Apple in Exploratory Talks to Acquire Jay Z’s Tidal Music Service
wsj.comI remember when Gruber was telling us that Apple was not buying Beats for the streaming service and its associated contracts. The truth is Apple acquired Beats almost solely for this asset.
This move makes totally sense if you consider that Apple is trying to control the streaming market the same way it controlled the download to own one. I'm sure the labels will do whatever they can to avoid it.
Spotify is a (big) thorn in Hook's foot and Ek would die rather than sell Spotify.
That also explains why Apple is not releasing the 30% tax for music streaming and why Spotify released an app with its own payment system to grab attention. It's war.
>> I remember when Gruber was telling us that Apple was not buying Beats for the streaming service and its associated contracts.
He really said that? I thought everyone at the time was pretty much agreed they were buying it for the streaming service, not the headphones.
>> "That also explains why Apple is not approving the last Spotify app update. It's war."
They're not approving it because supposedly Spotify built in their own payment system which is a clear violation of App Store guidelines. Could be wrong but that's what I read.
>> "He really said that?"
http://daringfireball.net/linked/2014/05/08/beats
"The problem with this theory is that those licenses (to my understanding) aren’t transferable in the event of an acquisition. Music label executives may be dumb, but they’re not that dumb."
>> "They're not approving it because supposedly Spotify built in their own payment system which is a clear violation of App Store guidelines. Could be wrong but that's what I read."
Maybe but I think it was a strategy. Spotify wanted to grab attention. The origin of the issue is really the fact that Apple is not releasing the 30% tax for music streaming services. This is unsustainable in the music business where there is close to 0 margin. The labels take most of the revenue.
Only he also says there:
>I can’t see Apple keeping the “Beats” brand around for headphones. If Apple wanted to sell expensive high-end headphones, they don’t need to spend $3 billion.
So it's not like what the parent implied -- whether Gruber saying it wasn't for the licenses also meant Gruber though it was about the headphones.
Plus, Gruber could be totally right about the licenses not being transferable.
Apple didn't buy Beats neither for the licenses nor for the licenses. It bought them for the users, the know-how, and the connections (through Iovine and Dre).
First, you said: >> That also explains why Apple is not approving the last Spotify app update. It's war.
Then: > The origin of the issue is really the fact that Apple is not releasing the 30% tax.
I'm honestly not sure if you're contradicting your first statement or if I'm misunderstanding your choice of words.
Is Apple failing to pay out? Seems like I would have read about it if they reneged on their contract with a highly visible third party.
The two statements are related, the source being the second one. The first one is just a PR strategy. I wrote my first post too fast.
>> "Maybe but I think it was a strategy. Spotify wanted to grab attention with this. The origin of the issue is really the fact that Apple is not releasing the 30% tax. This is unsustainable in the music business where there is close to 0 margin."
I definitely agree it was a strategy. No way Spotify thought they would get away with that, it's a PR exercise. The issue isn't Apple's 30% though - it's Spotify's business model. Apple charges all publishers the same flat rate. If you can't sustain your business on it either leave the App Store or force your users to register through your website. I can see how it sucks for Spotify but it is not unfair in my opinion (unless Apple had a monopoly on streaming music, then it would be anticompetitive but for now it's an advantage they have and should be free to use).
Unfortunately in the music business there is only one business model. The one the labels command (with very minor differences between each service). Apple business model for streaming is the same than the spotify one except they don't have to pay the 30% tax.
The only way to command the labels is to control the market. Apple did it with the iPod and iTunes. They were able to set the .99c price for any song. The labels were upset about it.
Apple is trying to reproduce that with streaming. They're initial goal was to release a cheaper suscription ($7.99/month).
Huh. As a Mac/iPhone/Spotify user, this is the first I've heard of any of this.
> That also explains why Apple is not approving the last Spotify app update. It's war.
To be fair, Apple has a long history of blocking apps with the own payment and subscription system.
Makes sense if it's for the exclusive content opportunities. I remember seeing a report when Kanye made his new album a Tidal exclusive and the number of users they got from that deal alone was staggering. The problem is that a lot of those users will cancel after their free trial but if they keep coming back for exclusives they'll a) want to stick around b) have no free trial so will pay for a month anyway and might stick around. Tidal also obviously has rights to high quality audio files - maybe Apple doesn't have that and it's something they want to do once they bring out the iPhone with lightning headphones.
