Sprint Invests in Tidal

On January 23, 2017, telecoms company Sprint acquired 33% of the Tidal music streaming service. According to the press release jointly issued by the two companies, the deal guarantees that Tidal, which now claims a catalog of over 42.5 million songs and 140,000 "high quality videos," will become available to Sprint's 45,000,000 retail customers, who will gain "unlimited access to exclusive artist content not available anywhere else."

Jay Z and Tidal's "artist-owners" will continue to run the service, while Sprint CEO, Marcelo Claure will join Tidal's Board of Directors. According to Forbes, the agreement also calls for a $75 million fund dedicated to musicians' exclusive releases.

According to both Forbes and Music Business Worldwide, the partnership comes not a moment too soon. Given competition from Spotify, whose revenue exceeded that of Tidal's parent company, Aspiro, by more than 42 times in 2015, and the recent announcement at CES 2017 that both Pandora and Rhapsody/Napster will compete with Tidal in streaming hi-resolution content, there were multiple indications that Tidal was proceeding on shaky ground.

Just last week, Norwegian newspaper Dagens Naeringsliv suggested that Tidal has been inflating its subscriber figures. Tidal had claimed 3 million in over 52 countries, while analysis suggested that the figure was more likely close to 1 million.

None of the gloomy stuff is mentioned in the official press release. After all, can you imagine Jay Z saying that Sprint saved his ass? Instead, he proclaims, "Sprint shares our view of revolutionizing the creative industry to allow artists to connect directly with their fans and reach their fullest, shared potential. Marcelo understood our goal right away and together we are excited to bring Sprint's 45 million customers an unmatched entertainment experience."

Claure, in turn, declares, "Jay saw not only a business need, but a cultural one, and put his heart and grit into building Tidal into a world-class music streaming platform that is unrivaled in quality and content. The passion and dedication that these artist-owners bring to fans will enable Sprint to offer new and existing customers access to exclusive content and entertainment experiences in a way no other service can."

With exclusive offers and promotions from Sprint and Tidal promised "soon," things are looking up for both Tidal, Sprint, and quality-conscious audiophiles. Especially promising is that the companies' joint press release takes care to state: "The Sprint-Tidal partnership comes on the heels of Tidal's recent announcement revealing the availability of "Master" quality [Note: MQA-encoded] recordings. A wide variety of content from labels and artists, including Warner Music Group's world-renowned music catalogue, is now available in Master audio across all of Tidal's available markets worldwide."

Assuming the partnership is a success, Sprint could very well become the medium by which a huge number of subscribers who listen to content on mobile phones become aware of hi-resolution audio and MQA. The development could even put pressure on manufacturers to improve sound quality in mobile devices. Only time will tell. Although publicists from both companies did not respond to an email request for interviews and additional information, Stereophile will attempt to supply additional information on the partnership as it becomes available.

cgh's picture

People in the investing community will remain dubious. $200M for a company that had $28M in losses FY15 amidst increased revenue. AAPL wouldn't buy them. Their user base is a fraction of Spotify and Pandora isn't going anywhere. Maybe a PE firm should have bought out Jay Zs holding co to teach them how not to lose money.

Anton's picture

19 million would be saving his ass, 200 million is something beyond that.

Sprint now gets 7 dollars of my money each month. Bummer.

I hate not being able to choose who I do business with when this sort of thing happens.

Hate Sprint vs. love Tidal.

bsaltz's picture

This might be a key factor:

"But perhaps this story has another, yet to be explored angle. Sprint is owned by Japanese telecommunications giant Softbank. Japan is relatively new to (Western) music streaming services. Spotify only launched there in September 2016 and Apple Music a few months prior to that.

Perhaps Softbank are eyeing their domestic market as ripe for Tidal’s incursion?

If any country is going to respond favourably – and in big numbers – to better quality streaming, it’s Japan."

FrederickNiemann's picture

I know that many said that iTunes/earbuds sets the standard but many nouveau-riche are doing more than automating their shades and plugging in their Galaxys for music. Why else would Tidal/Meridian's MQA become popular? As John Darko suggests, the first target maybe the Japanese home market. When I was on Sand Hill Rd. we used to watch the Japanese youth as a trend predictor... especially for mobile devices.
No matter if Softbank invests a pittance - for them - or Technics signs up for a "standard" - some of you will remember "token-ring" as the PC networking standard - we shall see Moore's Law and its corollaries rule. (It would be interesting for a shareholder to request the T&Cs of the Tidal/MQA with "publically held company investor/supporter" contract to see what stipulations are there for Meridian or whoever owns MQA.) It reminds one of the first round or mezzanine round of VC. How much ownership are the Tidal/MQA inventors left with? 66% - perhaps not....
Given the price/performance increases in data center storage, Internet bandwidth, and commercial off the shelf (COTS)32/64 bit DAC chips with ever greater noise floors with native DSD decoding on offer, we shall soon see DSD/DXD performances and recordings being offered by some major company on a native, streaming basis. Plenty of bandwidth over Ethernet, easy to do. If SONY wasn't following their Beta-Max business model this day would have come long ago. With their huge catalog of titles, doesn't it now make sense for them to jump generations? An alternative would be to MQA-ize DSD natively encoded/decoded (or into PCM if the user chooses) if this would work. I've heard it would but don't believe everything you hear or read - or what you think.
Moore's Law and its networking corollaries will win out. But it's gratifying that some little people got a pay-day whilst getting there.

corrective_unconscious's picture

You don't get to MQA-dize DSD.

"Any DSD files have to be converted to PCM to use MQA"

I don't know what audience you are trying to address in your post, but its apparent insiderness is matched only by the general air of breathless unreliability, imo.