Tidal, the new streaming service launched by Jay Z and publicized by a slew of other major artists at a press conference on March 30, dropped two exclusive hits over the weekend.
The first, on Saturday, April 4, was a surprise video from Beyoncé, featuring the star wearing pigtail braids and playing a baby grand piano while singing "Die With You," a song celebrating the seventh anniversary of her marriage to Jay Z. The second exclusive, launched the very next day, was Rihanna's "American Oxygen," from her upcoming, as-yet-untitled new album.
Both videos are enjoyable, but will they be enough to convince users to switch platforms? It might not even matter. Exclusive music might not garner Tidal a huge base of users today, but it could be the first step in the industry's transition to making almost all of its revenue from streaming.
A fight for exclusive content
Tidal currently is marketing itself via two major calling cards: high-quality audio and the promise of big-name exclusives. As I've written before, the size of the audiophile audience who will pay $20 a month for streaming is very small, though Tidal won't have much competition for those users.
Where Tidal finds itself in a more competitive marketplace is exclusivity. Its service in the $9.99-per-month tier, which doesn't offer high-quality audio, is really no different from the other interactive streaming services on the market. Spotify, Rdio, Beats, and Tidal all compete for the same group of users.
Jay Z has hinted there could be more to exclusivity on Tidal than simply new albums. That could be what makes the company powerful. In an interview at the Clive Davis Institute of Recorded Music at NYU, Jay Z and Tidal executive Vania Schlogel, discussed the future of the company:
"Again — there will be other things. This isn't just about music; it's also about concert ticketing. It's a holistic place where the artists will live in. You may be able to download a song for free, but you're not getting into concerts for free. There are different things that we offer. It's not just songs — we're offering value."
None of these features have launched on the site yet.
Exclusivity could differentiate a company Tidal from Spotify in theory, but Tidal isn't the only artist-focused streaming service. Its main competitor in this market will be Apple's Beats Music, which has Interscope's Jimmy Iovine leading a similar charge for exclusivity.
Before the launch of Tidal, Beats seemed like the most likely player (over Spotify and Rdio) to get exclusive albums from artists like Kanye West and Nicki Minaj, who have close ties to Iovine. The service's connection with iTunes also means that if artists were to give Beats an exclusive, it might direct listeners to purchase the album on iTunes, thus making the artists a bit more money from album sales.
But both Minaj and West stood on a stage last week with Jay Z and said they would be working with Tidal. Thus, their exclusives would probably end up on Tidal, not Beats. That doesn't mean the end of Beats, especially not with Apple backing the service, but it certainly signals something about artists' faith in listeners to purchase music.
Exclusivity could be the final nail in the purchasing coffin.
Tidal's roster of artists is larger and more diverse than the Beats roster, and it includes a slew of artists like Kanye West, Beyoncé, and Rihanna whose fans are known for purchasing digital albums.
However, what Tidal has released so far won't convince listeners to switch from Spotify in droves. There are few artists with that degree power, though Tidal has a few on its list. If Kanye West were to release his new album exclusively on Tidal (even for a couple of weeks), for instance, that could convince a large portion of his fan base to sign up for at least a little while. If Beyoncé or Rihanna did so, they'd bring in other circles of fans.
Thus, Tidal could use its star power to convert users, but it would require those artists to take a personal hit for the good of the company. Sales of full albums may be dropping drastically — according to the 2014 Nielsen US music report, CD sales fell 14.9 percent, while digital downloads fell 9.4 percent — but selling an album is still the most lucrative way for an artist to make money. Tidal features no ready-made connection with a music sales site, like Beats does.
The only artists who sell significant numbers of albums anymore are huge stars. Taylor Swift's 1989 sold millions of copies partially because she pulled her music from Spotify and made buying or pirating it listeners' only options. What's interesting about the idea of streaming exclusives is that they almost certainly would make everyone involved in the production of the album — the label, the producer, the songwriter, and the performing artist — less money in the short term. If you truly believe paid streaming subscriptions are the future of the industry, however, this may be the best way to encourage consumers to sign up for them.
Giving an exclusive album to Beats makes sense because at least there's a shot at listeners going over to iTunes to buy the album. Similarly, giving an exclusive video or single to a streaming platform, like Beyoncé and Rihanna did, also makes sense, because neither of those are expected to do massive sales.
But if Tidal can somehow convince a huge artist who has the ability to move product off virtual shelves to move product on Tidal instead, it could convince people who don't use streaming platforms at all to give Tidal a try. Exclusive albums could be the next battleground for streaming platforms — and Tidal is well-positioned in those fights.