A Marketer’s Take on TIDAL: Why I’m Not Bullish

 

Tidal Launch Event NYC #TIDALforALL JAY Z seems adamant on changing the musical landscape through Tidal, his new streaming platform, but will his execution lead to its painful demise?

 

On March 30th JAY Z, accompanied by 15 of the most successful musical acts on the planet, rolled out the second iteration of Tidal – a music streaming service set to rival Spotify, Pandora and the likes. Labeled a game-changing “movement” by the Roc Nation head honcho, Tidal’s business objective is rooted in reestablishing the “value of music” and protecting “the sustainability of the music industry rooted in creativity and expression“.

The platform, originally launched late 2014 under the umbrella of Swedish tech company Aspiro, boasts high-quality sound (Hi-Fi), platform-exclusive music releases and editorial content from music journalism’s notable scribes, as its key selling points. Tidal’s ownership clan aims to use their tech innovation to impact the industry by allowing artists to obtain higher royalty rates than competing platforms, by directly connecting artists to their fan bases via exclusives (i.e. – The Player’s Tribune) and by absolving a dependence that artists once had on music distribution companies/labels to cash in on their art.

This attempt is very honorable, and JAY Z & co. should be applauded for the crack they are taking at building a viable solution. My opinion, echoed by the growing sentiment from industry influencers however, is that Tidal is just not feasible (as is). The Henry Ford, “faster horse” approach – that is being exhibited – will lead to a slow, steady demise of the streaming newcomer, in my opinion.

Why you may ask? The execution of the platform, from a pitch and product offering standpoint, is flawed and alienates the two demographic that they rely heavily on to really move the needle: the listener, and the average artist.

The only way to compel artists enjoying nice checks from other platforms to pull their music and make it exclusive to Tidal, which will really help an artist-owned company impose its will on the industry, is through customer acquisition. That means the benchmark for Tidal to truly pose a threat to top streaming platforms is a little south of 60M+ active subscribers, or 10-15M paying users. You don’t reach that level of scalability by ignoring the concerns and needs of the average music junkie, which is what they are essentially doing.

Here are a couple of issues with Tidal that have hurt my confidence in its ability to be a viable alternative to the Spotify’s, iTunes’ and Rdio’s of the world:


The Pitch

Robin Hood, Gone Wrong

The pitch of the new platform was bringing back ownership to the creator and putting more money in the pockets of the artists. It essentially came off as disingenuous; a bunch of wealthy artists trying to overcharge their fans with the intent of adding millions to their collective, billion dollar-valuation. Two things, from a marketing standpoint are important here:

  1. Fans, probably fighting for equity in their own day-to-day lives, frankly don’t care about improving the financial standing of the JAY Z’s and Kanye’s of the world. They only care about the music, irrespective of the medium that brings them closer to it.
  2. The value proposition for the average musician is extremely unclear, as the platforms benefits only compromises these musicians in other areas

Dave Parrack dove deeper into this point, via MakeUseOf.com:

The problem is they’re all already massively rich and successful. If you want to persuade people that Tidal is some kind of revolution aimed at giving the power back to the musicians, don’t invite a host of already successful artists on stage who are collectively worth billions of dollars.

JAY Z would have been better off inviting up-and-coming musicians, who haven’t yet got record deals, or who are struggling to find gigs. That would have suggested Tidal is being run by and for musicians, and not by and for a rich cabal of artists who don’t need another revenue stream to pay rent.

And, of course, opinions from on social media mimicked these same points:

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The Product

Differentiation?

Despite claims of a better music experience, Tidal doesn’t do enough to differentiate itself from competitors. The user interface, as many have pointed out, is pretty identical to draws staunch comparisons to both Spotify and Beats Music. Curated articles and HD music videos are neat, but with a wide variety of readily available content (in high-quality videos, artist interviews, music analysis) on the net – plus exclusives pushed out by artists on social media – the value of “BTS” videos and tailored editorial pieces has diminished.

The lossless hearing, Hi-Fi technology that has been heavily promoted isn’t actually an advantage for every listener. Noticing the differences in sound quality isn’t as easy as one would think. In fact, for some it takes more than careful listening to catch sound disparity. According to LifeHacker, you would need an incredibly finely tuned ear, (that of an audio-engineer) and some high quality headphones to really enjoy the experience. I tested it out for myself, with the help of some Beats Solo’s, and my results were pretty underwhelming (below). Want to see if you can tell the difference for yourself? Click here for Tidal’s sound test.

