On-demand music service Tidal has relaunched with much fanfare. The service, which includes Aspiro’s rebranded WiMP music service, is backed by a host of celebrity musicians. Tidal’s main selling point is its new $19.99 premium tier, which offers high fidelity audio, in addition to its standard $9.99 standard quality subscription tier. Both tiers offer a free 30 day trial period.
Jay Z’s company Project Panther acquired Tidal and its Swedish based parent company Aspiro for $56 million in January 2015. Tidal’s backers aim to provide a better deal for artists and songwriters by providing greater royalties than existing alternatives.
Tidal is available in US, UK, Canada, Netherlands, Belgium, Luxembourg, Finland and Ireland and claims less than 12,000 paying subscribers, while WiMP is available in Denmark, Germany, Norway, Poland and Sweden and boasts more than 500,000 paying users.
In a market filled with a wide variety of on-demand music services, Tidal aims to differentiate by offering exclusive content, high fidelity music, and a better deal for artists. However, services such as Rdio, Deezer and Spotify, who have subscriber bases in the millions, already offer similar features. Deezer for instance, offers its Deezer Elite premium offering exclusively with Sonos in the US. Moreover, the use of exclusive content in music has no clear track record of driving new paying subscribers (particularly when compared to freemium offers or operator bundles), making exclusivity a questionable strategy to undertake.
No music freebees with Tidal
Making it even harder for Tidal to compete against larger music services, Tidal will not offer a freemium tier, potentially deterring users from trying out the new service – Tidal may well be too optimistic if it hopes to charge customers double the typical $10 a month music subscription fee. Tidal’s $20 a month price tag may only appeal to die-hard fans, with the vast majority users opting not to pay.
Mobile operator partnership in the works
Rumors have also circulated that Tidal will be partnering with Sprint and Sprint’s Japanese parent company Softbank. If true, Tidal’s tie-up with a mobile operator could help it go head-to-head with other operator-partnered music services such as Beats (AT&T) and T-Mobile’s Music Freedom service. Aspiro has a strong history of working with mobile operators, its original WiMP music service was designed as a white label offer that was marketed by operator partners including Telenor (Pakistan, Norway and Denmark) and T-Mobile (Poland).
Competing against Apple et al won’t be easy
Tidal will not only be competing against standalone streaming music services like Spotify and Deezer, who have well-established brands and large paying subscribers bases, but also against heavy-weight tech giants like Google and Apple. With huge resources and capital at their disposal, Apple and Google present a formidable challenge to smaller players like Tidal wishing to enter the market. Apple and Google, which are in the business of selling devices and search advertising, can run on-demand music services as side-businesses as long as it helps them to sell devices and keep users within their ecosystem of services and products. Tidal will need to navigate a difficult road if it is to compete against established music brands, which already use differentiating features to sell their services.
There is big money in the on-demand music business
On-demand and subscription music services are growing. IHS research indicates total online music subscription consumer revenues in North America and Western Europe reached over $1.1 bn in 2014 and forecasted to increase to $1.7bn by 2018 as consumers shift towards on-demand services.