Tidal is Jay Z’s most ambitious venture yet—an effort to profit in an arena that’s thwarted not only other musicians but startups and venture capitalists, too. Many artists are unhappy with the economics of streaming, notably Taylor Swift, who pulled her albums from Spotify last November. Jay Z wants to do better on two levels. Tidal pays record labels and music publishers a higher royalty—75 percent of revenue, vs. Spotify’s 70 percent, boosting the value of music on the Internet, including his own. And as a large shareholder, he could sell off his stake at a profit if outside investors give Tidal a valuation approaching those of other digital-music platforms such as Pandora and Spotify.
Another possibility is that Jay Z, who declined to speak to
Bloomberg Businessweek, will lose his entire investment in Aspiro, Tidal’s Norwegian parent company, which he purchased in March for $56 million. In streaming, he has formidable rivals. Spotify, the 9-year-old market leader, is valued at $8 billion, and it loses money. Three-quarters of its more than 60 million members use its free, ad-supported service rather than paying $9.99 for a monthly subscription. Smaller players such as Deezer and Rhapsody also lose money but have managed to stay afloat. Apple is expected to introduce its own product using Beats technology later this month at the same $9.99 subscription price—but the $757 billion company can afford to break even or even lose money on music as long as it sells more iPhones, iPads, and watches.