Spotify vs. Tidal: Should You Pirate Music?

Daft Punk. Chris Martin. Nicki Minaj. Rihanna. Jack White. Usher. Madonna. Win Butler. Alicia Keyes. Beyonce. Kanye West. Jay Z. Drinking champagne, kissing hello on both cheeks, talking about starting a movement, claiming this yet to be named collaboration is “ego-less” (re-read previous 12 names), arguing that whatever ‘it’ is (still yet to be named) will bring “art back to the forefront… humanity back to the artists… not technology, but art, human art.” A heartbeat grows louder in the background- a strangely dramatic noise given that this meeting looks like the most fun party of all time. Jay Z boldly asserts, “If these artists can sit in a room together, the game changes forever.” The heartbeat stops. And then the big reveal: Tidal. Oolalaaaa. I still have no clue what this movement/collaboration/game-changer actually is, but I definitely want to be apart of something this innovative. I have to look it up online to learn more. Marketing wins yet again.

It turns out Tidal isn’t some super hip artistic, or political movement, or some sort of new rehashing of Live Aid, like I hoped and dreamed it would be. It’s a new music streaming service that has a similar, though an essentially different model than its largest competitor, Spotify.

Here are the facts:

Tidal was first started as the steaming service WiMP by the Norwegian company called Aspiro. The service is already quite popular, with a half a million subscribers. This popularity is mostly abroad, though there are users in the US. It boasts 25 million songs (Spotify offers 30 million), and 75,000 high definition videos. Jay Z bought Aspiro in 2014 for 56 million dollars, renamed WiMP to Tidal, and officially announced the relaunch in October of 2014.

Unlike Spotify, Tidal does not offer free usage of the service. Users can either subscribe to Tidal Premium for $9.99 a month, or Tidal HiFi for $19.99 a month. The HiFi feature is particularly interesting because of its emphasis on providing the highest sound quality for its users. For the most part, Spotify’s sound is of a compressed MP3 quality, while Tidal provides sound that is better or at least close to the quality of a CD. Both subscription options provide curated playlists by music’s biggest stars. As Jay Z said in a conference at NYU early this year, if Win Butler of Arcade Fire hears an amazing artist in Haiti, he can put this artist on a playlist and share it with all Tidal users, instantly making the playlist more ‘human’ than anything Spotify can offer officially.

While this may seem like just another music streaming service, it has started a debate that could have immense implications for the music industry and the consumers that keep it afloat.

Spotify has made its name by use of the ‘freemium’ model. The company says, “By bringing listeners into our free, ad-supported tier, we migrate them away from piracy and less monetized platforms and allow them to generate far greater royalties than they were before.” Once users are on their free tier, they “drive” users up to premium service for only $9.99 (the entry level price for Tidal.) Spotify claims that this model has generated over $2 billion for its artists, and most importantly capitalizes on people who were going to pirate the music to begin with. In fact, as Spotify has grown in popularity, music pirating has steadily declined. 

In other words, Spotify generates revenue for artists, musicians, labels, publishers, etc., and even more importantly, generates this revenue from people who probably would not spend money on music to begin with. It also offers a premium service that gives users access to 30 million songs on their computer or phone with the click of a button. For many of Spotify’s 40 million users, Spotify thus represents the golden age of music streaming services.

So then what the hell is wrong with it? By encouraging artists to leave Spotify and by placing exclusive content on their service, Tidal is threatening to remove the freemium model, force users back to pirating, and end the golden age that many have grown so accustomed to. And however much that awful commercial wants us to believe it is, Tidal is not a game-changer; it could actually be the worst thing that could happen to the consumer-music experience since… well, since ever.

And yet Jay Z paints a very different, and rather compelling, picture of Spotify and the freemium model. Jay Z argues that artists and musicians are actually getting paid far less than Spotify may be leading us to believe. While we may be skeptical hearing this from man worth half a billion dollars, he encourages us to think of the little guy as well:

