Will Tidal Make Waves In The Music Industry Or Get Washed Out?

Editor’s note: Kelli Richards is the CEO of The All Access Group.

In late March, when a group of A-list musicians gathered in Manhattan to show support for Jay Z’s new music streaming service, Tidal, expectations were sky-high. The music stars, many of the brightest in today’s pop constellation, were selling an artist-owned streaming service that they affirmed would “forever change the course of music history.” But a lot has happened since then.

Tidal CEO Andy Chen was replaced in early April. Kanye West, Jay Z’s best pal and label mate, deleted all of his tweets about Tidal after its app tumbled out of the App Store’s top 700. Even though West — in true Kanye fashion — later reversed course and tweeted his support for the service, the damage had already been done.

In response, Jay Z pledged that Tidal is “doing just fine.” In a series of tweets (tagged with #TidalFacts), he revealed that the service has more than 770,000 subscribers. “The iTunes Store wasn’t built in a day. It took Spotify nine years to be successful….”

That may be true, but the prospects of Tidal upending Spotify in the near future are slim, no matter how many stars are persuaded to ride the wave. The success of Tidal depends on the deployment of a well-crafted strategy that will appeal to consumers beyond the splashy PR launch.

Premium Focus Must Be Backed by Content

After launching the initial focus on music at Apple and driving the vertical during my many years with the company, I understand first-hand how crucial — and challenging — rallying artists behind a product can be. And I’ve spent a fair chunk of my career beyond Apple helping established artists find new revenue streams to monetize their brands in a digital world.

So I commend Tidal for trying to revolutionize music streaming for artists. But I’ve also learned that even the most groundbreaking ideas don’t get very far if the consumer doesn’t come first.

Although Apple hasn’t launched its streaming service yet with Beats, we know a new product is near. If Tidal expects to siphon market share from Spotify, Apple, and other established services, it needs to offer unmatched value that justifies the stiff price tags.

Tidal Premium’s ad-free service plan has already jumped 30 percent since its launch when downloaded via the App Store, now carrying a $12.99 monthly fee. Similarly, Tidal’s lossless HiFi service costs $25.99 per month in the App Store. These are steeper fees than the competition charges. The only way for Tidal to pull this off is by delivering on its pledge to provide exclusive artist content that music lovers can’t find anywhere else. But even with that approach, the exclusives will likely have a fairly limited window.

Peter Tonstad, Tidal’s current CEO, told The Wall Street Journal that the industry is shifting away from the freemium model — every popular streaming service except Tidal offers a free tier — and that Tidal is confident that customers will pay for exclusive content.

“It’s going to be the content richness, deep-diving into individual artists. It’s going to be a combination of content and artist engagement that we put on the platform, or that the artists publish themselves,” Tonstad said.

In the wake of whisperings that Tidal was already a flop, rumors began circulating that Jay Z and Beyoncé will release a joint album on Tidal. This is the type of content that Tidal needs to be relevant and differentiated, but it will take more than one of these projects to create loyal customers. Consumers will expect ongoing enticements in exchange for their hard-earned cash each month.

The Pros and Cons of Celebrity Backers

Tidal places a huge value on artists and the music they create, and that bodes well for both artists and consumers with a desire for conscientious consumption. Many fans have personal, emotional responses to music and don’t want to hurt the artists they adore; in fact, they’d really like to have confidence that most of the money they spend is going directly into those artists’ pockets.

But not many people are worried that Jay Z and Kanye are suffering financially, so the theme of “by artists for artists” is hard for many consumers to swallow. Still, if the big names who showed up in Manhattan in late March end up supporting Tidal with exclusive content on an active and consistent basis, the gambit might pay off. It’s all about meeting and exceeding consumer expectations.

Tidal already has some exclusive content lined up. Rihanna released two songs on Tidal, Madonna debuted a teaser for an upcoming video, and the service features some non-music exclusives: “They Die By Dawn,” a Western from Erykah Badu, and “Electroma,” a 2006 film from Daft Punk. Tidal also has someone Spotify doesn’t: Taylor Swift.

The music industry is complicated, to say the least and it involves many players beyond artists and consumers. But at its core, it’s a business, and no business can thrive (or even survive) without offering consumers competitive value. Jay Z has a respectable vision to bring more power to artists, but the consumer must come first for a business to last.

If the artists currently on board (and the others who follow) continue to give consumers what they want — exclusive content they can’t find anywhere else — then Tidal has a chance to make waves in the music streaming space. If not, the established players will wash it away.