Not a Tidal wave

Streaming Subs

The smartest (business) man in hip hop, Jay Z, says Schibsted ASA, a Norwegian media group that sold him Tidal Music service (a year ago for $56 million) had inflated subscriber numbers and were disingenous when they sold him the company. So he is suing them and wants to be compensated for the damages caused by their lies.

Regardless of who you believe, the question that we should be asking: What kind of due diligence was done before Jay Z bought Tidal? Or was he (and his business group) so blinded by the opportunity to make quick cash that he overlooked the details?

To me, Tidal was nothing but a bought-to-flip company, which had little or no chance against Spotify and Apple. There wasn’t much to the service, and Kanye West isn’t enough for me to sign up for the service. It didn’t have the software chops. It didn’t know how to use data to drive usage. Tidal was a AAA baseball team trying to compete with the major leaguers. Tidal will not even be a footnote in the history of streaming music.

And if that isn’t enough, Amazon is coming hard for the streaming music business. By using Amazon Prime as a lure, it will be going after Spotify and Apple’s business. Spotify has 30 million paying members and Apple has 11 million. Tidal says it has 3 million subscribers. Amazon, according to Macquarie Captial analyst Ben Schachter, will have 62 million Prime members around the world at end of 2016 and 122 million in 2020.

How serious is Amazon? Well, they just hired Lucian Grange, formerly of Universal. Bob Lefetz, one of the most astute observers of the music industry, in a recent piece pointed out:

Amazon is on the cutting edge with its Echo, you can call up a song right now, they just need someone with music business expertise to show them the path forward…. Amazon is not buying Tidal. And certainly not Pandora. Tidal was bought to be sold, but just like Pandora, no one wants itThe rumor that Amazon will buy Spotify is untrue. It’s not Bezos’s style, he likes to grow products in-house….Music is just a pawn in the techies’ game. 

Jay Z miscalculated when making the Tidal acuqisiton last year. The idea that a few artists and higher fidelity streams, combined with a lot of hype and publicity, could turbo charge Tidal to a quick flip was simply misplaced. The attempt to recoup some of the original investment is much like beating the ground with a stick long after snake has slithered away.

Update: So Lucian Grange leaving Universal was an April Fool’s joke. It was a great one for like a boob, I fell for it, since well, I sort of thought Bob was beyond such shenanigans and took him at face value. It pains me but from this point forward I will doubt what he has to say, lest it be a joke.

Regardless of the faux Grange news, Bob’s comments about Amazon are true and we have not factored them into streaming music conversations just yet. And yes, Tidal is still screwed and still in the last place. Joke if any was on JayZ when he bought it for only $56 million.

April 1, 2016, San Francisco

A letter from Om

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