Is Tidal Already Washed Up?

Losing two CEOs in a two-month period is only the tip of the iceberg

CEOs don't seem to have much job security at Tidal - they just lost another one last week - their second in two months. That usually indicates a management problem, and that the owners of the company have lost confidence in the people running it. When you ditch a CEO after only two months, you've hardly given them much time to turn anything around or accomplish anything significant.

But Tidal's issues go even deeper than that. Is it possible that the owners expect management to make an essentially unworkable business model succeed in an industry that's getting ever more crowded with competitors? Tidal's three biggest features that they tout are:

• They offer higher-resolution audio than other streaming services like Spotify, Google Play and YouTube
• Tidal provides "exclusive content" that's unavailable elsewhere
• The service is owned by musicians and is going to pay musicians fairly.

Unfortunately, Tidal has problems in each of these areas. 

Image Issues and Fair Pay for Musicians

First, their image issues are a bigger problem than the CEO issues. The March 2015 rollout was a PR disaster, with Tidal's famous co-owners - some of the wealthiest musicians in the world - talking about how musicians need to get paid. Sure they do… but everyone who was on that stage is already filthy rich, so they're not exactly the best people to make the case about how musicians are being so poorly compensated for their work.

What do any of them really have in common with their audiences, or the starving musicians of the world anymore? In the modern era, we're all in it together, right? The tools have been democratized and musicians can now connect directly with their fans. Self-production, self-distribution and self-marketing are all possible in a post-DAW-revolution Internet world. If the starving musicians of the world were really one of Tidal's top concerns, they should have given a share of ownership to all musicians who are played on their service, or set up a charity for musicians, or at least rolled out the service with several promising, yet relatively unknown musicians onstage along with the big names. As it was, it just came across as the rich complaining that they're not getting enough for themselves. 

So do they at least pay musicians fairly? Is their royalty rate higher and more fair than competing services like Spotify? According to the Internet rumor mill they seem to be, but I honestly don't know for certain. Do a Google search and see if you can find any official word from Tidal, or specific details from them about how their accounting and payout system works. If their real concern is that musicians need to be paid fairly, then why not be transparent and put out the detailed information about how they're going to do it differently? If not at the press conference, then they could at least do so on their website or in a press release somewhere. Without that information, their claims lack anything substantive to back them up.

Exclusive Content and Piracy

Speaking of the big names that co-own the company, Tidal heavily promotes the fact that they're offering exclusive content from them -  but are exclusives the answer to what ails the industry, and will they be a big enough draw that consumers will be willing to pay a premium price for them? Listeners want one place where we can get it all, on-demand - from A to Z and all points in between. Right now, that's YouTube way more than any other streaming service, and it's free. While it's true that YouTube viewers and listeners have to put up with ads (which pay the bills and provide the revenue they use to pay the labels and artists), you can find just about anything on YouTube. There are even rumors that YouTube may soon offer a pay option so viewers and listeners can do away with the ads and receive higher streaming quality.

Tidal has taken a different approach, and does not offer any sort of ad-supported free tier for users. They have also pointed out how Spotify's free tier has led to lower rates per stream for artists. While Tidal's lack of a free tier may allow them to pay more per stream, it completely overlooks the fact that streaming is a popularity-based numbers game. Want to make money from streaming as an artist? Then write and record something that people want to hear over and over and over again! It's not about how much you get per stream so much as it is about how many times you get streamed, and with Tidal's much smaller subscriber base, an independent artist is far less likely to receive a lot of plays through their service than through some of their much larger competitors. And if there's one thing new and independent artists need more than anything, it's exposure.

In the future, expect to see more exclusive content from Tidal's musical stakeholders in an effort to draw in more subscribers. But will it be sufficiently cool enough that the demand for it from the public will help build Tidal's user base? That remains to be seen, but if Napster taught us anything it's that content which is desirable, exclusive and hidden behind a paywall tends to be a prime target for piracy. Because of that, Tidal's exclusives are likely to only encourage more piracy - the one thing that streaming services, if priced reasonably and run properly, ought to be able to finally do away with once and for all.

Lest anyone think I'm asking for something for nothing here, I'm not. I've been a paying Tidal subscriber for a few months, as well as a paying Spotify subscriber for quite a bit longer, but I'm in the minority - not many people are going to want to throw down a few hundred dollars a year for streaming services. In fact, research shows that the ideal price point that consumers are willing to pay for music is around $65 a year - about half of what services like Spotify charge for unrestricted, unlimited use ($120 per year), and one quarter of what Tidal charges for their premium FLAC-based higher-resolution service.  

High-Resolution Audio

But what about the higher-resolution? Is it worth the extra money, and will it convince consumers to pay higher prices? I think high-resolution audio is great. I'd love to have 24-bit music streaming to my mobile devices, but that's not practical with today's bandwidth limitations. On the go, where streaming services are most used, and while listening on cheap ear buds (or worse, expensive Beats headphones, with their horrible frequency response), hardly anyone is going to notice the difference between a 320 kbps MP3 and uncompressed 16 bit 44.1 kHz FLAC-based audio. Heck, many music fans probably couldn't hear the difference in a double-blind listening test, even on a nice home stereo system - so what makes Tidal think consumers are going to pay four times more than the research shows they're willing to pay for their music to get a premium service that doesn't provide any audible benefits under the types of conditions where it will typically be used the most?  

Want to impress me with the high fidelity audio quality of your streaming service? That's going to take 24-bit audio, not 16-bit. The issue is delivery speed and Internet/cellular bandwidth as much as anything, but if we want to move audio quality forward, then deliver it via streaming at the same sample rate and bit resolution as the original recording. Nowadays, that usually means 24 bit, and it often means high sample rates too - up to 192 kHz. Some day, we'll be able to stream that to our phones. Once we can, I'll be impressed - and one of the first (and probably few) to sign up for it. Until then, I can't really envision many people feeling that paying twice as much (Tidal charges $20 per month for their higher-resolution service vs $10 a month for their 320 kbps compressed service) for something that they can't hear much of a difference with is financially justifiable. That's especially true for the biggest portion of the music-listening audience: teens. Does Tidal really think they're going to pay $240 a year for their service, or be able to convince their parents to do so for them?   

Will a New CEO Turn the Tide?

Tidal can keep swapping out CEOs like Beyoncé swaps outfits for her stage shows, but it's not going to make any difference. Tidal is too expensive. They have a limited user base, which means not much in the way of user-generated content, such as playlists. There is no free (ad-supported) option to get people hooked or to grab the teen market, and no matter who is running it, they're not going to convince people to pay twenty bucks a month when they can get Spotify for half that, or YouTube for free. Not when they can't hear the difference in audio quality anyway. Until Tidal addresses these fundamental issues, their problems are going to continue - no matter who's in charge.

Well, that's my take on Tidal's current situation. What do you think? Do you have a different point of view? Would you like to discuss the various streaming services and their relative merits? Then please join in the discussion in this thread right here on Harmony Central!

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Phil O'Keefe is a multi-instrumentalist, recording engineer / producer and the Senior Editor of Harmony Central. He has engineered, produced and performed on countless recording sessions in a diverse range of styles, with artists such as Alien Ant Farm, Jules Day, Voodoo Glow Skulls, John McGill, Michael Knott and Alexa's Wish. He is a former featured monthly columnist for EQ magazine, and his articles and product reviews have also appeared in Keyboard, Electronic Musician and Guitar Player magazines.