Just over two weeks after its star-studded press conference, Tidal has fired 25 employees including CEO Andy Chen. This is a clear red flag; its re-launch was supposed to establish a new direction and the fact that the CEO has already been replaced by someone with a ‘clear vision’ shows that Tidal is in disarray. What exacerbates the situation is that Chen will be replaced by Peter Tonstad, former CEO of Tidal’s parent company Aspiro – if Tonstad has such a ‘better understanding of the industry’, why was he not made CEO prior to the re-launch?

Why would a company that has just embarked on a new direction embark on another new direction with new personnel? The answer is simple: Tidal is not connecting with the market.

The Numbers

Three weeks after re-launch and Tidal has crashed out of the top 700 apps in the US iPhone download chart. It had some initial success climbing into the top 20 downloaded apps, but any traction that it gained has now been lost. That said, there has been some suggestion of corporate espionage with Jay Z tweeting that ‘there are many big companies that are spending millions on a smear campaign’ and unofficial sources have stated that Apple has manipulated Tidal’s download numbers by being slow to approve the app’s iOS updates. It might therefore be fairer to check the numbers on Google Play Store. At the time of writing, Tidal is not within Play Store’s top 540 downloaded apps and it does not appear unless you manually search for it. In comparison, Spotify is Google’s 7th most downloaded app.

In his #TidalFacts Twitter session, Jay Z said that ‘Tidal is doing just fine’, that it has over 770,000 subscribers and that it has only been in business for one month. However, he failed to mention that it already had 550,000 subscribers prior to the re-launch. Disregarding whether these new members are people using the free one month trial or if they are early adopters who have anchored themselves to the platform, it must be noted that each of these artists can generate more sales figures in the first week of their solo albums than what Tidal has achieved in a month. There has therefore not been a conversion of fandom into membership.

Meaning of the Numbers

Yes it is just the first month of business for the revamped Tidal, but it is clear that consumers have not warmed to the platform. In an economy of price-conscious and value-driven millenials, consumers find no appeal in Tidal giving artists more money in exchange for expensive subscriptions, little exclusive content and lossless audio that only those with specialist equipment can truly appreciate.

Tidal is tailspinning into irrelevancy. It needs to change, but it will not offer a free subscription model because that would defeat its purpose. An exclusive Jay Z and Beyonce album could prevent Tidal from becoming washed up, but how will it fare when the pirates get their hands on the booty?

What Next?

Although it markets itself as a niche product, the fact that Jay Z compared Tidal’s valuation to the valuations of Apple, YouTube and Spotify shows that it wants to compete with the key figures in this industry; 16 of the world’s most renowned artists holding equity in Tidal also betrays its image of being a specialist service. Therefore, to compete with Spotify or another similar service, it must become more consumer-friendly. It currently adds no value, or at least not enough to detract a significant number of customers away from services which do offer a free membership.

The vital move would be to change its pricing strategy and offering a free membership would be most beneficial. On the face of it, this seems like it would defeat the purpose of Tidal, which is to give artists more ownership over their work, but do not forget the star power that the company wields. The advertising revenue that could be generated in a move into adtech to subsidise the free memberships would be extremely significant and the idea is that Tidal could scale up advertising fees alongside its growing membership. This is a long term strategy that could work but the artists would need to all buy in to the system for maximum effectiveness.

Another very promising feature would be to expand on the exclusive content, not just the music but on concerts and sporting events, as indicated by Jay Z’s recent tweets. To give consumers an experience truly distinct from its competitors, broadcasting live events for a one off fee in cinemas would be a novel way of moving far beyond what Spotify, Pandora etc currently do. A consistent schedule of live events would generate the excitement that the initial re-launch press conference warranted.

With the streaming market becoming increasingly competitive, Tidal also needs to bear in mind that the European Commission is currently investigating the competition aspects of a joint venture between German, UK and Swedish collecting societies (the bodies that manage copyrights in music on behalf of their members and who also licence the works out to companies like Spotify). If such a joint venture is successful, its dominance could increase the prices that streaming services pay which will ultimately benefit the artists and take away from the purpose of Tidal. Increasing membership and generating revenue so as to reduce the purchasing power of Spotify would protect Tidal’s position and, granted Tidal is still in its infancy, if Jay Z is honest about the company being in it for the long haul, this is certainly something that it needs to consider.

Conclusion

Despite what Jay Z says, it seems that the market is in agreement that Tidal is about the artists and not about the consumers. That is fine. Tidal is a business and it is supposed to benefit its stakeholders, but it must make itself more appealing to the customer and what it absolutely cannot do is continue with this current pricing strategy.

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