The star-studded unveiling of Jay Z's new streaming music service, Tidal, had the unlikely overtones of a lefty political rally.
Beyoncé Knowles, Kanye West, Daft Punk, Jack White and Madonna took the stage to listen to Alicia Keys give a vague, stirring speech about the power of music, with quotes from Jimi Hendrix and Friedrich Nietzsche. Music's biggest stars appeared in a product-launch video that bemoaned the power of Silicon Valley, which stands accused of eclipsing the pop icons of the music industry.
"Right now they're writing the story for us," said Jay Z in the video. "We need to write the story ourselves."
Musicians of the world, unite!
Jay Z is following through on his rhetoric in one significant way. More than half of Tidal, which the rap star bought in January for $56 million, will be owned by the artists whose music it features. Many artists have felt cheated by the financial arrangements offered by dominant streaming services such as Spotify and Pandora, so an alternative that lines their pockets directly will be welcomed.
But if populism is Tidal's main differentiating feature, the newcomer faces challenges. No one on stage on Monday seemed the starving artist type, and there was no shortage of cynicism on Twitter as artists used the platform to hype the launch in the hours before the news conference.
Musicians vs. technology
As it stands, the economics of the music industry work well for consumers, even if things prove unsustainable in the long run. In exchange for enduring ads or ponying up a monthly price on par with a few lattes, listeners can access vast catalogs of albums from past and present that would have cost a small fortune to amass in the compact disc era. The record labels and pop stars have understandably resisted any additional downward pressure on prices.
Apple was unsuccessful in its attempts to offer a Spotify-like service for $8 a month, and there is increasing hostility among artists to free versions of streaming subscription services. Taylor Swift's decision last year to pull her catalog from Spotify helped turn the spotlight on this backlash. Tidal doesn't offer a free, ad-supported tier of service.
Tom Silverman, founder and chief executive of the record label Tommy Boy, sees the introduction of Tidal as the latest salvo in an intensifying conflict between musicians and the technology.
"These artists are sick of technologies devaluing their art into 'content,' and it seems like they're not going to take it anymore," he said. "I don't think it will end with Tidal."
Artists have an incentive to push consumers toward paid subscriptions, rather than digital radio or even worse, from Silverman's perspective-ad-supported services such as YouTube. In a recent analysis, Silverman found that the average revenue per user to the music industry for paid subscription services was $57, compared with $7.47 for digital radio and less than $4 for YouTube, Vevo and the free tier of Spotify.
Pursuing exclusive deals?
There's a significant challenge for the worker's paradise that is Jay Z's streaming music: Tidal expects consumers to willingly pay more than they do now. A month of Tidal costs $9.99 in the U.S. for desktop-only access, the same price as an ad-free Spotify account that includes mobile access and high-def audio. To add mobile service to Tidal, the monthly price jumps to $12.99. Want mobile listening and high-definition audio? Tidal wants $25.99.
So how will Tidal pitch itself as a better deal than other, less costly, paid services? There's a lot of skepticism about hi-res audio, which some experts believe is above the threshold of human hearing; most industry observers think it will be a niche product. It seems more likely that a star-studded service such as Tidal will focus on exclusive content, and senior record label executives told Bloomberg News that Jay Z's company is pursuing exclusive deals.
That could make Tidal similar to Vessel, a new video-subscription service that charges a monthly fee to watch videos before they are posted to YouTube. This kind of windowing would be relatively novel in music, although some artists have started to keep new releases from streaming services at first in a bid to drive record sales. Even then, however, artists will face a trade-off between cashing larger per-stream checks from Tidal while sacrificing the reach of competing services.
Whether people are willing to pay more for new releases or bonus content has yet to be seen. Streaming services are still having trouble getting people to pay at all — and turning those subscribers into profits. If Jay Z hopes to appeal to people's sense of justice, he's probably going to need a better pitch than guaranteeing that Rihanna will get a bigger paycheck.