08.12.2017
  • United States

Knock the Hustle

Jay-Z’s Tidal streaming service is just another "sharing economy" scam.

Tidal founder Jay-Z. Mikamote / Wikimedia

Take him at his word: he’s not a businessman, he’s a business, man. Few artists have embraced “entrepreneurship” more fully than Jay-Z.

This summer, he surprised fans by releasing his thirteenth solo album, 4:44. But it was no surprise that they could only get it via Tidal, the streaming platform Jay-Z launched in 2015 with superstar shareholders like Beyoncé, Madonna, Kanye West, and Jack White. Competing with Spotify, Apple Music, and Google, Tidal distinguished itself as an artist-owned alternative that offers listeners high-fidelity streaming and provides artists with unparalleled support. As Alicia Keys proclaimed at the official launch, “This is for the people by the people, you know?”

The star-studded and live-streamed announcement garnered immense social media and press attention, glorifying Tidal as a panacea amidst the music industry’s tumultuous shift towards the streaming paradigm. Yet very few noted the fundamental similarity between Tidal and its competitors. Marketing ploys and UI/UX features aside, each of these services does basically the same thing: they provide subscribers with unlimited access to an expansive music library for a monthly fee.

In fact, Tidal has the same ownership model as other streaming platforms. Although they didn’t appear on stage with Kanye and Keys, venture capitalists and the three major record labels own a huge chunk of Jay-Z’s start-up, calling its assertion of artistic autonomy into question.

In 2014, scholar and critic Eric Harvey chronicled the onset of the streaming revolution, tracing it back to nineteenth-century speculative fiction, twentieth-century litigation around radio, and ultimately, the twenty-first century’s “celestial jukebox.” But they key takeaway of his expansive piece comes at the end: the music industry has transformed “from properties to portals,” mirroring capitalism’s new Silicon Valley–infused spirit.

Tidal’s co-owners promised it would be different. In their contribution to the launch video, Parisian electro-pioneers Daft Punk mourned a lost era in which “artists were the icons,” noting that “now the iconic elements are the tech companies that think the artists are products.” This artist-owned service, they declared, would put artists back on top.

Instead, Tidal highlights the exploitation that has always plagued the music industry, exacerbating the gap between music’s 1 percent and the rest.

The Real Winners

Like Uber, Spotify has never turned a profit. In 2016, its net losses increased by 133 percent, almost tripling sales, which grew only 52 percent. As VICE put it, “Spotify’s users are loving it to death.”

While Uber has pinned its hopes on a future in which automation and deregulation create unbridled profitability, Tidal and its cohort bank on “scalability,” as Spotify founder Daniel Ek has repeatedly prophesied. But this future looks more and more distant: Spotify’s user base has more than quintupled since 2014 with no corresponding revenue growth. The streaming service has already stooped to austerity measures, reportedly convincing record labels to accept lower payouts.

Content providers themselves have been mostly absent from these negotiations, as non-superstar acts, shackled to their existing record deals, not only can’t participate but often remain unaware of the terms that dictate ownership and payment structures. We might expect Tidal — for and by artists — to do better, but Glaswegian independent label LuckyMe, joining the chorus of streaming skeptics, took to Twitter following Jay-Z’s album release to remind followers that it remains “the worst paying [digital service provider.]” (The tweet has since been deleted.)

This might remind readers that some major acts, like Adele, Radiohead, and Taylor Swift, have been conspicuously uncooperative with major streaming platforms, but it also highlights the relative lack of autonomy for LuckyMe and its mostly underground roster. Clearly, as with so many socioeconomic ills, the rich can effectively control their assets even during a crisis. Everyone else must play by the rules or exit the market entirely.

