Tidal, Music Streaming Service, Seeks Footing After a Stumble

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From left, Usher, Rihanna, Nicki Minaj, Madonna, Deadmau5, Kanye West, Jay Z and J. Cole are among the artists who own a stake in Tidal.

Credit... Sam Hodgson for The New York Times

By Ben Sisario

May 1, 2015

As a celebrity-studded, headline-grabbing product release, Jay Z’s unveiling of Tidal was about as big as could be.

Standing on a Manhattan stage with Madonna, Kanye West, Jack White, Nicki Minaj and nearly a dozen other stars, Jay Z introduced Tidal on March 30 as a streaming music service to challenge Spotify, Apple and Google. In a twist to the usual ownership of music apps, the artists — not Silicon Valley financiers or big entertainment studios — would control a majority of the company, and they promised fair economics for all musicians.

For an industry struggling with the value of music in the digital age, it was an audacious pitch. But from the very start, Tidal’s debut was ridiculed as grandiose and out of touch.

A teaser video had showed Tidal’s stars plotting in secret and toasting with Champagne. Jay Z and Beyonce, his wife, called Tidal a “movement” that would “change the course of history,” drawing complaints that they were appropriating the language of civil rights. And the news conference itself was bombastic but short on details, with Alicia Keys quoting Nietzsche and the artists signing a declaration to “reestablish the value of music.”

Tidal’s fumbled introduction led to weeks of negative news coverage, as bloggers trumpeted its apparent plunge in Apple’s app rankings and other artists accused Tidal of being primarily a vehicle to benefit music’s elite.

“I think it was naive of them to think they could speak for the common man,” said Errol Kolosine, an assistant professor at the Clive Davis Institute of Recorded Music at New York University. “Especially in today’s economic climate, people aren’t ready to feel anything close to sympathy for people who are much better off.”

This week, a humbled Tidal began to mount its response. In a Twitter spree on Sunday, Jay Z declared that “Tidal is doing just fine” with 770,000 subscribers, but he also acknowledged mistakes. “We are human,” he wrote. “We aren’t perfect — but we are determined.”

In an interview, Vania Schlogel, Tidal’s chief investment officer and a former executive at the private equity firm Kohlberg Kravis Roberts, took responsibility for Tidal’s troubled introduction, and said that the story taking shape around the streaming service was inaccurate.

“If I gave myself a grade, I would probably give myself a D,” Ms. Schlogel said. “It was frustrating because we knew in our hearts what the intent was and that we didn’t do a good enough job telling the story for ourselves. It allowed other people to jump in and tell our story for us, which wasn’t helpful.”

For Tidal — which Jay Z bought this year for $56 million as part of his acquisition of the Swedish technology firm Aspiro — the strategy of using A-list celebrity power was a double-edged sword. While technology companies usually release new products quietly, letting them work out early kinks away from the spotlight, Tidal capitalized on its artists’ fame. That led to a wave of media coverage rare for a small player, but also invited withering scrutiny.

Music and technology executives say that it is far too early to judge Tidal, particularly given the specter looming over all music apps this year: the expected arrival of Apple’s new streaming service, perhaps as early as June.

While Tidal’s unveiling may have been rocky, the company has also taken steps to distinguish itself in a crowded market. It has released exclusive videos by Beyonce, Mr. White and Erykah Badu, who used the platform to present a 50-minute Western . On May 13, Jay Z will perform a “B-Sides” concert in an undisclosed New York space, with tickets available to Tidal users who submit playlists.

Behind Tidal’s celebrity power is a broader concern — common among all artists — that the digital economy is spinning out of control, resulting in a world where technology interests are all-powerful and content is an often cheap and ubiquitous commodity.

Yet Tidal’s introduction, analysts and executives say, offers lessons in some of the missteps of marketing in the digital era. One is that no matter how famous the pitchman, the product must have a clear relevance for ordinary customers.

“The whole announcement seemed geared toward other artists,” said Dave Goldberg, the chief executive of SurveyMonkey and former general manager of Yahoo Music. “What is the consumer value proposition? Why should I sign up for Tidal when I can sign up for Spotify?”

Part of Tidal’s implied answer to those questions was a promise to pay artists better than other digital services do — currently a particular issue of debate in the music industry. Last year, for example, Taylor Swift withdrew her music from Spotify because the service would not restrict it to its paid tier. (Ms. Swift is not involved with Tidal.)

Tidal offered few details of its economic plan. On Sunday, Jay Z posted on Twitter , “Tidal pays 75% royalty rate to ALL artists, writers and producers.” In an interview, Ms. Schlogel said the company would pay 75 percent of its revenue for royalties, slightly more than the 70 percent that is standard among Spotify, iTunes and many other digital outlets.

Amy Thomson, a manager of D.J. acts like the duo Axwell and Ingrosso, who this week wrote a detailed open letter to Jay Z about Tidal, said in an interview that the company had simply misjudged consumers’ interest in the issue of fair royalties for artists.

“It felt like a bit of a lecture,” Ms. Thomson said. “If you choose to make such a big point about how artists are paid, you should make sure that the person on the other side of that debate cares.”

For Ms. Schlogel, the bad publicity for Tidal has been a distraction, but she said that the company would continue to push forward.

“I just hope people are willing to at least open their eyes and ears and say, ‘Hey, this company has been out for a month and they are already executing on all the things they said they would,’ ” she said.

“Maybe there weren’t details of royalty splits and whatnot during the press conference,” she added, “but that press conference was meant to state the mission, and then very quickly after that to let our actions speak for themselves.”

