When was the last time you bought an album?
As a music fan, I buy albums all the time. Unfortunately, I’m in the minority, as most people stream albums through services like YouTube, Spotify, and Apple Music instead of purchasing physical/digital albums or individual songs.
Music streaming is now the single-most popular way to consume music, to the point where a musician can now rank on the Billboard sales charts without ever selling a single album. Yet when there are multiple streaming services, all with the same tens of millions of songs available to listen to on demand, what makes them stand out?
Spotify offers a free, ad-supported service, which lets users hear a few songs before bombarding them with ads. Apple Music, a paid-only service, touts their curation and timed artist exclusives as a selling feature. Yet Tidal, the streaming service owned by Jay Z, flaunts their higher-quality audio and unique artist exclusives as a selling point.
Tidal has a way to go to catch up to Spotify and Apple Music. The service reported late last year that they currently have 3 million paid subscribers, a lot less than Spotify’s 40 million and Apple Music’s 20. Yet the company has something new to celebrate: a $200 million investment from Sprint ($S).
Why would Sprint, a phone service company, pay that much money for 33% of a less popular music streaming app?
Mobile phone services like AT&T, Sprint, T-Mobile, and Verizon all offer relatively similar products for the same amount of money. To compete with each other, each company is attempting to diversify their business and become more than just a phone company.
AT&T, for instance, purchased DirecTV and is currently trying to buy Time Warner for their entertainment properties. Verizon owns AOL, and they’ll likely own Yahoo by the summer. This puts both companies in the content business. It also lets them use said content to keep customers engaged and make money on things other than phone services. Now that Sprint owns part of Tidal, it lets them make money on Tidal subscriptions while keeping their customers entertained with exclusive content.
What do Sprint and Tidal customers have to gain?
In the press release for Sprint’s investment in Tidal, the company announced they were setting aside $75 million for future exclusive releases on Tidal. This helps the company continue to be the only place to listen to artists like Kanye West, Jay Z, and Beyoncé.
At the same time, the press release also mentioned exclusive content just for Sprint subscribers. This would mean Tidal subscribers who also subscribe to Sprint would see a different Tidal than non-Sprint customers. This could be seen as an incentive to join Sprint…or subscribe to a new mobile service entirely.
What does this mean for the future of Tidal?
Last year, several executives left Tidal’s parent company, Aspire, and it looked like the end for the streaming service. Now that Sprint bought 33% of Tidal, the company can continue to exist without worrying about closing up shop. They now have more money to spend on content deals (having all that music doesn’t come cheap). They will likely get more advertising through Sprint, and will see more Sprint customers use their product.
For a while, Apple and Samsung were in talks to purchase the company outright. While those companies can still buy Tidal, Sprint and their parent company, SoftBank, would be in the position to make a monetary gain from such a purchase.
Tidal has 17 million fewer paid subscribers than Apple Music and 37 million fewer paid subscribers than Spotify. They have a lot of catching up to do if they want to be anywhere close to their direct competitors. Yet with more exclusive releases in the future coupled with a soon-to-be-growing audience, Jay Z and Sprint’s platform could become a formidable competitor by the year’s end.