If nothing else, Jay Z has got the nation talking about music subscription services. Tidal, the music subscription service Jay Z acquired for $56 million through a purchase of Aspiro AB, has been covered everywhere from NBC’s The Today Show to NPR’s All Things Considered and everywhere in between. Not bad for the reboot of a high-definition streaming service that had previously — and quietly — launched in late 2014.
But Tidal’s re-launch, press event and overall message haven’t been a complete success. Much of the public and media were either cynical or confused that 16 wealthy musicians demanding higher royalties were leading a Castro-style takeover of a subscription service. A nod to the Cuban Revolution isn’t out of place here, especially given the tone of Alicia Keys’ speech at Monday’s press event. As Jay Z tells Billboard, artists involved in Tidal will be equity owners “in some kind of way” and will share in its success. Other commentators have noted that Tidal’s plan to release exclusive content could anger fans using other services.
Vania Schlogel, Tidal’s chief investment officer and chief industry liaison, sees things differently. Schlogel, who joined Roc Nation as chief investment officer in December after spending nearly six years with private equity firm KKR, says artists are being criticized merely for doing something different. “There is some bravery for what these artists are trying to do. It’s not to fill their own pockets, it’s to create a sustainable industry.”
Billboard: It’s 48 hours after the big announcement. How are you feeling?
Vania Schlogel: Everybody’s super buzzed and excited. It’s awesome because the proof of concept is out there, but there still isn’t much sleep for a while.
There was a manager meeting Tuesday morning with Guy Oseary (Madonna), Ron Laffitte (Alicia Keys), Ian Montone (Jack White), Lee Anne Callahan-Longo (Beyonce) and others. What was discussed and how was the vibe?
It was a great meeting — not that uncommon, obviously, because there’s not just one person who sort of makes creative decisions. It’s a real group effort. So we have these meetings very routinely. I think everybody felt really great about the fact that we’ve launched Tidal, and now there’s so much more to do — we can do anything. Like “Hey, can we do this, can we do that going forward?” Then we just stopped and realized we can do anything.
What we’re promising to people is, “This is gonna continue to evolve,” and we really mean that. We’re a young company, we just took control of it not that long ago, so if anyone is skeptical at all about, “Hey you don’t have that feature or that activity in it,” just bear with us, hold, wait, be patient and invest that time because the artists, me, everyone want to deliver something that’s going to be incredible and continue to evolve.
Were there specific questions or concerns by the managers?
Yeah, like, “Hey we want to reach out to some of the people who signed up for Tidal yesterday.” So that’s in the works. For example, there’s gonna be direct artist contact like, “Hey, thank you for supporting this.” There’s just been ideas about — without giving out any marketing plans to competitors — there’s been ideas around the artist showing up in places in an organic way to interact with people. It’s just been crazy the level of commitment to this and shows we’re so committed.
Why did you select Alicia Keys to be the spokesperson?
It’s almost self-evident, right? You just saw her charisma and talent when she was up there. Alicia was such a great artist, someone who stands for the values of Tidal. And on top of that, her being such an elegant and poised woman to deliver that message just felt right. We were all so happy to stand there with her and have her deliver that message.
The speech Alicia delivered that quoted Nietzsche and outlined Tidal’s mission, who wrote it?
That artist manifesto didn’t happen overnight. That was literally something that came as a group effort where everybody contributed. We really wanted that one to be something meaningful — not just to do it — and pay homage. We wanted it to be really significant and explain what Tidal is.
Explain the partnership with SoftBank and Sprint.
When the timing’s right we’ll put more meat to the bone there, for now we just feel like they’ve been very supportive in our discussions, and when the time is right we’ll unveil more of that. It was to say, “look they’ve been great partners to us thus far and we’ll continue.”
Jay Z indicated that there were a group of founding investors — can you confirm that it was 12 artists? Who was part of the second tier of four artists?
I won’t go into the details, but to us all the artists are important and they’re equally as committed to this. When it comes to the nature of their participation in the company, that’s someone else’s business.
What happens to WiMP, Aspiro’s original subscription service?
We’re rationalizing the brand portfolio, and basically allowing the WiMP subscribers to migrate over to Tidal. We didn’t want to yank the rug out from anyone and say, “Wow, your service is shut off.”
So the 540,000 subscribers figure you shared last week, where do those come from?
WiMP and Tidal, all those subscribers, are from the holding company, Aspiro.
What will royalty rates look like?
Because there isn’t that free tier, the royalty payment on a per-stream basis will be multiples higher on a per-stream basis than services that offer music for free. That’s point number one. Point number two is artists that join — when it comes down to it, technology is distribution, what they bring is the art. And without their art and their content, this distribution is meaningless. So it’s important for us fundamentally that artists participate in the equity of this company. Number one, they’re gonna be paid multiples higher than on a per-stream basis. Number two, they’re gonna be participating in the equity upfront, and that’s a real, core tenet.
Some critics are already saying that yesterday’s announcement looked like a meeting of “music’s 1%,” that these were just superstars looking to make themselves richer. What would you say to that perception of Tidal?
I would almost say it’s the reverse of that. Ok, these are established artists who care enough about the sustainability of the industry, stepping out on a limb and doing this. Of course there are going to be people who are cynical. But look, at the end of the day, if any established artist goes out and gets an endorsement deal — no one’s gonna criticize them for that because that’s how they make money. But if an established artist goes out and steps outside of the box and says, “I’m trying something different,” that invites criticism. There is some bravery for what these artists are trying to do. Its not to fill their own pockets, it’s to create a sustainable industry.
By virtue of that definition, because that is our thesis, if we’re not treating music like a loss leader, then that’s good for indie artists, emerging artists, songwriters, producers. Music is a whole industry and it takes money. The reality is it takes money to create music. It doesn’t just happen for free. We want to make sure music continues to be made, that songwriters are able to actually write songs rather than having to say, “I do a 9-to-5 in New York, and don’t have time to write songs. That doesn’t make it a sustainable industry.
Among the exclusives available at launch on Tidal, you were able to secure Daft Punk’s obscure short film Electroma, which isn’t available on any other digital video service.
That just shows the belief that Daft Punk has in this movement that we’re doing. And, by the way, that’s such a great illustration. Artists of this caliber, they could go out and do a big licensing deal and have their content go out that way, rather than including it in a platform that is just starting up and is nascent. This isn’t about the artists trying to make money, this is about the artists trying to say, “You know what? The world catalog of music is at your fingertips. Yes, that’s something that, if you really care about the music and the artists you support, then you’re gonna want to subscribe to this service or other services instead of pirating their music.” That kind of fundamental thinking is important to understand.
What do you hope Tidal accomplishes this year?
We need to fundamentally change the discourse that we’re all — and I’m not making this an indictment — that everybody has been trained to think that music is this cool thing in marketing used to sell other things, that music doesn’t have a value in itself. And it’s like, no we can’t do that, we can’t allow that to be the conversation in how things are going. Everybody else gets up, we go to work and do our 9-to-5, we get paid. Intrinsically music itself has a value. It doesn’t just have a value because it sold consumer electronics. We all feel that emotionally, and now it’s just making sure we marry up that emotional connection with the real understanding of all that’s gone into the industry and gone into making that song continues to produce a sustainable music industry.
You were most recently at private equity firm KKR. Did they have a role in investing in Tidal?
No, this was a purely personal passion of mine and something I really wanted to do.