Consider this: Kanye West, one of the biggest artists on the planet, released a new full-length album this month; 10 days later, it hasn't made the Billboard 200 chart.
That's because Tidal, which has the exclusive digital rights to West's album "The Life of Pablo," would not share streaming data with Nielsen. If it did, the numbers would almost certainly be very low.
Tidal launched almost one year ago, in March 2015. Jay Z (Shawn Carter) acquired it when he bought the Swedish "lossless streaming" company Aspiro last year for a reported $56 million. ("Lossless" is a file-compression technlogy that makes the track sound exactly as it does on a CD; standard streaming is only a very close approximation.) Tidal is often called "Jay Z's streaming platform," but there are 15 artists or groups that have equal equity stakes in Tidal: Carter, West, Beyonce, Rihanna, Nicki Minaj, Usher, J Cole, Madonna, Jason Aldean, Arcade Fire, Daft Punk, Deadmau5, Calvin Harris, Chris Martin of Coldplay, and Jack White.
Despite the star-studded lineup, the service has appeared to suffer setback after setback.
First, its much-hyped launch event did more to alienate fans than inspire them. What was intended as an effort to return control to artists instead looked like a bunch of rich mega-stars uniting to cheer for their right to make more money.
Tidal has gone through three CEOs in less than a year: Aspiro CEO Andy Chen stayed on at first, but Tidal let him go after one month; it then appointed a different Aspiro executive, Peter Tonstad, as interim CEO, but dismissed him in June; Jeff Toig, former chief business officer at the streaming service SoundCloud, took over as CEO in January.
In June, reports emerged that the artist Drake (Aubrey Graham) was initially signed on to Tidal but backed out at the last minute to jump ship for Apple Music. In October, Carter was asked to list all of his business interests at a deposition and forgot to mention Tidal—more bad optics. Amidst ongoing negative press since its launch, Carter has repeatedly taken to Twitter to defend the platform. In April, he said Tidal had 770,000 subscribers, and in September he said it had gone "platinum," reaching 1 million users.
Tidal has not provided any update on user numbers since Carter's tweet in October; the company declined to comment for this story and declined to answer basic questions such as how many full-time employees it has. TMZ reported that since West's new album launched, Tidal has ballooned to 2.5 million subscribers, but the report has not been confirmed.
Whether the number is 1 million or 2.5 million, it barely makes a dent on competing streaming services: Spotify has somewhere north of 60 million subscribers, with more than 20 million of them paying; Pandora has 80 million subscribers, 3 million of which pay; Apple Music says it has hit 11 million paying subscribers. Of course, on Tidal, all of its users are paying—there's no free version of the service. When it first launched, Tidal's cost was $20 per month, but it has since relented on that steep fee and offered a $10 option to be more competitive with Spotify. (Tidal still offers a $20 per month version to get the lossless streaming.)
As Carter has pointed out, Tidal's competitors have been around much longer: Pandora launched in 2000, and Spotify in 2006. Apple Music is newer than Tidal and already has three times the subscribers, though it benefits from a whole host of advantages, chief among them Apple's brand and that so many are already using its devices. So, can Tidal really grow to compete with these established incumbents?
The better question may be whether it should even try. Beats Music, the streaming service from Dr. Dre (Andre Young), reportedly had a meager 100,000 subscribers when it sold to Apple, but was appealing thanks to its hardware and its talent: Young and Jimmy Iovine, who were essentially acqui-hired by Apple. Might Tidal just sell? "It’s not two egos, like it was at Beats, it’s 16 or 17," says an executive at a competing major streaming service who asked not to be named. "I think Tidal will have longer staying power, more stamina," he continues, "but not more success. They will resist selling because of the egos. But as the industry consolidates, I think they will explore options."
The industry is not yet consolidating much. In addition to Spotify, Apple, and Pandora, there are options like Deezer, Google Play, Amazon Music, Rdio, Rhapsody, and others. Did the world need yet another one? If you ask that same music executive, yes—for now. "I think the smart people in the music industry do want multiple distributors," he says. "It creates a more diversified ecosystem where they can control the economics of the business. They're looking at it like, 'We don’t know exactly what the future of the industry will be, so the best thing is to be on multiple distributors. They aren’t looking to help crown a single kingmaker."
Indeed, some 60% of album revenue now comes from other sources than physical sales. That means if you're one of the rare artists refusing to allow your library on any streaming platform, like Garth Brooks (his music is on Pandora, but no on-demand services), you're shooting yourself in the foot—but you might still be doing that if you only put your music on one service. Marcus Mumford of the band Mumford & Sons, when asked about Tidal, told the Daily Beast, "We don't want to be tribal... What I'm not into is the tribalistic aspect of it—people trying to corner bits of the market, and put their face on it."
But that is what West has done with "Life of Pablo," and what Rihanna did with her latest album "Anti," and it has unquestionably hurt them. When Rihanna put her single "American Oxygen" exclusively on Tidal last year, the song got only 142,000 streams in the first week. In the second week, exclusivity ended, and it got 71,000 streams on Tidal, but more than 1 million each on Spotify and on YouTube. It was a stark sign of how she had shrunk her audience for the first week by giving Tidal the exclusive.
Taylor Swift has her music on Tidal and Apple Music, but not on Spotify. Perhaps artists like these are big enough that their devoted fans will go anywhere to get their music, but when being exclusive to a small, nascent service cuts you off from mainstream charts, it's a problem. Not all of the 15 artists with equity in Tidal have limited their digital music to Tidal; you can play Rihanna, Madonna, or Coldplay, for example, on Spotify, too. Rather, they have taken individual songs, or music videos, to Tidal exclusively. It has been rarer that they've exclusively posted entire albums there.
Tidal's value proposition is exclusive albums or singles (like Beyonce's "Formation," which is still only available on Tidal) along with exclusive video content. Music videos have certainly made a resurgence lately. But as streaming services increasingly resemble social networks, a service is only as valuable as its user base. If your friends all have Spotify, it might feel lonely on Tidal, exclusive videos or not. (In a Billboard survey of music industry executives last summer, more than 70% predicted the service would only last a year.)
The skimpy numbers so far for Tidal are more a statement on consumers than on the service itself: Tidal's interface looks good, and its music sounds good. Most people have simply already committed to one on-demand service, and they aren't about to pay for two.
So: Are Tidal's exclusives enough to lure people away from Spotify or Apple? If TMZ's report is true, then Tidal has seen a Kanye bump. It has certainly seen a bump in general buzz: Google searches for Tidal were five times higher right after the "Life of Pablo" release than they had been earlier in the month, and the app is No. 7 in the iTunes store for music apps. (Pandora, Spotify, and Soundcloud have the top three spots.)
But the bump may not prove sustainable. Any new users who signed up for the 90-day free trial just to hear West's album can easily cancel before the trial ends. If Tidal wants to keep cruising, it needs to constantly offer up exclusive goodies to hold on to new users. If it can't build up a big base, artists like West might eventually have to stop putting their friendship with Jay Z before their audience.
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Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology.