You guys may have seen some of the stats like, Aloe Blacc had a song that was streamed 168 million times and he got paid $4,000. For us, it’s not us standing here saying we’re poor musicians. If you provide a service, you should be compensated for it. And not just artists — just think about the writers and the producers. Like an artist can go do a Pepsi deal or something — I shouldn’t have singled out Pepsi — but they can go get an endorsement deal somewhere and you know, go on tour and sustain themselves, it helps their lifestyle. But what about the writers who do that for a living? The producers? That’s it for them. What about Jahlil Beats, who produced Bobby Shmurda’s “Hot N**ga”? He went on to get a $2 million record deal or whatever, and Jahlil Beats just put the song out. So he wasn’t compensated for that song at all. There are dozens — more than dozens, there are thousands and thousands of those sorts of stories of someone who worked at their craft, worked really hard at the studio, they did their job and people loved it and consumed it and they just went home. I think we’ll lose a lot of great writers in the future because you have to do something else, because you can’t sustain a lifestyle, and I think that’s a shame. That someone has that talent and just isn’t being compensated because someone needed a business to profit off of their work. And we’ve seen that time and time again, we’ve seen it time and time again. Companies that pretend to care about music and really care about other things — whether it be hardware, whether it be advertising — and now they look at music as a loss leader. And we know music isn’t a loss leader, music is an important part of our lives.

Studies on Spotify have shown that this is actually quite true. While Spotify says that “its average payout for a stream to labels and publishers is between $.006 and $.0084,” data journalist website Information is Beautiful suggests that “the average payment to an artist from the label portion of that is $.001128.” Though the service has not been around long enough to show how much more it will pay all of its artists under Jay Z’s helm, the purpose is to make this number more fair. In paying all the musicians credited to songs as equally as possible, Jay Z and the Tidal crew hope to “build up music again” and cause it to be a more transparent, enriching, and creative force in all our lives. It seems lofty of course, but if you are already paying $9.99 for Spotify’s service, then why not switch to Tidal precisely for its more ethical stance? If you believe music is in a crisis, then why not pay for a service who’s entire mission is to change the industry and make it better?

The answer to these questions comes back to piracy, and illegally downloading your favorite tunes. As noted, Spotify has served as a corrective to this issue, and has driven down piracy rates around the world. Nevertheless, piracy still exists, and the music industry, and really the entertainment industry in general, argues that piracy and file sharing is ruining the entertainment experience. Tidal hopes it can prove to people that music is valuable and that it is actually worth paying for. The question then becomes, is piracy really killing the music industry? Are people who get music for free really ruining the careers of musicians we know and love, or at least the potential careers of people trying to break into the music world?  Are the social sharing capabilities of social media really accelerating this process? Tidal has started the Napster debate once again, for better or for worse, and I think it is a debate worth having.

10 comments

  1. Great round up of information. I really appreciate this, especially since I haven’t had the time to research Tidal too much on my own! I find it interesting that Tidal does not have a student discount like Spotify. I feel like a lot of Spotify’s base is comprised of students, and paying $4.99 a month for music is far better (in my opinion) than paying $9.99. If Tidal, had a cheaper option, I would consider it. However, $10 a month for me seems ridiculous when I’m already a Spotify user.

    Did your research and writing of this post change your views on Tidal?

  2. @hannagreenstein
    From that interview with NYU that I mentioned in the post: An NYU student asks, “Will Tidal offer a student discount for subscriptions like Spotify does in the near future? JAY Z: Oh. Okay, well I’m going to let Vania [TIdal executive] answer that one.
    SCHLOGEL: Yes. When we look at the data, the data says that students don’t really care about paying for streaming. I actually don’t believe that, necessarily — I think that this demographic here, sitting in the room, cares very deeply about music. I think in fact that a lot of you have a deeper emotional connection with music than any data says. And so the short answer for that is, absolutely yes, because we want you all to be Team Tidal and to be a part of this.”

    And yeah it definitely did. I understand where Tidal is coming from and respect their position, I just think they opened up a big debate about piracy that could be more negative for people’s perception of the music industry than positive.

  3. @rkeilson thanks for sharing that part of the interview! I’m glad they’ll consider that.

  4. Great post on a really interesting topic! My fear for a new development in this industry would be that the music industry splits its rights between the two platforms. For instance if Jay-Z were to go away from Spotify and bring his crew with him, this would take away a lot of the content that I listen to online. I would basically be forced to switch in between the two apps to get a different variety of music. I feel like something like the music industry benefits from a single source of music delivery. I also do not understand what more artists want from Spotify. The company has extremely slim margins as it is, and most of its expenses are from copyrighting that they have to pay to the artists. I just hope that this is not a sign of things to come for the industry.