 

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Price Disparity

For every supposed advantage above, one must ask him/herself: Does it justify paying double (or for me, quadruple) the rate of your current streaming service? While Tidal offers a basic sound experience package for $9.99, its hope is that the higher quality sound with help them convert listeners to their platform. This option is currently $19.99.

What’s more alarming than the inflated price is the fact that they hadn’t offered a free, no-strings-attached, trial for listeners to experience. The option available now, 30 free days of listening, requires a credit card before one could experience the technology. From a marketing standpoint, that will hurt their cause tremendously. Listeners, especially millennials, have grown so accustomed to piracy and the expectation that albums will be released via stream for free. It is unrealistic to think you can convert happy customers to your platform by forcing them to pay for the opportunity to experiment with your technology.

If confident in its offerings, I would recommend Tidal give a free week of music for all – credit card input not required – to help listeners find value in its service and convert. Beats Music offered 14 free days (without ads), which did a lot to pry me away from Pandora back in 2014. Spotify’s freemium option, coupled with familial and educational discounts, goes along way as well. The freemium model is something Tidal has vowed against, a grave mistake in my opinion – from a practical and strategic standpoint.

 

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via BillBoard Magazine’s review of how JAY Z’s Tidal service fares relative to “competition”

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“Jay Z’s Tidal Is Great for Artists, But Maybe Not for Fans”, via Wired.com

Their inability to understand how valuable models like these are for acquisition, and how important they are for the consumer, is discouraging. Maybe they do understand, but are adamant in ignoring the data in favor of anticipating what their demographic likes, dislikes and needs. Tidal’s Chief Investment Officer, Vania Schlogel, exhibits some of this perversity in an Q&A session with students at the Clive Davis Institute of Recorded Music:

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Hidden Data Costs

Flown under the radar is the impact that Hi-Fi music has on your cell phone’s data intake. Data has gotten more expensive, unlimited plans are scarce (+ come at a premium), and providers are now capping customers at certain data rates, before charging extra.

FLAC files and HD music videos carry a lot more bandwidth, so wi-fi (or an unlimited data plan) is essential for listening with Tidal on-the-go. If not, you’re subjected to less streaming/downloading for “offline playback” ability than Spotify, albeit taking up the same amount of data.

 

Limited Exclusivity

JAY Z has reportedly gifted each of his musician co-founders a 3% equity stake, in exchange for releasing exclusives on the platform. Under the huge assumption that these artists flex their guns and remove all music collateral from other streaming platforms, is this still enough to cause industry concern?

TechCrunch’s Josh Constine spoke about this in his great analysis of Tidal’s miscues. Company equity isn’t scalable, so how does JAY convince other artists – with less access to capital that can’t afford to turn down streaming royalties from other platforms – to leave money on the table and give exclusive rights to Tidal? Doing so could mean less promotion for the average artist’s music (as Tidal’s user base is still growing), less revenue (despite the higher royalty rate Tidal promises), and higher piracy (as fans would be forced to resort to any method of obtaining the music necessary, if Tidal invokes this barrier to access).

 

 The Conclusion

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Tidal falls short of justifying its premium price tag, as it doesn’t provide a viable solution to music consumption/distribution challenges. In my opinion, it is flawed and hasn’t compelled the average artist and (more importantly) the listener to join in on the revolution.

Tidal claims to put artists in the driver seat and give them a viable option to monetize their music. But other than the elite artists that benefit from equity, and have the capacity (via other income streams) to keep their music exclusive to the platform, how can the other 95% of musicians capitalize from this service? The answer is unclear.

In regards to the consumer, the main differentiation point that Tidal offers is clout. It doesn’t seem like the marketing strategy was developed with the costumer in mind. And to reiterate, an artist-owned streaming company is only as strong as its user base. The customer goes wherever the product they covet can be found. In this case the product is the music, not the brand that these mega music celebrities have amassed. Thinking fans will jump ship, from convenient listening situations, to pay more money in support of their favorite artists ignores reality.

An emphasis has to be on addressing the needs of your constituents, as paid subscribers are the only way JAY Z & co. could help the average artist reap a much deserved return on their music investments, in today’s unfavorable music landscape.

The power is in the people; give the people what they want!