Jay Z's Tidal Gets New CEO Again
02 December 2015 - 5:10PM
Dow Jones News
Eight months after launching Tidal, rap mogul Jay Z already
hired the fledgling music service's third chief executive.
The company said Jeff Toig—the former chief financial officer of
SoundCloud, a Berlin-based audio-sharing service—would take over as
Tidal's CEO in January.
His arrival caps off a hectic year for Tidal, which charges $20
a month for a high-fidelity version of its 40 million song catalog
and the standard $10 a month for download-quality sound. Those two
tiers originally operated under different brands run by Swedish
company Aspiro, which Jay Z bought in March for $56 million and
relaunched as Tidal in April.
He has given 19 famous artists and bands, including Kanye West
and Madonna, small stakes in Tidal and promised each millions of
dollars worth of marketing, according to people familiar with the
matter.
Since then the service has offered exclusive content from
Prince, rapper Lil Wayne and others, while developing a roster of
emerging artists and amassing more than 1 million subscribers,
according to a recent tweet from Jay Z—double the size of Aspiro's
subscriber base before his acquisition.
But without an experienced leader, many industry executives said
they were skeptical that Tidal could compete against Spotify AB,
which counts 22 million subscribers paying $10 a month and nearly
80 million free users, according to people familiar with the
matter. Not to mention Apple Inc.'s Apple Music, which launched in
June and claims more than 6.5 million subscribers.
Jay Z's team dismissed Aspiro's CEO, Andy Chen, in April shortly
after the relaunch, appointing another Aspiro executive, Peter
Tonstad, to serve as chief on an interim basis. Mr. Tonstad left
the company in June.
As Tidal searched for a permanent leader, it also held
exploratory talks with a variety of other streaming services about
a possible merger, according to people familiar with the matter. No
deal has materialized.
One concern among potential partners, according to one of these
people: Tidal spends more, relative to its size, on royalties than
its larger rival, Spotify, leaving less money available for
marketing via TV ads. Tidal devotes 75% of its revenue to paying
labels, artists, publishers and songwriters, Jay Z tweeted in
April, whereas Spotify says it pays 70%.
Turning a profit on music subscriptions alone has proven
difficult. Apple may be able to afford not to do so, since it makes
so much money on hardware. Company founder Steve Jobs famously said
that the company could treat iTunes music download sales as a loss
leader for that reason.
But Spotify is preparing to launch an array of non-music video
content next year to bring in fresh advertising dollars. Alphabet
Inc.'s Google, which launched its video subscription service
YouTube Red in October, reaps most of its revenue from advertising
on its free services.
Mr. Toig, who earlier in his career co-founded a music-streaming
service called Muve Music, which was bundled with the subscription
plans of 2.5 million Cricket Wireless customers, said he believed
that he could build Tidal into a healthy, stand-alone subscription
music service. Mr. Toig said he wasn't sure how many subscribers he
would aim to acquire over the next year.
His strategy includes managing costs and taking a different
approach than his bigger competitors, expanding on some of the
approaches Tidal has already started experimenting with. Those
include promoting Tidal concerts, offering exclusive live-streamed
shows and giving subscribers the chance to meet artists. Coldplay
live-streamed songs from its new album exclusively on Tidal last
month while Rihanna brought 80 Tidal subscribers to her
video-premiere party this summer and gave all Tidal subscribers
pre-sale access to her coming tour.
In October, Jay Z staged a "Tidal X" benefit show at Brooklyn's
Barclays Center featuring performances by Beyoncé , Nicki Minaj and
J. Cole among others, the first of what Jay Z said would be many
such charity events to come. Tidal is aiming to breed loyalty among
up-and-coming artists by putting them on stage at these shows.
Write to Hannah Karp at hannah.karp@wsj.com
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(END) Dow Jones Newswires
December 02, 2015 00:55 ET (05:55 GMT)
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