Why Jay Z’s Tidal is under attack
Along with the streaming service’s rise has come accusations of inflated streaming figures, the departure of three chief executives, and allegations of unpaid bills
When Jay Z and Beyonce released their collaborative album on June 16, they stage-managed its release to cause maximum impact. During their performance in London, the video screen behind them lit up with a message: Album out now.
The album was initially only available on one music streaming service: Tidal. Owned by Jay Z, Beyonce, and a few of their famous friends, Tidal has gone from an obscure Norwegian streaming service to a global player in just three years.
But along with Tidal’s rise has come accusations of inflated streaming figures, the departure of three chief executives in just over two years, and allegations of unpaid bills.
Tidal started life in 1995 when three employees of a Swedish phone network met and decided to start a company that used WAP, an early precursor to mobile internet, to develop services to sell to networks. Founders Jorgen Adolfsson, Christer Mansson, and Klas Hallqvist moved to Norway and started Aspiro.
Aspiro launched a music streaming service, WiMP, in 2010. It didn’t try to compete with larger services like Spotify, instead aiming at an older demographic. WiMP’s main selling point was high-quality audio that streamed at the audio quality of CDs.
But music streaming is an expensive business with thin margins, and by 2014, Aspiro’s finances were looking rocky.
For months, Jay Z had been planning a move into music streaming. He had a network of fellow musicians, an extensive back catalogue and an army of fans. If he could convince other musicians to join him, then he had a chance of running his own streaming company.
Jay Z saw Aspiro and its WiMP streaming service as the perfect vehicle for his ambitions. Aspiro was listed in Stockholm, so Jay Z had to carry out his takeo- ver deal in public. On January 30, 2015, Jay Z broke cover.
Jay Z created a new company, Project Panther Bidco, that was dedicated to acquiring Aspiro and taking it private. Aspiro’s majority shareholder, Norwegian media company Schibsted, accepted Jay Z’s takeover bid of $56 million (Dh205.67 million). But a group of smaller investors joined forces to try to block Jay Z’s takeover attempt. Eventually, the rebel investors gave in, and Jay Z was able to take Aspiro private and gain control of its music streaming service, WiMP. Now it was time for the rapper to relaunch WiMP and to showcase his plans for the company. He held a press conference in New York on March 30, 2015, and showcased his celebrity co-investors. There was no place on stage at the press conference for Aspiro’s chief executive or anyone from the Norwegian company at all. Instead, Jay Z filled the stage with celebrities including Madonna, Kanye West, Beyonce, Rihanna, and Nicki Minaj.
Jay Z now had his streaming service, and a band of other celebrities who agreed to support the service. The name of WiMP had been changed to Tidal, which worked better outside of Norway. But for staff at Aspiro, the takeover was the start of a dramatic series of events. Less than a month after the press conference, the company lost its chief executive and 25 staff were made redundant. Tidal sent a press release announcing its new chief executive: Peter Norstad. There was one problem, though: Peter Norstad didn’t actually exist. Tidal had instead named executive Peter Tonstad as chief executive.
Since Aspiro was taken private by Jay Z, the company has found itself entangled in a series of legal fights and claims of financial problems.
In 2016, Jay Z was reportedly preparing a lawsuit against Tidal’s former owners over the number of customers Tidal had when he purchased the company. And in 2018, Jay Z was sued by a Swedish law firm alleging that the company had not been paid in full for its services in helping him acquire Aspiro.
Norwegian newspaper Dagens Naeringsliv has published a series of articles alleging mismanagement. In September 2016, it reported that Tidal had 107 outstanding default notices on outstanding bills. But the most damaging accusation against Tidal centres around what Dagens
Naeringsliv says is a stolen computer hard drive from inside Tidal. The newspaper reported in May that the hard drive contained company data which showed that Tidal had inflated the streaming numbers for key releases by artists such as Beyonce and Kanye West, by hundreds of millions of plays. Tidal has denied the report, and called its findings “demonstrably false” and part of a “smear campaign”.
Tidal is fighting to compete in the crowded world of music streaming — and timed exclusives like Jay Z’s recent album with Beyonce will help to attract customers to the service. But questions over Tidal’s finances and the accuracy of its numbers hurt trust in the company. Spotify chairman Martin Lorentzon was asked about Tidal during a conference in Stockholm. “I’ve got 99 problems — and Jay Z ain’t one,” he joked.