I’ll be honest, my gut reaction – when hearing the reports that Apple is in exploratory talks to acquire Tidal, was "well, that would be great for Tidal."
After all, the music service owned by Jay Z, has been besieged by issues in its first year. After a disastrously tone-deaf launch, the business side of the service has been plagued by executive changes. Then there are the lawsuits – both on the business side and even from some of its users.
Yes, the service has managed to grab some flashy streaming exclusives, but the service has also struggled from tech fails with those exclusives.
That isn’t to say Tidal hasn’t had some big wins in 2016. It had a brief exclusive window on Rihanna’s album ANTI and is the only place you can legally stream Prince and Beyonce’s Lemonade.
But the truth is, 15 months after the service launched, most people still don’t even know what it is. I mean, even Jay Z sometimes forgets he has a streaming service.
With just 4.2 million subscribers, Tidal is dwarfed by Apple Music (15 million subscribers) and Spotify (100 million users, 30 million paying subscribers).
So yes, I can see why Tidal would want to sell to Apple. Competing against Spotify and Apple Music is tough – and that’s before we even discuss YouTube.
The music streaming space is already overly-crowded and as Rdio taught us, having a good product isn’t enough.
The bigger question in my mind is what would Apple Music get from Tidal? And the answer here is a lot less clear.
Why would Apple care?
You might think that the easy answer would be, “Well, Apple will get all those Tidal exclusives and catalog content.” Maybe. The truth is, as Dan Frommer at Recode notes, most of those artist and label deals would probably expire after an acquisition. In other words, there is no guarantee that Lemonade or Purple Rain would immediately transfer to Apple Music – if Apple were to even buy the company.
Granted, the fact that Tidal’s bevy of big-named artist “co-owners” would now get some Apple stock would probably entice them to sign new contracts.
It probably does stand to reason that buying Tidal would help with Apple’s ongoing courting campaign of major artists. Tidal has successfully positioned itself with upper-tier artists as the anti-Spotify when it comes to royalty rates. That brief spat with Taylor Swift notwithstanding, Apple Music has made much of the same play.
So maybe this could be about buying goodwill from the music community in the hopes that major artists give streaming exclusives to Apple Music and just forget about Spotify altogether. I mean, it worked with Swift.
And then you have the subscriber figures. Tidal has 4.2 million subscribers. Now, this isn’t enough to compete head-on with Spotify or Apple Music, but it’s not inconsequential.
While Apple Music's 15 million subscribers is an impressive figure – especially since the service is only a year old — but it’s still half of what Spotify counts as paying subscribers. Adding another 4 million users to the docket definitely shrinks that gap.
Still, I can’t help but think 4 million users might not be enough unless the selling price is extremely low.
And that might just be the real reason. Perhaps this would be as simple as Tidal needs a buyer and Apple is willing to be there. Tidal was in talks with Samsung to sell the service to the Korean giant, but those fizzled out.
Spotify doesn’t really have a cash position to make an acquisition like that – and the value Tidal has for Spotify makes even less sense than it does for Apple.
So maybe, if this were a $200 to $300 million deal, I could see Apple buying Tidal. Gain 4 million new subscribers, build better relationships with marquee artists, possibly get access to some major streaming exclusives.
I guess that could make sense.
But I still can’t help but feel like this is a deal that looks great for Tidal and pretty meh for Apple.
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