Monday, March 30, 2015

Jay Z's Tidal music service makes star-studded splash

173415878.jpg Jay Z bought the parent company of Tidal in January for $56 million. Getty Images

Streaming music service Tidal relaunched Monday with high-quality audio at $9.99 a month as the artist-owned alternative to the likes of Spotify, backed by Jay Z and more than a dozen other top musicians.

The star-studded unveiling of Tidal will test whether streaming music's competitive field is still fresh enough for a flashy newcomer. Streaming music is growing rapidly, and companies like Spotify and Pandora cemented a lead in race by sprinting ahead early. Tidal's proposition -- high quality audio and video combined with editorial content in a service that is owned by the world's most beloved musical artists -- will ride on the success of branding.

The service will test whether its message of having artists' seal of approval will resonate with consumers. High-profile faceoffs like Taylor Swift pulling her catalog from Spotify have brought artist compensation to the fore.

The unveiling followed a day of celebrity hype through social media activity by high-profile artists like Kanye West, Rihanna and Madonna, and through a teaser video that brought together a dizzying collection of music megastars into one room.

Those musicians and more than a dozen others shared a stage to sign a document declaring them owners of Tidal. Alicia Keys called it "a moment that will forever change music history, the first ever artist-owned global music and entertainment platform."

However, the event didn't indicate whether those artists or others would contribute exclusive music to Tidal, which would make it the only place to hear some of the world's most popular artists. The event also announced a Tidal partnership with mobile carrier Sprint. Tidal representatives couldn't provide specifics.

Tidal is a subscription streaming music service, along the same lines of Apple's Beats Music and the paid version of Spotify. Purchased by Shawn "Jay Z" Carter in January in a deal worth $56 million, it offers high-quality definition sound for $10 a month, the going rate for most subscription streaming services. It doesn't have a free tier that will let people listen without paying by hearing ads. It launched initially in the U.S. in October, with the high-quality-audio tier costing $19.99 a month.

The star-power marketing frenzy of Tidal's relaunch is straight out of the playbook of Beats Headphones. It used celebrity placement of its headsets to amass 60 percent of the $1 billion premium headphones market, according to NPD Group. Tidal's relaunch under Jay-Z feels like the kind of streaming music service Beats would have.

But of course, Beats already has a streaming music service: Beats Music. Apple bought the company, both the headphones and streaming arms, last year for $3 billion. Although that price tag was impressively large, Beats Music's subscriber rolls weren't: it had about 250,000 paying subscribers at the time Apple agreed to buy it. That compares with Spotify's 10 million paid members at the same time.

Apple, which is reportedly planning a relaunch of Beats Music later this year, has not disclosed fresh user numbers for Beats since the acquisition. The refresh of Beats Music bodes more competitive pressure for Tidal, which will face rivalry not only from the first movers but also a revamped service powered by Apple, the world's most valuable corporation.

Tidal didn't provide subscriber numbers for its service.

Tidal's flashy relaunch raises the question of whether it can hit mainstream popularity with a clever branding strategy.

"It's very easy to overlook the importance of brand, but in a industry like music, brand really matters," said Andrew Lipsman, vice president of marketing and insights at researcher ComScore. He noted that consumers' increasing mobile device usage simply means people are listening to more music, which makes room for new offerings. However, lower prices and first-mover advantage are strong benefits on the side of Tidal's rivals, he said.

Russ Crupnick, managing partner of analysis firm MusicWatch, noted that star power will help to create some awareness, but with a myriad of ad-based free competitors available to consumers, Tidal will face the same challenge did of convincing people to pay that Beats grappled with. "You couldn't have more brilliant brand name, but they struggled for the same thing: to get any kind of awareness and usage," he said.

Consumers' shift to mobile listening also raises questions about the selling power of high-quality audio. Listening to music while walking down the street, riding in a plane or working out at the gym means that the higher-definition sound (already difficult for untrained earns to discern) may not be something consumers decide is worth paying for.

Update at 2:49 pm PT: with further details.

from CNET

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