Something must be working at Tidal. It announced yesterday it has surpassed 3 million subscribers, a 2.5 million subscriber improvement from its launch a year ago. (WiMP, re-branded as Tidal after its purchase by Jay Z, already had about half a million customers.) That's a solid number for a standalone subscription service that started from practically a dead stop and has suffered through constant executive turnover.
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Tidal's 2.5 million subscriber gain is impressive considering its competition. Apple Music has its parent company's vast resources, hardware tie-ins and ability to lure artists and their content. Spotify, like Tidal, is a standalone subscription service but has far more resources -- it has raised $2.5 billion to date -- and the greater momentum afforded by its six-year head start.
Some of the improvement can probably be attributed to the arrival of Apple Music. Its arrival caused a rising tide for some other subscription services. But much of the gain is probably due to the attention drawn by owner Jay Z. Few other owners could attract the media coverage given to Tidal. Few other owners could bring together artists to become equity holders and often use Tidal as an exclusive platform for their releases. And who else could put together the concerts, such as the Tidal X events at Barclays Center in October, that help promote the service?
The actual Tidal product probably hasn't been a factor in its growth. At the same time, the product hasn't got in the way, either. The Tidal app and web player offer a user experience that meets expectations and is good enough not to turn away customers. For a young company, a good place to start is not shooting yourself in the foot with a bad product.
Tidal's advantage, to whatever degree it exists, comes from access to its artist-owners and affiliation with Jay Z. Tidal has been able to offer nine exclusive albums, 166 exclusive playlists (from the likes of Prince, Justin Bieber and Coldplay) and exclusive singles such as Rihanna's "Bitch Better Have My Money." It live streams concerts too: 44 of them to date.
Another point of differentiation is high-quality audio. WiMP originally launched under the Tidal brand in the U.S. as a high-definition audio service. High-definition means 1.4Mbps lossless audio, a big step up from the 320kbps that's the standard quality for Apple Music and other paid subscription services. Along with Deezer, Tidal is betting sound quality will set it apart from its peers.
The Tidal app and web player are fine. There's nothing wrong with them. Tidal has the features that listeners have come to expect from a music subscription services: curated playlists, charts, recommendations and radio. But a good product isn't enough these days. There are plenty of streaming services with a pleasant user experience and capable mobile app.
Consider Apple Music's lesson in product development. Apple didn't reinvent the subscription service, but it pushed the model a few steps forward. It acquired Beats Music through its purchase of Beats Electronics in May 2014 (the deal closed three months later). Apple spent 13 months improving Beats Music, retaining its emphasis on human curation while adding a 24/7 radio station, Beats 1, and luring DJ Zane Lowe and producers from BBC Radio. In contrast, Tidal re-launched just five months after being acquired. It got a new coat of paint and some celebrity passengers but was essentially the same vehicle.
It might not be possible to catch Spotify, which has the advantage of time and size. It has poured resources into improving its curation and playlist capabilities. It acquired music intelligence startup the Echo Nest and recommendation service Tunigo. It has built curation and label relations teams to improve its ability to serve music to its listeners. There are automotive integrations, SXSW promotions with SoulCycle and a partnership with Starbucks. It's practically everywhere.
There's an uphill battle for any standalone subscription service. Outside of exclusive content, the catalog itself doesn't matter. The user experience won't be hampered if a subscription service can't offer every garage band, 20-minute Indian raga and 70-year-old Appalachian. Success comes down to a great product and the ability to build a compelling experience. Time will tell whether Tidal can keep up let alone win.
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