: He’s a writer, he's an artist, and he’s also an executive,” says Ne-Yo, who’s collaborated with Jay Z in the past. "He knows the struggles; he’s fought them himself."
Tidal also has many in the industry rooting for it. Like Apple Music, it represents a paid-only business model that contrasts with the contentious “freemium” model employed by Spotify and, outside the States, Deezer. Rather than use free, ad-supported music to lure subscribers, Tidal is attempting to draw customers through such perks as exclusive content (like Lil Wayne and Rihanna songs) and early access to concert tickets.
“We want it to do well,” says one major-label executive. “It’s artist-backed, gets interesting exclusives, and Jay is taking on Jimmy Iovine at his own game. But they need a real player running it.”
Additional reporting by Andrew Flanagan
An edited version of this article first appeared in the Oct. 31 issue of Billboard.