Will Tidal's Mega-Music-Star Model Pose a Threat to Streaming Giants?

Jay Z, Other Celebrities Will Be Co-Owners in New Service With Sprint Partnership

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Shawn "Jay Z" Carter and a lineup of mega-music stars have banded together to relaunch Tidal, a hi-fi music streaming service. Mr. Carter acquired Tidal earlier this month with his purchase of Norway tech company Aspiro for $56 million. The company, however, will not just belong to him, but also to his fellow artists. Sprint, the struggling third-placed carrier, has also been announced as a launch partner.

The service promises its users hi-fi, CD-quality audio and video, curated by the musicians themselves. It's subscription costs are $19.95 for high quality streaming and $9.95 for standard streaming. Unlike Spotify, there will be no free ad-supported offering. At the outset, the service is pricy compared to the competition and, according to the Financial Times, "the deals with top recording stars do not include rights to music, which are held by the large labels that represent them."

At an NYC event on Monday, teased by a celebrity-studded ad that broke earlier in the day, Mr. Carter was joined on stage by Beyonce, Usher, Daft Punk, Kanye West, Madonna, Jack White, Rihanna, Nicki Minaj, Alicia Keys and many more. Ms. Keys addressed the crowd saying that the musicians were all banding together to launch an "artist-owned global music entertainment platform. ... Our goal is simple: we want to create a better service and a better experience for both fans and artists. Our mission goes beyond commerce, it goes beyond technology. Our intent is to preserve music's importance in our lives."

Tidal Exec Vania Schlogel introduced the stars and also announced the company's partnership with Sprint, name-checking CEO Marcelo Claure. She did not specify the terms of the relationship.

Tidal launched in October 2014 and only boasts about 500,000 subscribers at this point. But the new service poses a legitimate threat to established powerhouses like Spotify and Beats, given the star power and the intentions behind it. With its ownership model, Tidal promises to put power back in the hands of the artists, who over the years have lost control over how their music is distributed and consumed. Major streaming services that offer freemium models to entice consumers into subscriptions, have been particularly frustrating for some artists. Spotify, for example, last fall came under the attack of Taylor Swift, who pulled her entire catalog off the service. "I'm not willing to contribute my life's work to an experiment that I don't feel fairly compensates the writers, producers, artists and creators of this music," she told Yahoo.com.

Following Ms. Keys' speech, the celebrities on stage each stepped up to sign a "Declaration of Independence" of sorts.

On the Sprint side, as competition in the wireless industry grows, streaming is a favored promotional weapon. AT&T tied up Beats Music before it was acquired by Apple. T-Mobile launched a package for customers this summer, footing the data bill for a host of streaming apps.

Last April, Sprint signed a deal with Spotify -- the music service's "biggest ever," per its CEO Daniel Ek -- to discount streaming fees for customers that selected the "Framily" pricing plan from the fledgling carrier. Four months later, Sprint nixed the "Framily" offering amid a business and marketing overhaul.

Representatives from Sprint declined to comment on the Tidal partnership.

Jay-Z may not lean on Sprint to promote Tidal. The hip-hop mogul has persuaded his fellow musician celebrities to market the service in exchange for equity, according to the Financial Times.

--Contributing: Mark Bergen

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