Jay-Z Taking the Hard Knocks of Music Streaming

Rap mogul Jay-Z is learning the music streaming business is a tough game. In March of this year Jay-Z purchased Tidal the subscription music streaming service for $56 million. This was clearly a bold move considering the competition from Spotify, Google, and Apple.

Jay-Z’s plan was to address complaints from artists that they are not getting paid, or not paid enough, for their music.

Music streaming apps and websites original purpose was to  make music cheap, or free, for consumers while assuring artists would be fairly compensated for their work. That’s not happening. Musicians and songwriters claim they’re barely seeing any money from streaming.

Some muscians have openly revolted. Singer Taylor Swift pulled all of her music from Spotify. Taylor claims the ability to stream her new album, “1989,” threatened to hurt sales. Spotify claims 50 million users paying $9.99 a month for the service or listening for free with advertisements.

In a move to back Jay-Z’s service Prince removed all his music from online streaming services except Tidal.

Jay Z’s strategy is to have Tidal be a company with majority ownership in the hands of the artists. Prior to a news conference anouncing the service Jay-Z said “This is a platform that’s owned by artists. We are treating the people that really care about the music with the utmost respect.”

But the streaming game has no gentle side and Tidal has struggled. To begin with the company has seen the loss of executives recently. CEO Andy Chen left the company and was replaced by Peter Tonstad,  former CEO of Tidal’s parent company Aspiro Group, as an interm CEO.

At the time the company stated Tonstad “has a better understanding of the industry and a clear vision for how the company is looking to change the status quo.” But shortly thereafter Tonstad was fired. He was there less than three months. Currently day-to-day operations are being handled by Vania Schlogel, Roc Nation’s chief investment officer.

Right now Tidal is in desperate need of leadership. Though the company has significant artist backing it is tiny with a subscriber base of about 750,000 listeners. Spotify claims to have 20 million paying customers.

Another problem is that App Annie rankings reported that Tidal quickly dropped out of the top 500 most downloaded apps in the U.S. on April 18. In three days, it plummeted to no. 870.

For Jay-Z there seems to be no light at the end of the streaming tunnel. Currently the company is in a nasty dust up with rapper Lil Wayne’s record label Cash Money. The label has filed suit against Tidal for releasing Lil Wayne’s latest album “The Free Weezy Album.” They are asking $50 million in damages. Jay-Z only paid $56 million for the service.

Cash Money’s lawsuit claims that Tidal did not have the right to license the music and owes the label for the unapproved debut of the album. Tidal however claims that the rapper granted exclusive rights to the album in exchange for partial ownership of the company. Cash Money records called Tidal’s deal with Lil Wayne “a desperate and illegal attempt to save their struggling streaming service.”

Sadly Jay-Z and Tidal may have gotten caught up in a dispute between Lil Wayne and his record label. Lil Wayne claims his record label is holding back his money. The dispute has even led to the revelation of a possible murder conspiracy against the rapper.

Anyway you look at, if it gets to court, the outcome could have a major impact on the music business especially streaming services and music labels. When it comes to music streaming Jay-Z is learning, its a hard knock life.