Well rumours flying around suggests Tidal may soon be bought. The when and how is what no one knows but what might be the possible reasons why Apple would want to buy rapper Jay-Z’s Tidal that is reported to have 3 million subscribers of which 1.3 million are paying? A number of reasons are possible and we’ll look at one or two in this report.
Well by now you may already know that Apple’s second quarter earnings were down mainly because the sale of its most priced commodity (the iPhone) appears to be cooling after 13 consecutive years of growth. The second quarter revenue of $50.6b/10tr Naira/5tr KES was down $58b/11tr Naira/5.5tr KES in the same period last year. Net Income was down to $10.5b as the company forecasts that the third quarter sales will drop even further to $41b-$43b when compared to $49b last year. Another key point to note is that 51.2 million iPhones were sold within the same period which also represents a 16% drop from the same period last year and at the time of the report from Apple yesterday, their shares had dropped by about 7%. But notable in that report was a better than expected growth in revenue from Apple’s services like iTunes, Apple Music and the App store. Better put, services represented Apple’s second largest revenue source just behind the iPhone but better than the Mac and iPad.
This tells us something about the direction Apple may be looking next. If Tidal is growing as reports suggest, it might make sense to acquire a growing rival service that’s now getting the attention of a certain group of music listeners. Just last month, Tidal got exclusive rights to the some of the late musician Prince’s songs which could in itself drive some interest and traffic to the service because reports have it that there has been renewed interest by music lovers globally into the late musician’s music and how he rocked his world in his hay days.
The other reason could be simpler. Apple Music is not performing well enough to catch up to and eventually surpass Spotify when it comes to subscribers. The easy way out would be to acquire a growing service that may further cut into its Apple Music growth. This would enable Apple join forces with Tidal to eventually take the real fight to Spotify. Spotify which is Apple Music’s main competitor now has about 30 million customers even though the Apple’s streaming service is less than a year old since it was launched last year June. Tidal’s growth might not still be big enough to increase Apple Music’s fire power but it’s a starting point and honestly, since it appeals to a certain class of music listeners namely hip hop and rap coupled with Apple’s money power, this could just be the future as Tidal may bring that a certain flavour to Apple which would make it more appealing to a new user base.
The third reason I would give here may be the most obvious one and that’s the fact that if a successful musician of Jay-Z’s class could fund and run a music streaming service and you can say successful depending on what parameters you use, it would make sense to bring him into the Apple family and see what he can do with a bigger pool of funds available. According to Forbes, the rapper is now worth about $660m/231b Naira even though it’s hard to tell if he has started making any profits from Tidal just yet. Tidal was acquired in the first quarter of 2015 by Project Panther Ltd owned by Shawn Carter aka Jay -Z for about $56.2m/19b Naira.
The last reason is the list of exclusives on Tidal. Here’s a quick list according to Tech Times
• Release date: April 24, 2016 following the HBO special
• Exclusive longevity: We all worried we would need Tidal to get the new album, which is why many rushed to start their subscription. However, fans can now purchase the album on Tidal without a subscription, as well as on iTunes and Amazon. Tidal still has exclusive streaming rights, however. Can’t win ’em all.
It’s not yet clear if it will come to Apple Music, although this is a possibility once the physical album is released on May 6 (Beyoncé also previously released the single “Formation” from the album exclusively on Tidal).
- Album: The Life of Pablo
• Release date: Feb. 14, 2016
• Exclusive longevity: This album remained a Tidal exclusive for a few weeks, with Kanye revealing on Twitter that it would never be released anywhere else. Then, he changed his mind. The Life of Pablo is now available on Apple Music.
• Release date: Jan. 28, 2016
• Exclusive longevity: Anti was exclusive for a week on Tidal, but fans could also download the album for $11.99. Singles like “American Oxygen” and “BBHMM” were released as exclusives on the platform prior, although they were not featured on the album. Anti did hit other services like Apple Music the week after its debut.
- Album:Entire catalogue
• Exclusive longevity: Back in July, Prince pulled his music from most streaming services aside from Tidal. The artist later released his new album HITNRUN in Sept. on the platform as an exclusive, although fans can purchase the album or individual singles without a subscription. Now, after his death, the only place to listen to his entire catalogue of music is on Tidal (Apple Music does have HITNRUN Phase Two and the single “This Could B Us”).
- Album:The Blueprint, The Blueprint 2: The Gift & the Curse, The Blueprint 3
• Exclusive longevity: Even though there are quite a few Jay Z songs and more recent albums available on Apple Music, the rapper pulled his older album trilogy, The Blueprint, from other streaming services in March. True Jay Z fans will have to get Tidal to be able to listen to these older tracks.
There you go, the weight these names pull together is big. Those are big names in hip hop and adding them to the Apple Music list would definitely bolster the list of exclusives. This is an area analysts believe Spotify needs to do better to maintain its lead in the industry. Right now it seems like two strange bed fellows may have a common enemy in sight.