> high quality audio (...) once they bring out the iPhone with lightning headphones
... and you've lost me. I mean, the 3.5 mm jack solution is used by audiophiles for connecting headphones costing several iPhones to equipment costing dozens of iPhones. If it was in any way a problem for audio fidelity, these people would've gone for a new solution long ago.
I didn't say it was a problem but one of the theories for why they would make this change is audio quality. I believe it would allow you to build pre-amps and things into headphones.
Removing the headphone jack doesn't magically make the lighting port more capable.
There already exists a range of audio equipment and headphones that use the lightning port on existing iOS devices.
Yes, you would need at least a D/A converter and a preamp in the headphone. But why would you want to do this? Good headphone DACs/amps are relatively big and heavy and they run on batteries (yet another thing to charge). The Fiio E5 is a small headphone amp (no DAC), and it's still the size of an iPod Shuffle.
And if your headphones are getting a digital signal instead of a 3.5mm jack, you can put the relatively big and heavy DAC in the headphones instead of using the dinky one built into the phone. The lightning port will also deliver more power than the 3.5mm jack.
A pair of headphones has space for something the size of a Fiio E5 (potentially several times that size), but there's no way Apple or anybody else is going to built that quality internal to a phone.
Earbuds won't have the space for that hardware, so I expect the phone will still have an onboard DAC and an analog output mode over the lightning connector for use with cheap/small lightning earbuds and to allow a passive lightning/3.5mm adapter.
EDIT: As an addendum, I'm expecting we'll see a lot of bluetooth headphones with the iPhone 7, following in the Apple Pencil's "plug into lightning to pair and charge" setup. Hopefully also using the wire for data while they're connected.
>> "they run on batteries"
I think that's the point of lightning - they can derive power through the port. As for size I think there's already a few products out there that manage it. I saw one reviewed a few weeks ago.
Audiophilia has nothing to do with actual sound quality.
OK, substitute "audiophiles" with "recording engineers" then. The music you listen to will have passed through a bunch of 1/4" analog stereo jacks at the studio where it was recorded.
> ... Kanye made his new album a Tidal exclusive and the number of users they got from that deal alone was staggering. The problem is that a lot of those users will cancel after their free trial ...
Exactly. If. I tried it and canceled once the The Life of Pablo was on Spotify a little over a month later. Their "growth hacking" is not sustainable and their user base is fragile. Jay is smart to flip while Tidal hits a peak from the chain of major releases from its biggest artists.
Also, the average music fan doesn't care about audiophile-level sound quality. I think they're just trying to emphasizing that point for differentiation since Spotify has a stronger catalog in general.
If the headphone jack rumors are true, I'd bet it has nothing to do with audio quality and is more about the limited usefulness of the old jack. It plays music fine, but has no support for microphones or controls (like the fast forward / pause button on Apple earbuds) without weird nonstandard hacks (like the extra ring on the jack of Apple earbuds).
If the headphone jack rumors are true, it will come down to reclaiming space inside the phone and possibly also waterproofing.
As long as Apple ships a small adapter with the phone, I have no problem with it.
Acquisitions like this make no sense to me. At best you're getting access to the current popular artists under temporary licenses from a platform that's failed to gain a massive user base.
Calling Kanye / Jay Z / Beyonce "the current popular artists" is a bit disingenuous. Look who he out-sold:
> 10 #1 albums in a row, who better than me?
> Only The Beatles, nobody ahead of me
> I crush Elvis and his Blue Suede Shoes
> Made the Rolling Stones seem sweet as Kool-Aid too
At this point he is a dominant force in music... and we're not even talking the commercialized aspects beyond albums themselves. Jay is a genius.
I knew this would happen from the beginning, but actually seeing it happen breaks my heart.
I really can't interpret this as anything other than Jay-Z trying to be like Dr. Dre.
The difference is Dr. Dre's company actually created a product people wanted, and he deserves the success.