  5. Great post Rob! I have seen the Tidal commercial a lot lately, but never really looked into it to see what it is all about. Thanks to your post, I feel like I know enough about Tidal to engage in a conversation about it. Thank you! I wonder if more and more artists will take down their music from Spotify and switch to Tidal. As a Spotify (for free) user, I really hope that this is not the case. I, like many others, have grown accustomed to listening to music for free wherever I go (of course as long as there is wifi!). I realize now, that it can be unfair for writers and song producers who make no money off of their work anymore. I had never really taken them into consideration before when thinking about this issue. When Taylor Swift, for example, pulled her songs off Spotify, I assumed she was being greedy and wanted to make as much money as possible off of her album at the expense of less exposure. I now question my judgement and think that maybe there are other reasons for her pulling her music off of Spotify (maybe to benefit unknown people to the public such as song writers, producers, etc.)

  6. Great post! Really interesting to hear that Tidal is actually just a rebranded streaming company that Jay Z purchased from Europe, I always thought he was starting this company completely new. I think that Tidal has only generated the hype it has due to the high profile artists that are backing it. The premium sound quality that it is offering may be appealing to some true music enthusiasts, but I don’t think that will be a differentiating factor to most consumers. I don’t think that there is much of a reason to switch from Spotify or just completely pirating music, as there is hardly much that is unique about this platform. However, they are doing a good job appealing to the ethics of the issue, and may be able to garner some following about people who truly care about the upcoming artists and their compensation for the music. It will be interesting to see how this unfolds in the future.

  7. Really great post! You did an excellent job of breaking down the Tidal announcement and how it might shake up the music industry. One thing to seriously consider however, is that Tidal and Spotify may not need to gun for a winner take all approach. I can’t imagine Tidal or Spotify forcing artists to choose to host their music on one service and not the other.
    The way I see it, this current situation is comparable to the situation that exists in many other commodities when it comes to consumer vs. luxury goods. When you buy a car, you can buy a used car, pay for a low end new car, or shell out for the most luxurious sports car, or buy something that’s in between all of that. Its not black and white, its a sliding spectrum. The same applies for Spotify, Tidal and pirating music. Jay Z is right, music is an important part of everyone’s lives, and people will find a way to obtain it. Some people will always pirate their goods, some people are content with normal Spotify, and some are audiophiles who will shell out for their FLAC/loss-less music files.
    Jay Z could be seen as another player in a finite market and shrinking everyone else’s slice of the pie, but he could also be seen as an innovator who’s expanding the streaming market to welcome in folks who love high-definition music but did not have an accessible platform. Only time will tell how this all plays out, but I firmly believe Jay Z is aiming to corner the “luxury” market of the music streaming business.

  8. Great post! This did a great job of explaining the announcement as well as some of the distinguishing features available on Tidal. I liked your points about how Tidal could cause a rebirth of a piracy movement similar to what existed before Spotify’s “fremium”. I agree with this fully. Similar to what was said in class, Spotify provide’s the incentive to not steal music. The artists need to decide whether they want to be paid a small amount for a large volume (spotify). or a bigger amount on a small volume of music. I think as an artist they should allow their music to be streamed, and gain revenue from tours. Although it is a different model than what they are used to, it is the way the music world is going because of social implications of the internet.

  9. Nice post. We used to read an article for class describing the difficulties of the Freemium model, because it’s tough to get the balance right. Where this *might* work is that if enough artists pull their content from Spotify, then the value of their free product starts to deteriorate. I’m not sure everyone would resort to Piracy. What led to the rise of napster were $20 albums. $10/ month might seem like a price worth paying for a premium service.

  10. In the music industry, it is so true that we as listeners only care about the singer. Seriously, I don’t know the song writer or producer, not to mention all the backstage peoples. I really hope there’s a fair share for them as the song gets popular? But guess it isn’t the case. The ethic that your blog brings about and how Tidal can kind of tickle that is really something we should discuss in class. I mean, technology disrupts so many industries already. As for music industry, I think it is something more than just profit, because it is MUSIC :) But that doesn’t neglect the financial need from all people involved in the music industry.
    My gut feeling is that, there is and will be still piracy. It is the matter of how many more others who value and support the music. I believe that the basic economic model that we all know stay true especially in music industry: the relationship between supply and demand and the value of the product :)

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