Music streaming – Tidal wave

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This could be the end of Tidal.

• Tidal has received allegations of serious misconduct which if proved true, are likely to spell the end of the music service.
• Tidal has been accused of deliberately manipulating its usage data such that albums from Beyoncé and Kanye West were massively over represented in the figures and therefore they got paid far more money than they otherwise would have been entitled to.
• The fact that other artists may have been underpaid, Tidal may have committed the crime of fraud from which it is very unlikely to recover.
• This explains the vigorous defence that Tidal making as the company’s future hangs in the balance.
• Norwegian newspaper Dagens Naeringsliv (DN) became suspicious when Tidal claimed in March 2016 that Kanye West’s The Life of Pablo had been streamed 250m times over a 10 day period.
• Tidal also claimed at the time that it had 3m subscribers meaning that each subscriber had to have listened to the album at least 8 times per day for 10 days.
• To compound matters, music industry research firm Midia estimated that the subscriber count at the time was closer to 1m, which if correct, meant that every subscriber had to have streamed the album over 24 times per day.
• Following this, DN spent a year investigating during which it came into possession of a large amount of internal Tidal data that was most likely obtained illicitly by DN’s source.
• DN sent this data to the Norwegian University of Science and Technology to be analysed by its group of experts in data security and cybercrime prevention.
• Its findings have been made public (see here) and fully support the claims made by DN.
• The report concludes that there has been manipulation of the data targeted at two albums in particular (The Life of Pablo and Lemonade).
• In particular, more than 1.3m users played 150m tracks from The Life of Pablo at exactly the same time of day and with Lemonade, it appears that genuine listening patterns were repeated hundreds of times to fatten up the play count.
• Furthermore, the report states that it is extremely unlikely that this manipulation was the result of external interference or any software bug, concluding that the manipulation came from internal sources.
• Music streaming payments work on the basis of royalty sharing based on the number of times content is played.
• Hence, if the play data was overstated for Lemonade and The Life of Pablo, then these artists received more money than they should have.
• During that period Tidal paid Sony $2.5m for Lemonade based on its usage, and Universal E2m for The Life of Pablo.
• This raises the possibility of a criminal complaint from the artists who were consequently underpaid and may see themselves as the victims of fraud.
• While Tidal clearly had both the means and the opportunity to manipulate this data, the big question is motive for which I see two possibilities:
  • First, money: both Beyoncé and Kanye West were at the time owners of the Tidal music service creating a clear conflict of interest.
  • Furthermore, Beyoncé is married to Jay-Z who led the artist buy-out of the service in 2015.
  • Second, public image: Tidal is tiny compared to Spotify, Apple Music and was at the time smaller than many of its other competitors like Deezer etc.
  • Consequently, Beyoncé, Kanye West and their labels were taking a huge risk by allowing their albums to go exclusive on such a small service.
  • Hence, I suspect that Tidal was under enormous pressure to show that it could put up the kind of volume of streams that these albums would have received had they been on one or more of the larger services.
  • Weak figures would have exposed the service’s limited reach potentially driving the artists to stop giving it exclusives.
  • These exclusives are what drove user acquisition as Tidal briefly went to Number 1 on the Apple App Store around the time of the release of The Life of Pablo (currently No. 33).
  • If Tidal were to lose these exclusives, there would be almost no differentiation meaning that Apple and Spotify could easily crush the business.
• I suspect that it is the latter of these two motives that is the most likely and that the potentially unfair skewing of payments to those two albums was an unintended side effect.
• Either way, if Tidal does not categorically put these allegations down, then its very existence will become very difficult as an exodus of artists and then users is likely to result.
• This is a death spiral from which Tidal would most likely not recover.
• The deck is currently stacked against Tidal as the evidence from where I am standing, looks pretty damning and Tidal’s chief defence that the data was stolen and incomplete is actually no defence at all.