As for Tidal, how is this not different from union workers going on a strike? Except that people going on a strike do have legitimate reasons. For the "exclusive" artists who were on Tidal they're all rich people already. They just wanted to make more money.
They created absolutely 0 value with this company, all they did was create a collective with enough critical mass to matter and monetized on it. And when I say "monetize", it's us the fans that they monetized. It's almost like a betrayal.
But why not create that conglomerate themselves rather than join another service where they have less control as individuals, say signed exclusively to Spotify or whatever?
I've long thought that elite-brand athletes (LeBron, Durant, etc) should collectively start an alternative social media network that gives them more functionality that suits them, rather than just play on Instagram, Twitter and the like.
You already see things like The Players' Tribune - a media presence by players giving them direct control over things like signing announcements and so on.
I have no issue particularly with your statement but technically Kanye isn't rich, last I heard he was 50 mil in the hole haha.
If 50 million dollars isn't rich I don't know what is. Maybe reading a lot of Techcrunch made us think people aren't rich unless they're billionaires, but stop and think about it. He's much richer than me, and probably richer than you. And I'm not poor.
$50m in the hole means he's carrying $50m in debt.
Unpopular music service to acquire even less popular music service. With those forces combined they will be unstoppable! /s
In one year they've managed to acquire half the number of paid subscribers Spotify has - and with a pretty buggy product. That's pretty impressive.
I suspect that is largely because the product is bundled with the iOS. I wonder how it doesn't on Android, where people have to go out of their way to install it.
Does it even matter? The iOS device base is so large that Apple can get more paid customers than Spotify on their own devices alone.
Isn't Apple Music already the #2 most popular streaming music service behind Spotify? I'd hardly call 15 million paid subscribers unpopular.
It also is way better than Spotify for me. It's everything I wanted out of a music service.
Spotify was never going to have me as a subscriber but Apple Music was so much better (for me) that it was a no-brainer.
But then I always preferred Pandora over Spotify anyhow (different use cases I know, but still).
In what way is Apple Music better than Spotify? I've tried both and, other than catalog differences, I don't see one as really being better than the other.
For a start: the UI.
I know Apple Music gets hate for it's UI but it's nirvana compared to the horrible, grating, death by 1000 papercuts UI that Spotify has.
So that contributes a LOT to my impression of Spotify.
I find their radio offerings better than Spotify, and the curated playlists to be of higher quality and better variation. The For You tab alone is better than a lot of what I found on Spotify.
The importing of my existing library and linking of it into the service with all sorts of metadata made for a seamless experience that I haven't found from any other service either.
Basically... it's just a little bit better (for me) in every possible way, while being nicer to use.
Does Apple have an equivalent of Discovery Weekly yet? That's become one of my favorite Spotify features.
I chose Apple Music for a couple reasons:
1. I can add music to my streaming library that is not on their service and that music isn't treated any differently than the stuff in their catalog from a UI standpoint.
2. It integrates better into the Apple ecosystem, which I've already tied myself too. For example, play music using Siri and Apple TV support.
Also, I'm not a fan of Spotify's UI.
1. With Spotify I can also add all the music I want from "local" sources, aka my computer. And later I can stream that music from my Android phone.
2. Spotify works great with Google Now and Chromecast.
Also, I'm not a fan of Apple Music's UI.
How many of those 15 million are people who forgot to turn off auto-renew on their free trial?
Apple Music has been out for a year today. After the initial three-month free trial, I would think that most people would notice $10 missing from their bank accounts every month.
I once paid $80/mo for a year for a server I forgot I had.
It happens.
Or at a certain point 10 dollars is nothing and the time alone to figure out apples weird settings isn't even worth it. I still pay for a few things that I never use but just don't feel like figuring out how to cancel.
I'd be happy to unsubscribe you from those services, in exchange for 50% of what I'll save you monthly.
I think "most people" is giving "most people" too much credit!
Mark, that's a legitimate question, but shouldn't you also ask how many Spotify customers forgot to turn off auto-renew? After all, they are also quickly acquiring customers.
In my opinion, a lot of users of streaming media services are neither enthusiastic customers nor entirely forgetful. Their opinions of the services they pay for aren't consistent from day to day, either.
