Sprint takes 33% stake in Tidal, plans streaming music for its 45M users



Here’s an interesting turn of events in the ongoing story of the streaming music industry. Today, Sprint, itself owned by Softbank, announced it would take a 33 percent stake in Tidal, the streaming music startup originally founded in Norway that was majority acquired by Jay Z and relaunched in 2015 as a platform to compete against the likes of Spotify and Apple Music, offering high-definition audio services with an emphasis on exclusive content from popular artists.

Sprint said it plans to make the service available to its mobile users, which today number 45 million across both subscription and pre-paid tiers. “Tidal and its artists will make exclusive content that will only be available to current and new Sprint customers,” the companies noted.

Recall that Sprint and Tidal first started to work together in 2015, announcing a relationship at Tidal’s relaunch — although the companies never revealed details about what they were doing together and even specifically denied investing in Tidal. Now, Sprint’s chief executive officer, Marcelo Claure, will join TIDAL’s Board of Directors.

“Sprint shares our view of revolutionizing the creative industry to allow artists to connect directly with their fans and reach their fullest, shared potential,” said JAY Z in a statement. “Marcelo understood our goal right away and together we are excited to bring Sprint’s 45 million customers an unmatched entertainment experience.”

The value of the stake is not being disclosed. Music Business Worldwide is reporting it at $200 million, valuing Tidal itself at $600 million. We have contacted Sprint to comment on this and all that a spokesperson would say is: “We don’t provide financial figures.”

Meanwhile, if you consider Tidal’s reported valuation of $250 million when relaunched by Jay-Z and a consortium of shareholders that included a number of famous artists, the stake is worth some $82.5 million. If you consider that Samsung was rumored to be looking at buying Tidal last year for a price of around $100 million, it’s a $33 million stake. In other words, both of those are considerably lower than the $200 million mentioned today. Tidal has also reportedly been in acquisition discussions with Apple and Rhapsody.

Tidal is live in over 52 countries, with 42.5 million+ song catalog and 140,000 high-quality videos, the company says. The company differentiates itself from other streaming services like Spotify, in that it doesn’t offer a free tier of service. Basic services cost $9.99 per month, and a higher tier costs $19.99 for high-definition audio quality. Both come with music exclusive to Tidal.

It’s unclear just how well Tidal has been doing under its new star-studded ownership model where music artists involved with the platform also have stakes in the service.

The company reported a loss of $28 million in 2015, nearly three times bigger than its 2014 loss (figures have not yet been released for 2016). And there have been a lot of questions over just how many people are using it.

The company in March 2016 claimed 3 million subscribers. However, it also has been suing its previous owners over inflating figures, while at the same time also being accused of inflating numbers itself. This report last week, for example, from Norwegian newspaper Dagens Naerinsliv, claimed that when Tidal reported 3 million subscribers, it only had 850,000 (with 1.2 million ‘activated accounts’).

In short, Tidal’s books appear murky and messy from an outsider’s point of view — and you have hope/wonder about what Softbank knows that we do not.

In any case, this latest investment is not only will give Tidal a cash injection — and potentially a much, much larger number of subscribers — but it also points to how Sprint — like other carriers, is looking for ways to differentiate itself from the rest of the pack.

“Jay saw not only a business need, but a cultural one, and put his heart and grit into building TIDAL into a world-class music streaming platform that is unrivaled in quality and content,” said Claure in a statement. “The passion and dedication that these artist-owners bring to fans will enable Sprint to offer new and existing customers access to exclusive content and entertainment experiences in a way no other service can.”

Tie-ups between mobile carriers and music streaming companies more generally have been an important way for the streaming companies to grow their user bases as well as attract more subscribers to the carriers offering the deals. There have been many of these forged especially by Spotify.

In fact, Sprint back in 2014 announced its own partnership deal with Spotify, offering Spotify Premium for six months free (and then at a discount) when you signed up for the higher tiers of Sprint’s mobile service. That deal is still available now, although it looks like Sprint will not be promoting it or a similar deal with Napster quite as much as it had in the past:

“We will continue to carrier bill for both Spotify and Napster if the customers chooses that an option,” the spokesperson said. “However, the announcement today with TIDAL represents a much broader partnership that includes Sprint’s 33% investment in the company and unmatched experiences for Sprint customers.”

Updated with response from Sprint and more background.

Featured Image: Tidal



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