How Tidal Can Embrace Its Mission, Win The Streaming Wars
[UPDATED] In this piece, Frank Woodworth explores how TIDAL – the artist-owned streaming service often overshadowed in the streaming wars by heavy-hitters like Spotify and Apple Music – could embrace it’s mission to emerge on top.
Guest post by Frank Woodworth from Forbes
In 2019 streaming accounted for 80% of the US recorded music market. While Streaming is now the dominant music consumption medium, the competition for market share is still wide open. The leaders in market share and mindshare continue to be Spotify and Apple Music, but Amazon Music and YouTube Music both have deep pockets behind them, Pandora and Deezer aren’t going away and Qobuz is super serving the hi-def audio market. Globally TenCent owns the Chinese market, Gaana and Saavn are competing for the growing Indian music market and Tik Tok parent company ByteDance just launched the Resso streaming app in select international territories.
Overshadowed in this current landscape is Tidal. When Tidal launched in 2015, it did so with three key differentiators. The first differentiator was that the platform was artist owned. The artist owners of Tidal are some of the biggest names in music including Alicia Keys, Arcade Fire’s Win Butler and Regine Chassagne, Beyoncé, Calvin Harris, Coldplay’s Chris Martin, J. Cole, Jack White, Jason Aldean, Madonna, Rihanna and majority owner Jay-Z. The second differentiator was the service offered exclusive content from these artist-owners enabling subscribers to Tidal to listen to music no other streaming service offered. The third differentiator was that Tidal paid the highest rates per stream out of any streaming platform and offered the same deal terms to independent labels, major labels and self-released artists.
With superstar artist-owners, exclusive content and a commitment to fairly pay artists in theory Tidal should have a larger share of the streaming market. In practice, the service has struggled to grow subscribers and has yet to turn a profit. Tidal has not recently reported subscriber numbers but estimates are somewhere between 1 and 5 million subscribers. This is significantly less than most of their competitors and last year, majority owner, Jay-Z took his catalog exclusively off the service to give back to Spotify and some pundits have called that the final nail in Tidal’s coffin.
Tidal still has significant advantages because of their ownership and their artist friendly mission “of bringing fans and artists closer together and creating a sustainable industry model that values music and artists.” These advantages can be leveraged to build a beachhead in the streaming wars and change the trajectory of the service. This can be done without completely redesigning the platform, but incremental ideas are not likely to make an impact. Tidal needs to take big swings with their ideas.
Idea #1: Leverage The Social Reach Of The Current Artist-Owners
Tidal’s owners are some of the biggest names in the music world. Currently across the three primary social media platforms these artists can reach over 1 billion impressions per coordinated post. Using an average CPM of $5 as a benchmark, It would take approximately 5 million dollars of advertising buys to purchase the organic reach made possible by one post collectively from Tidal’s artist-owners. This is roughly the same as the cost of a 30-second Super Bowl ad. While admittedly easier said than done, if the current artist-owners of Tidal committed to coordinate a posting of the service’s initiatives just once a week, that would augment their paid advertising budget by roughly $250 million dollars in yearly value.
Idea #2: Expand The Idea Of Artist Ownership
The fact that Tidal is artist owned should be powerful, but it has limited impact as a narrative because the artist owners are all already millionaires and hardly the portrait of starving artists. The consumer doesn’t get the warm and fuzzy feeling supporting Jay-Z or Coldplay like they do a small farmer in a developing nation.
I think it was a severe miscalculation that the general public would choose a streaming service simply because it was owned by a number of wealthy artists. No one is rooting for the Charlotte Hornets because they are owned by Michael Jordan, but the Green Bay Packers have a special mythology because they are owned by their fans.
This narrative can be changed by opening up artist ownership shares to all members of the musical creative community through the creation of an artist affiliate program that pays the artists in stock. Affiliate programs are one of the top drivers of streaming service subscriptions and also one of the largest drivers of partnership income for influencers. It is a natural match. As seen above, artists have some of the best influencer reach and if 18 artists can reach a billion impressions, a million artist’s reach is almost incalculable.
