Jay Z’s subscription-only music streaming service is apparently a big failure because the benefits of this new paid service were not adequately highlighted and communicated to potential subscribers in terms of technology and additional features. In other words, the music lovers developed a bewildered impression of Tidal of which the clear value proposition and positioning does not exist. Next, the music streaming service is a highly competitive business, which already has Spotify as a 9-year old industry leader with $8 billion valuation but it also incurs losses because its 45 million subscribers prefer using free ad-supported services compared to just 15 million paid members. In addition, Spotify also provides a better exposure to people for different kinds of music, which sets a clear differentiation and positioning compared to Jay Z’s Tidal, Pandora, Deezer, Raphsody and other free streaming rivals. Also, Apple has also acquired Beats to enhance its penetration into music digital streaming because of its strong back-end support through sales of iPhone, iPad and other devices. The core difference between Tidal and Spotify is in terms of artist-friendliness as Jay Z’s Tidal offers 75% royalty compared to Spotify’s 70%. The second difference is the inclusion of 15 global music legends in Tidal as equity partners including Madonna, Usher, Rihanna, Beyonce, Kanye West and others. Spotify, in contrast, doesn’t have this legend endorsement and equity ownership unlike Tidal as the latter aims to establish its image of an artist-owned digital music platform that would revitalize the value for music by creating a culture of paid music instead of free streaming (Leonard). The entry of Apple through acquisition will although be positive for the cause of enhancing music value by creation of paid music culture; however, it also means a threat for survival of platforms like Tidal, Spotify and others. Apple’s mobile business gives it a competitive advantage over Tidal and Spotify; therefore, the global cellular giant looks in a better shape to win the streaming music industry in the long run after acquisition of Beats (Dredge).
Dredge, S. What is Tidal and Why Should Music Fans Care? The Guardian, April 05, 2015. Web. http://www.theguardian.com/music/2015/apr/05/tidal-10-things-you-need-to-know-jay-z-madonna-music-streaming
Leonard, D. That’s Business, Man: Why Jay Z’s Tidal Is a Complete Disaster. Bloomberg Business, May 28, 2015. Web. http://www.bloomberg.com/news/features/2015-05-28/why-jay-z-s-tidal-streaming-music-service-has-been-a-disaster