A Tidal Wave Of Power

Strictly Business By Mazza

“Oh ok!”

That quickly deleted but certified Tweet from Spotify’s Daniel Ek may just come back to bite him in the ass, and make for a cautionary tale for those that underestimate how quickly things can change. As bigger and bigger bites are being taken out of Spotify’s long monopolised music streaming market, today some naysayers may need to start the backtrack and look a little closer to Jay-Z’s Tidal and the pending powerhouse that could just take the entire industry by surprise.

2016 is already becoming a thrilling year for music and the shape of the music industry. We’re currently seeing the spinning plates of power and it’s exhilarating to watch while we’re questioning everything from our choices to our loyalties to our once strongly held perceptions and options. What we thought we knew, we’re not so sure about now and as the curtain is being pulled further and further back, day by day, are we taking a good enough look to see where things could be heading next? “A wise man told me don’t argue with fools, Cause people from a distance can’t tell who is who” or so Jay-Z told us on the Kanye produced ‘Takeover’.

If you’re just catching up with Kanye’s weekend Tweets, SNL performance and ‘The Life Of Pablo’, don’t underestimate the kind of paradigm shift that’s taking place in parallel with the real distribution of power. Playing his own game of smoke and mirrors, Kanye himself has spurred a new round of speculation about his financial state of affairs, appeals to Mark Zuckerberg and all while disrupting the Fashion, Tech and Music industry in realtime.

The fashion industry itself is living out the last legs of it’s own pre-existence, magnified by none other than the power of the West, whose staging of Yeezy Season 3 at Madison Square Gardens upstaged New York Fashion week powerhouses. Filling over 18,000 seats at MSG, screening in cinemas in over 25 countries and live streaming on Tidal – the estimated 20 million people who tuned in for the show and listening event of the year was unprecedented in the history of fashion or music. The New York Times summarises this in effect with one line –  ‘This is turning out to be fashion’s season of existential crisis. Suddenly designers are asking big questions about “purpose” and “effect,” re-examining the system on which they rest.‘

kanye-west-Yeezy MSG

Last week as Burberry changed tack on future rollouts, Diane Von Furstenburg was also quoted as saying “We are in a moment of complete confusion between what was and what will be. Everyone has to learn new rules,” only Kanye’s Yeezy Season 3 MSG debut could lay claim to having already broken the rules;

Where the play is for power over money, identity play is as much at play in the reach for the power in our pocket and it’s exactly where the battle for our emotions is taking place. Kanye the master of playing with our emotions didn’t have to do anything other than reach to us with ‘The Life Of Pablo’ and it masterfully – is everything.

Sure we love music but ultimately all of our freedoms themselves are under scrutiny, how free can you really be about your choices and how free do you really want your music to be and at what cost? If you love your artists, you gotta support their music and that ultimately means putting your hands in your pockets – if you’re not paying for the music itself, you’ll be paying for the experience.

I don’t blame you much for wanting to be free

Subscription fatigue is fast setting in, but we’re also nearing the necessity to choose a side, as a powerhouse of music icons unleash their music to the world in 2016. With Kanye’s release already secured as a week long Tidal only exclusive, what can we expect from Beyonce’s next album expected to be dropping anytime this year and with a rumoured tussle going on between Sony and Tidal about her release. Apple Music will likely have the monopoly on the exclusive with Chance’s forthcoming yet to be confirmed ‘3’ album, and well we know where Drake’s ‘Views’ on allegiances are.

Nonetheless the frustration is about to grow that much larger for fans, as people are slowly racking up those monthly costs of £6-£12 a month between their Netflix, Apple Music, Tidal, Spotify or Amazon Prime subscriptions, and wondering how to actually manage it all.  Now you’re being forced to ask yourselves, how many subscriptions do you want, how many do you need and exactly how many can you actually afford? But it’s not just about picking a side, we’re also picking a side of history and our emotions are playing a part in that decision whether we like it or not.

