Tidal also hoped that its exclusive content would attract users. As a new, and late entrant, scale becomes very difficult to achieve for Tidal, made even more daunting by its smaller geographic footprint than its rivals. This is due to the high fixed cost nature of the business, meaning scale is the only way to reach profitability.
Spotfiy, which has a much larger user base, pays artists less than Tidal and has never been able to make a profit. First, the cost structure of this model is not scalable. It hoped that its artist-first ownership and royalty model (it reported to pay the highest royalties of any music streaming platform), was meant to be an attraction to gaining top talent that would then entice user subscription. Looking at how Tidal wanted to create value, it becomes clear why the platform struggled. 4 However, the success was extremely short-lived, and the platform quickly fell out of the top 700 apps within two weeks. The platform stated that it gained 100K subscribers just from the announcement of the artist co-owner list and catapulted to the Top 20 of the U.S. The immediate aftermath of the announcement seemed to prove the re-launch a success.
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It would offer the best sound quality of any platform, known as “lossless audio.” This would be available for $19.99 a month, while a $9.99 a month, with regular audio, was also a subscription tier.It would house lots of exclusive content (it re-launched with an exclusive single from Rihanna) and curated playlists by its owners.It would be the first music streaming service to be owned by artists (the service had many high profile minority owners, including but not limited to, Kanye West, Rihanna, Beyonce, and Jack White) who also committed to “changing the music industry.”.The platform wanted to distinguish itself on three dimensions: With Spotify and Pandora already in the market, Tidal needed to distinguish itself from the competition to gain any traction. 3 Two months later, Jay-Z re-launched the service with a huge marketing and PR push. Tidal was initially launched by Aspiro in 2014, but was quickly purchased by Jay-Z in January 2015 for $56M. Tidal’s “Re-Launch” and Value Proposition 2 Why has Tidal, which had the benefit of a famous owner in Jay-Z, faired so much poorly than its competitors? 1 Contrast this with competitor Tidal, which as of December, was reported be burning though cash and losing users, with enough working capital to last only six months. Spotify filed for an IPO last week, and analysts report that the offering will give the company a $23BN valuation on the back of 71 million paying subscribers and more than 159 million MAUs. While the streaming wars of online video have become a widely discussed topic, music streaming is not far behind.