Why Jay Z’s Tidal is Good for the Music Business (Even if it Flops)

Usher, Rihanna, Nicki Minaj, Madonna, Dead Mouse, Kanye West, Jay Z, Jason Aldean, Jack White, Daft Punk, Beyonce and Win Butler attend the Tidal launch event #TIDALforALL at Skylight at Moynihan Station on March 30, 2015 in New York City. (Kevin Mazur/Getty Images For Roc Nation)
Usher, Rihanna, Nicki Minaj, Madonna, Dead Mouse, Kanye West, Jay Z, Jason Aldean, Jack White, Daft Punk, Beyonce and Win Butler attend the Tidal launch event #TIDALforALL at Skylight at Moynihan Station on March 30, 2015 in New York City. (Kevin Mazur/Getty Images For Roc Nation)

The music business got a jolt Monday when a chorus line of celebrity musicians stood on stage for the launch of Tidal (a re-launch, actually, but its first launch under current ownership). From Kanye West to Daft Punk, the artists have chosen this artists-first platform as the home of their streaming content. They’ve been given equity, too. Nobody can blame Jay Z for not motivating his partners.

Tidal and its all-star cast of shareholders can only be good for the music business. Even if Tidal folds and Jay Z loses his $56-million investment — an entirely plausible scenario given the high attrition rate of streaming services — the new service and its new approach will likely have positive impacts on the market. Here’s why.

1. The U.S. Subscription Market Needs A Swift Kick in the Butt

Last year’s unimpressive growth rate of the paid music subscriptions has received scant attention since the RIAA released 2014 year-end numbers two weeks ago. Consumer spending on paid subscriptions increased 25 percent to $799 million from $639 million. The number of paid subscribers rose 25.6 percent to 7.7 million from 6.2 million. Both figures were lower than the growth rates for SoundExchange revenue (31 percent) and advertising-supported streaming (34 percent). Given the dependence the music business will have on paid subscriptions in the coming years, these numbers from 2014 should be sounding alarm bells from coast to coast.

Why is the U.S. market so important? It’s the world’s largest music market and the leader in streaming revenue. Last year’s 30 percent gain in the trade value of recorded music streaming revenue — across all formats — was $370 million. Other countries had higher rates of streaming growth but far smaller dollar gains. In France, 34 percent growth in streaming revenue amounted to a $24.5-million gain. Australia’s 111 percent improvement in streaming revenue equaled an improvement of $13 million. Gains in subscription strongholds Sweden and Norway were less than $10 million each. No surprise here: big markets matter most.

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SOURCE: 
Billboard

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