Maybe 3. Who doesn't notice $10 a month on their card? People with little spare money would feel it, and people with lots of spare money usually get that way by paying attention to their finances.
You're right, consumers who buy the newest iPhone each year are real penny pinchers. \s
Fantastic, time for me to leave my music library behind for the umpteenth time and move to greener music platforms. You failed me Hovito, just as Grooveshark, Napster, iTunes and many others did before you.
While the Beats acquisition made sense for their talent and get a little faster entry into music streaming, but buying Tidal doesn't make much sense at all. Tidal software and technology doesn't offer anything of value. Jay Z presumably would not want to work under Apple long term.
Tidal has licenses with a lot of artists but those wouldn't transfer to Apple Music, they would have to renogitate with them. And the whole reason artists are choosing Tidal is because they dont want Apple Music and want to be with a company all about the artists. If Apple wants to be all about the artists, it doesn't need Tidal for that, it can simply update it's relevant policies.
One could say the want to buy them to get rid of the competition but I don't see Tidal being much competition since while artists may launch with them most like Adele end up on all the services anyway.
Or the most likely reason is this is simply a an unfounded rumor.
Now buying Pandora to replace their Genius feature would be amazing, but Pandora works so well because the amount of music is so small in comparison and Apple right now is anti algorithms publicly and all about human curation, so doesn't look like a pandora acquisition will be coming anytime soon as much as we want it.
They aren't buying it as a competitor, its likely for the talent+exclusive content offerings.
Exactly. Love it or hate it, exclusive content = monetization in a market where streaming services struggle to differentiate beyond their catalogs.
To me it seems anti-competitive to disallow streaming services to use their own payment model. I expect a lawsuit to come from this and within the next two years either Spotify will be Daenerys, Breaker of Chains or Erlich Bachman, Waster of Cash.
It seems like Apple have created a monopoly within their own ecosystem. Whether their ecosystem is too big to be monopolised will be up to the lawyers as regulations are put in place. I expect American government to allow Apple to keep their monopoly as it'd be "unfair" to not let a company do what it likes with their own products.
If however the government decided this was a monopoly and regulations to be put in place, I expect Apple to get around this by "opening up" their eco system by making customers resign all Apple support for their products if they decide to "break out". Which is fair enough.
>It seems like Apple have created a monopoly within their own ecosystem.
There's no such thing as a "monopoly within an ecosystem".
Either you cover the majority of the full market (not of your market), and you're a monopoly, or you don't.
If you don't, then within your own platforms, shops, and premises it can be your way or the highway.
Nobody has a right to tell you what to sell or not sell, and how much to charge for things in your own shop -- kind of like with a physical shop. It's not Apple wanting Spotify to be sold through their platform/store and asking them -- it's Spotify wanting to take part in Apple's marketplace.
Makes sense if Apple wants solidify being known as a destination for 'music'.
Amazon has been making inroads in this market [1], while Spotify and Pandora (most of Pandora's listeners are not paid subscribers) are the other incumbents [2].
[1] https://www.amazon.com/gp/help/customer/display.html?ie=UTF8... [2] https://www.statista.com/chart/3899/paid-subscribers-of-musi...
My god, how can Apple be this bad at services that they need to acquire a garbage product like Tidal?? Tidal is junk, an elitist music streaming service that does more to screw over any artist not in the top 25 grossing than Spotify ever could. Jay-Z is a $%^$ing hack and for the first time I'm extremely disappointed with Apple's strategy assuming they do this deal.
I don't think they care about the service. They already bought one system and rebranded it. Doing it again makes little sense. They likely care more about the users and exclusive agreements they signed. Even if those aren't transferable, the removal of Tidal from the market will lead to new negotiations. Remember that iTunes/Apple Music exclusives are a great way to battle Play Music, Spotify, and Prime Music.
>My god, how can Apple be this bad at services
Apple services, from iTunes to the App Stores and iCloud are actually generating tens of billions of dollars per year.
Apple is just buying Tidal (if they do) for the userbase (and some content deals).
>Jay-Z is a $%^$ing hack
Good thing any such acquisition is not implying anything about Jay-Z's worth as an artist then.