Tuesday, 24 January 2017 17:23

Sprint Acquires 33% of Tidal

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Tidal has long been rumored as an acquisition target for major companies looking to expand their footing in the music industry, such as Apple. However, on January 23rd, Japanese telecommunications giant Softbank – who owns Sprint – moved to buy 33% of the burgeoning streaming service. Sources report that Sprint’s one-third acquisition cost $200m, which would value Tidal at $600m. Sprint CEO Marcelo Claure will join Tidal’s board of directors in an advisory capacity.

Tidal, a music streaming service owned by a collective of artist-owners including Jay-Z, Kanye West, and Beyoncé, had been previously seeking outside funding to create more exclusive content before the Sprint deal was finalized. While its services are available in more than 52 countries, with a 42.5 million song catalog, 140,000 high quality videos, and 1 million subscribers, this is exactly the deal Tidal and its owners were looking for to expand the streaming service’s reach commercially. Tidal has differentiated itself from the rest of the streaming market by focusing on their high quality audio distribution, which now includes a growing catalog of Master quality audio by their artists. However, in this day and age where competitors Spotify and Apple Music are inking exclusive deals with corporate entities to develop and diversify their customer bases, Tidal had grown stagnant in its efforts, making this deal even more important. “Sprint shares our view of revolutionizing the creative industry to allow artists to connect directly with their fans and reach their fullest, shared potential. Marcelo understood our goal right away and together we are excited to bring Sprint’s 45 million customers an unmatched entertainment experience,” said Jay-Z. The $200m that Sprint is sinking in to the company is no small number, but Sprint CEO Marcelo Claure reassured investors and customers alike that, “Jay saw not only a business need, but a cultural one, and put his heart and grit into building Tidal into a world-class music streaming platform that is unrivaled in quality and content.”

This move by Sprint marks the continuation of Fortune500 companies understanding that music and especially hip-hop are not only commercially viable, but lucrative. Sprite recently figured this out after featuring Atlanta hip-hop newcomer Lil Yachty in a prime time ad with LeBron James that many marketing researchers say had a direct affect on Sprite’s recent sales spike. Nautica saw the effects of this and built off of what Sprite did by naming Yachty to a role on their creative design team for 2017. Wall Street also seems to like corporate giants buying in to the hip-hop and streaming space, as Sprint’s (NYSE: S) stock jumped 2.69% and was trading at a three-year high the morning of the sale. Furthermore, since Wall Street caught wind of Sprint trying to acquire a portion of Tidal three months ago, Sprint stock has outperformed competitor T-Mobile by north of 15% and Verizon by upwards of 24%. For current Tidal subscribers, not much if anything will change from the current user experience. Conversely, the 45 million customers that Sprint boasts will now have access to all Tidal features. Most of what the $200m will be used for that is now flowing in to Tidal’s books is yet to be seen, but a joint press release by the companies have indicated that a marketing fund worth up to $75m will be set up specifically to be put solely behind artists and their promotional efforts. With this influx of cash, you also expect Tidal to start aggressively putting out more original content. This is important because the way Tidal will start accruing revenue from this deal is if they can truly differentiate themselves in the market from the industry giants of Spotify and Apple Music. While Apple Music has exclusive deals with Drake and Chance The Rapper, and Spotify has exclusive deals with some of the more influential labels in the country, neither of them produce original content that is comparable to Tidal. If Tidal invests this money correctly and can do a good job putting out more projects quickly that are similar to the 21 Savage and Young Thug tour documentary they made, they will have branded themselves as the leading original content music streaming service. They can then build on this and start landing exclusive content deals with artists that aren’t in their target hip-hop demographic to widen and diversify their audience and customer base. If Tidal can take advantage of this opportunity and money, you may see a new player challenging for the digital music streaming throne.

Read 2283 times Last modified on Thursday, 26 January 2017 15:57
Isaac Weeks

Marketing intern

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