Launch week for Jay Z’s Tidal was rocky from beginning to end. Last Monday’s press conference announcing the launch was greeted with skepticism from the media and public alike, while many in the music business found it shockingly disingenuous. Nothing was said about helping non-elite artists, these critics noted, the prevailing perception being this was a grandstand play masking the point: helping rich artists get richer. Said one skeptic, “When the fat cats are finished popping all those champagne bottles, they’ll have some explaining to do.” And how do these 3% celebrity owners make money from their involvement? The most obvious answer is by way of a sale or an IPO. As the week went on—and despite millions spent on TV spots—the Tidal app failed to ignite at iTunes (where it’s #84 at presstime) or Google Play (#111). Then, last weekend, exclusives from Beyoncé and Rihanna lost their exclusivity nearly instantaneously when both started popping up all over YouTube.
Nonetheless, Jay Z’s marketing chops and success of his 2013 Magna Carta Holy Grail album release via Samsung suggest that he’s capable of prospering with a paradigm-shifting digital model. But can he compete with the biggest names in online content? Does he have another large corporate entity, such as Google, lined up to lend muscle? Another rumor has Tidal considering a merger with pioneering premium service Rhapsody, which has 2.5m paid subscribers and an established business.
The prevailing view is that most if not all of the $56m cost of the purchase (Jay famously doesn’t use his own money for entrepreneurial ventures) was put up by SoftBank, whose CEO Masayoshi Son is Japan’s richest man, with a reported net worth of $13.7 billion. Last week, SoftBank-owned Sprint, which was rumored to be involved in the deal, acknowledged that it was looking at Tidal but refuted reports that Sprint or its parent company had invested any money in the company. Nonetheless, speculation persists, much of it having to do with Nikesh Arora, formally the #3 executive at Google, whom Son lured away last July to oversee his U.S. technological investments. Both Arora and Son were said to have attended the secret meeting of superstars Jay had called in order to secure their involvement in the venture; presumably they weren’t present to get autographs.
Amid this negativity, Jay Z’s service gets a thumbs up from the rights holders, who share the belief that competition in the premium streaming sector is healthy. This in contrast to Spotify, which is viewed as alienating artists, despite the fact that the service is starting to move the needle. Labels have taken to regularly posting tracks on Spotify’s worldwide playlists as a way of warming them up, in that these playlists function like mini-radio stations, and they’re becoming progressively more important.
Speaking of Spotify, has the Daniel Ek-led company hired lobbyists on Capitol Hill and in Brussels, headquarters of the EU, in an effort to minimize the threat from Apple? Those in the know say the mission of these lobbyists is to sell regulators that Apple and the majors are colluding against streaming services that, like Spotify, offer an unlimited free tier. The EU, FTC and DOJ are looking into these allegations, according to the New York Post.
MORE TROUBLE IN SCOOTERVILLE: Scooter Braun’s financial issues continue, as business manager David Bolno of Nigro Karlin Segal Feldstein & Bolno tries to raise the money to buy out Waddell & Reed, which paid $89m for half of Braun’s management company. The pivotal element here is Braun’s relaunch of Justin Bieber’s career, which, if successful, would make Bolno’s pitch to prospective investors far more compelling.
Concurrently, Braun’s Schoolboy label deal with UMG, which had allowed him to place his acts on any of the Universal labels, is nearing its end. Ken Hertz is in the process of renegotiating the deal, and the figure being thrown around is astronomical—unless it’s the asking price for all of Braun’s companies. How motivated is UMG to continue considering that Braun has given the company a number of hits but no bona fide career artists to date?
Braun is seen by execs at the UMG labels as a savvy marketer and an expert manipulator of social media, but they’re less convinced of his A&R chops. PSY, on Schoolboy/Republic, will go down as a colossal one-hit wonder outside of Asia, and although Carly Rae Jepsen, on Schoolboy/Interscope, had a massive hit of her own in 2012, she’s still viewed as an unproven artist. The same can be said of Rixton (another Schoolboy/Interscope put) and Tori Kelly (Schoolboy/Capitol), but all three are being watched closely to see how they develop, and their respective labels are hopeful. Sources close to Braun say Len Blavatnik is intrigued by the possibility of bringing Scooter and company to WMG, but such a deal would run contrary to his track record, and Warner insiders are unaware of any interest on Blavatnik’s part.
NAMES IN THE RUMOR MILL: Vania Schlogel, Jason Owen, Paul Tollett, Stu Bergen, Rob Stevenson and Martin Mills.
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