Neither artists nor subscribers win in this model. Listeners and fans struggle to find music as A-list albums are inconsistently populated across competing platforms. Jay-Z and Beyoncé released their music on Tidal as expected, while Drake has signed a partnership with Apple Music. Mega-artist holdouts as well as the indie stalwarts including, among others, LuckyMe’s back catalog — which ironically features acts like Hudson Mohawke and Cashmere Cat, both collaborators with Tidal co-owner Kanye West — leave gaps in streaming platforms’ libraries.

Even music executives seem to have recognized this problem: Universal Music Group chief Lucian Grainge reportedly “banned” streaming exclusives. Of course, the skewed incentives created by the major record label’s ownership stakes in the streaming platforms likely motivated this policy more than concerns about artists’ well-being or fans’ access. If anything, it is an illustrative case study of who actually profits from the structure of the sharing economy.

Though each platform offers different royalty rates, they all function on essentially the same system: payout rates fluctuate based on scale, more plays equal bigger checks, and more users means higher per-stream rates. Each remuneration parameter nonetheless remains pegged above all to the fallacious silver bullet of scalability. Ultimately, this means that while some artists will continue to enjoy disproportionate revenue growth, this piece of the pie remains tiny when compared to the slice that “portal” owners take home.

What should we make of Jay-Z’s superficial solidarity? When he met with fifteen of today’s most successful acts, he declared “if these artists can sit in a room together, the game changes forever,” but Tidal finds itself in terrible shape just two years later. It has rocketed through three CEOs and posted abysmal user retention rates. Meanwhile, he and Kanye are publicly feuding: the latter is demanding three million dollars in unpaid royalties and Tidal bonuses, while the former takes potshots on 4:44’s opening track: “You gave him twenty million without blinkin’ / He gave you twenty minutes on stage.”

Jay-Z’s reference to a massive payday likely refers to some perceived ingratitude regarding his storied role in launching Kanye’s career some fifteen years ago, but it might also point to Tidal’s faltering business model. Following the collapse of rumored acquisitions by the likes of Samsung and Apple last year, Tidal finally announced that Sprint had purchased a 33 percent stake. Altogether less sexy, this new ownership structure pairs a flailing telecom giant with a flailing but cool streaming platform — a cynical outcome for what has only ever been a cynical enterprise.

Jay-Z thought he had hit mergers-and-acquisitions pay dirt for his circle of artist-owners, each of whom hoped to transform their 3 percent share into millions and a ticket-to-ride in Silicon Valley. Had things gone just slightly differently, Tidal’s superstar musicians might have joined the ranks of today’s real rock stars: the titans flipping start-ups for billions. Perhaps Kanye’s 2013 declaration that “rap is the new rock and roll, we’re the new rock stars” could use an update to reflect the true rock stars of financialized technoculture. Instead, Jay-Z became a pawn in the content wars between old- and new-guard monopolists, as evidenced by recent exclusive partnerships struck up between Taylor Swift and AT&T, and the aforementioned deal Drake signed with Apple.

The thousands of artists who don’t own a piece of Tidal are left hanging in the balance. Even if we heed the streaming platforms’ self-published royalty rates and growth projections, these performers — independent, major label, and unsigned alike — will find themselves on the wrong side of the widening inequality gap accelerated by the shift toward streaming. Reflecting socioeconomic trends at large, the 99 percent of artists that don’t count themselves amongst the portal-owning superstar class reportedly take home less than one-quarter of all recorded music revenue. This is a fatal flaw in the ecosystem of “portals not properties.”

Jay-Z’s Tidal is only one example of the music industry’s turn to the sharing economy ethos, but it deserves outsized flack given its branding and PR rhetoric: the superstar owners masked the platform’s anti-artist coup with power-to-the-people messaging. Like their cousins Uber and Airbnb, streaming services have turned the labor force they rely on — artists — into desperate micro-entrepreneurs who compete for an ever-decreasing share of already meager rewards. Meanwhile, Silicon Valley grifters get rich, riding a wave of venture-funded growth.

Perhaps Jay-Z is just a businessman, after all.