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Advertisement. SKIP ADVERTISEMENT. Supported by. SKIP ADVERTISEMENT. Share full article. 21. From left, Usher, Rihanna, Nicki Minaj, Madonna, Deadmau5, Kanye West, Jay Z and J. Cole are among the artists who own a stake in Tidal. Credit... Sam Hodgson for The New York Times. By Ben Sisario. May 1, 2015. As a celebrity-studded, headline-grabbing product release, Jay Z’s unveiling of Tidal was about as big as could be. Standing on a Manhattan stage with Madonna, Kanye West, Jack White, Nicki Minaj and nearly a dozen other stars, Jay Z introduced Tidal on March 30 as a streaming music service to challenge Spotify, Apple and Google. In a twist to the usual ownership of music apps, the artists — not Silicon Valley financiers or big entertainment studios — would control a majority of the company, and they promised fair economics for all musicians. For an industry struggling with the value of music in the digital age, it was an audacious pitch. But from the very start, Tidal’s debut was ridiculed as grandiose and out of touch. A teaser video had showed Tidal’s stars plotting in secret and toasting with Champagne. Jay Z and Beyonce, his wife, called Tidal a “movement” that would “change the course of history,” drawing complaints that they were appropriating the language of civil rights. And the news conference itself was bombastic but short on details, with Alicia Keys quoting Nietzsche and the artists signing a declaration to “reestablish the value of music.” Tidal’s fumbled introduction led to weeks of negative news coverage, as bloggers trumpeted its apparent plunge in Apple’s app rankings and other artists accused Tidal of being primarily a vehicle to benefit music’s elite. “I think it was naive of them to think they could speak for the common man,” said Errol Kolosine, an assistant professor at the Clive Davis Institute of Recorded Music at New York University. “Especially in today’s economic climate, people aren’t ready to feel anything close to sympathy for people who are much better off.” This week, a humbled Tidal began to mount its response. In a Twitter spree on Sunday, Jay Z declared that “Tidal is doing just fine” with 770,000 subscribers, but he also acknowledged mistakes. “We are human,” he wrote. “We aren’t perfect — but we are determined.” In an interview, Vania Schlogel, Tidal’s chief investment officer and a former executive at the private equity firm Kohlberg Kravis Roberts, took responsibility for Tidal’s troubled introduction, and said that the story taking shape around the streaming service was inaccurate. “If I gave myself a grade, I would probably give myself a D,” Ms. Schlogel said. “It was frustrating because we knew in our hearts what the intent was and that we didn’t do a good enough job telling the story for ourselves. It allowed other people to jump in and tell our story for us, which wasn’t helpful.” For Tidal — which Jay Z bought this year for $56 million as part of his acquisition of the Swedish technology firm Aspiro — the strategy of using A-list celebrity power was a double-edged sword. While technology companies usually release new products quietly, letting them work out early kinks away from the spotlight, Tidal capitalized on its artists’ fame. That led to a wave of media coverage rare for a small player, but also invited withering scrutiny. Music and technology executives say that it is far too early to judge Tidal, particularly given the specter looming over all music apps this year: the expected arrival of Apple’s new streaming service, perhaps as early as June. While Tidal’s unveiling may have been rocky, the company has also taken steps to distinguish itself in a crowded market. It has released exclusive videos by Beyonce, Mr. White and Erykah Badu, who used the platform to present a 50-minute Western . On May 13, Jay Z will perform a “B-Sides” concert in an undisclosed New York space, with tickets available to Tidal users who submit playlists. Behind Tidal’s celebrity power is a broader concern — common among all artists — that the digital economy is spinning out of control, resulting in a world where technology interests are all-powerful and content is an often cheap and ubiquitous commodity. Yet Tidal’s introduction, analysts and executives say, offers lessons in some of the missteps of marketing in the digital era. One is that no matter how famous the pitchman, the product must have a clear relevance for ordinary customers. “The whole announcement seemed geared toward other artists,” said Dave Goldberg, the chief executive of SurveyMonkey and former general manager of Yahoo Music. “What is the consumer value proposition? Why should I sign up for Tidal when I can sign up for Spotify?” Part of Tidal’s implied answer to those questions was a promise to pay artists better than other digital services do — currently a particular issue of debate in the music industry. Last year, for example, Taylor Swift withdrew her music from Spotify because the service would not restrict it to its paid tier. (Ms. Swift is not involved with Tidal.) Tidal offered few details of its economic plan. On Sunday, Jay Z posted on Twitter , “Tidal pays 75% royalty rate to ALL artists, writers and producers.” In an interview, Ms. Schlogel said the company would pay 75 percent of its revenue for royalties, slightly more than the 70 percent that is standard among Spotify, iTunes and many other digital outlets. Amy Thomson, a manager of D.J. acts like the duo Axwell and Ingrosso, who this week wrote a detailed open letter to Jay Z about Tidal, said in an interview that the company had simply misjudged consumers’ interest in the issue of fair royalties for artists. “It felt like a bit of a lecture,” Ms. Thomson said. “If you choose to make such a big point about how artists are paid, you should make sure that the person on the other side of that debate cares.” For Ms. Schlogel, the bad publicity for Tidal has been a distraction, but she said that the company would continue to push forward. “I just hope people are willing to at least open their eyes and ears and say, ‘Hey, this company has been out for a month and they are already executing on all the things they said they would,’ ” she said. “Maybe there weren’t details of royalty splits and whatnot during the press conference,” she added, “but that press conference was meant to state the mission, and then very quickly after that to let our actions speak for themselves.” . Order Reprints | Today’s Paper | Subscribe. 21. Share full article. 21. Advertisement. SKIP ADVERTISEMENT.