Beyond reach, this is also an opportunity to create an artist collective. Instead of payment based as a percentage of lifetime customer value which is often a meager amount of money per conversion, Tidal will be compensating the artist participants in stock making Tidal truly artist owned.
A tidal shareholder meeting would instantly have the potential to be one of the biggest events on the music calendar. It would rival Warren Buffett’s Berkshire Hathaway confab in terms of cultural influence. It could be a festival and stockholder meeting all in one and become an important destination to discuss music business issues. Artists could band together to fight for health insurance, and fairer payments. Streaming economics would no longer be an opaque box to the artist community. Artists would have a vote and a voice and Tidal would be at the center of the discussion.
Idea #3: Free Lifetime Accounts For Every Musician And Songwriter On The Platform
Tidal currently suffers from a tree falling in the forest syndrome. The service could have the best playlists, or the best discovery algorithm, but the world at large does not know because there are at most a few million users of the platform. By giving a free account to every artist on Tidal by definition more people will experience what Tidal has to offer.
This also accomplishes several things:
1. It strengthens the artist first narrative.
2. It automatically increases the user base.
3. It siphons away users from competitors.
4. Most importantly It gives context to the platform.
This context creates a funnel for the artist ownership affiliate program. As more artists use the platform and engage with its offerings, they create awareness as they push out their favorite music to their fans resulting in a positive acquisition loop.
Idea #4: Build Artist Dashboard That Includes Followers/Fans Data
In the music industry streaming data can be used to sell more music and merchandise, route and market tours and build brand partnerships among other pursuits. The dashboards of the leading streaming services offer listener data by number of streams, top cities, and top countries along with a demographic breakdown of gender and age.
While these numbers are useful, and artist marketers are doing magic with them, it is also inherently skewed data. The amount of lean back listening done through playlists means these listeners are not necessarily fans of the artist.
A more useful metric would be to either have the ability to filter by artist followers or organic listeners. These are the users that have demonstrated an interest in the artist versus merely being exposed to their music. Providing this data to their artists would make Tidal’s dashboard the standard of the industry giving artists the right data to make informed decisions about their marketing initiatives.
Idea #5: Switch to User Centric Payments
Tidal is already ahead most of the streaming services in this area with a policy of paying out the highest per-stream revenues and giving parity in their deal terms, but they will simply always be hindered in this department until they reach scale. Per stream revenue is not as important as aggregate revenue. If given the option of having 100 dollars in pennies or 2 dollars in quarters which would you choose?
If you accept the fact that there will not be significant aggregate revenue until reaching 100 million subscribers, then it becomes clear why paying out higher per stream rates did not positively affect Tidal. They could pay a nickel a stream and still have plenty of paupers on the platform.
One improvement that can be implemented is to change the accounting to a user centric payment system. The user centric system calculates payments based as a pro rata share of what a subscriber has listened to for the month. The current method is market share method which divides the total subscriber revenue against an artist’s share of the overall streams. The thought is this could be a fairer system of payment where a listener feels like their money is going to the artist the support. This better links artist and fans aligning incentives. Deezer is working to implement this in 2020. Tidal should do so as well. User Centric payments would also match better with the affiliate program permanently aligning the money generated by those new users with their listening habits that in theory would include the artist who brought them into the Tidal fold.
These ideas are just a start and should be considered a success if they moved Tidal closer to the competition. Tidal is so far behind that big paradigm changing ideas like building an artist owner collective and giving free accounts to every artist on the platform are the best chance the service has to change its trajectory. Once the service is moving in a positive direction though, it has the resources, ethos and mission that can win the streaming wars.
Frank Woodworth is the founder of Glacial Concepts, a strategy and marketing consultancy for artists, labels, and music tech start-ups. Find him online at www.glacialconcepts.com or @glacialconcepts.