Today’s publication of Billboards 100 Power List, not unlike last years power list, raises more questions yet again about the biases at play, Music Business Worldwide made some startling but unsurprising observations about the power balance of the 2016 list, pointing out that ‘there are a fair few questionable omissions – not least Tidal & Roc Nation mogul Jay Z.‘ while the all white team at ‘Apple Music are No.3 on Billboard’s Power 100. Spotify’s Daniel Ek is at No.10. Oh ok.‘

It’s undebatable when it comes to ownership, the great balance of power still remains firmly in the hands of the Big 3 – Sony Music Entertainment, Vivendi’s Universal Music Group, and Warner Music Group who still control 3/4 of the $15bn-a-year global music market. Payments to the big 3 tables, are digging deep into the pockets of music streaming companies and for those without a big cash bank to subsidise their streaming service – there’s no way to go but down in exchange for their freedoms. Spotify, Pandora, SoundCloud and Deezer are all making losses and not one of them has ever made a profit.

Billboard Power 100 2016

With annual music streaming subscriptions currently approximated at £120 a year each for Spotify, Apple Music or Tidal – it’s not a case of having them all – it’s a case of choosing which one.

In August of 2015, Apple’s Eddy Cue announced proudly that 11 million people had signed up to Apple music since it’s launch and now it appears their conversion rate to 10 million actual paid subscribers has paid off with Apple’s Tim Cook confirming the numbers to investors last week. The unprecendent speed with which Apple music is growing, could have it firmly on its way to nailing 20m subscribers by the end of 2016 and taking over the market.

While Apple Music is simultaneously realigning the soundscape for radio and it’s multi-platform reach across it’s platforms from music streaming, downloads, TV and radio, Tidal has been largely ignored, but Jay-Z has continued to invest in the long play with Tidal. Long moving past the disastrous PR launch and silently building the content distribution platform with original content and exclusives – who’s the New Slaves you ask “See they’ll confuse us with some bullshit, Like the New World Order.”

2016 is the year we find out what the price of access will be

Daniel Ek’s since deleted Tweet following the Apple Music announcement last summer, may have come from feeling underwhelmed too early in the game, or may have been more about a state of nonchalant arrogance than about understanding the real value of the music game.

Daniel-Ek-Oh-Ok

As with most streaming services, making large royalty payments to music copyright holders, Spotify has never made a profit. While its revenues surged last year to almost €1.1bn, it incurred an operating loss of €165m. At the top of 2016, the FT reported that ‘Spotify is seeking to borrow $500m from investors, just eight months after the world’s biggest music streaming service raised the same amount by selling equity at a valuation of $8.5bn.’  More shocking for some, is the revelation that neither Spotify, Pandora, Deezer, or Soundcloud have ever made a profit. Since money on the markets is drying up fast and tech stocks are getting battered by the day, investors are feeling less upbeat about the returns on those billion dollar valuations, and are making safer bets.

Each streaming service is on the hunt for funding and the options for all are turning to convertible debut offerings. SoundCloud is reporting bigger and bigger losses year on year and questions about its very survival are abound, with more financial injection needed. Pandora, the US internet radio company,and Deezer have both raised new rounds of funding but their future is still fragile.

The marketing playbook has been rewritten, the pr playbook is being rewritten, the rules are being rewritten. The tide is changing and Tidal is changing the play, we’re heading back to the recession-era of ‘Cash Is King’ and for this new world order in music it might be a case of not underestimating the cash kings.

While the rewards are still being reaped by the established players, the game changers armed with the audacity of a few may just be unleashing a new takeover – but before you pass judgement look at the reach of power once again –  “It’s like bringing a knife to a gunfight, pen to a test, Your chest in the line of fire with your thin-ass vest, You bringing them boys to men, how them boys gonna win?. This is grown man B.I., get you rolled into triage, bi-atch, Your reach ain’t long enough“.

Tidal may have a fighting chance and eventually it could end up existing for all the right reasons.

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