Big Financial Losses at Tidal

[duxservit]

Very good question, as I'm starting to use (and like, appreciate) Roon.

 

JJ

 

My understanding of Roon ($99/yr) is that it's aimed at folks who want to see visuals in addition to audio. But the millennial kid next door on Spotify and Apple Music won't be shelling out that kind of money for visuals.

[duxservit]

It would make the incredibly useful discovery features in Roon much less useful .

Hopefully Roon is working on adding Deezer Elite in the future .

 

Hmm. Deezer is still $9.99/mo per user.

 

Compared to Apple Music at $15/mo for the "family" of 6 users (each user allowed 3 devices I think).

[hornytoad]

Hmm. Deezer is still $9.99/mo per user.

 

Compared to Apple Music at $15/mo for the "family" of 6 users (each user allowed 3 devices I think).

 

Deezer Elite is lossless streaming and only available on Sonos right now .

Apple Music is 256 Kbps streaming .

[Snowmonkey]

While I do make a definite effort to purchase music by artists I have discovered or increased my exposure to on Tidal, it would cost me thousands of dollars to reach a point where I could remain even, in terms of what I often listen to, at this point in time, much less allowing for what the future would bring.

 

I think this illustrates the whole problem with the streaming paradigm. The artists are getting screwed, the streaming services (including Spotify) are losing money and the subscribers benefit enormously in terms of cheap music. This is an unsustainable business model. There's no such thing as a free lunch.

[mansr]

I think this illustrates the whole problem with the streaming paradigm. The artists are getting screwed, the streaming services (including Spotify) are losing money and the subscribers benefit enormously in terms of cheap music. This is an unsustainable business model. There's no such thing as a free lunch.

The artists have always been screwed by the labels. That part never changes.

[james45974]

The artists have always been screwed by the labels. That part never changes.

 

With the history of recorded music pre-computer I can imagine that the artists were in no position to not be screwed by the labels. Now there are so many more options available for artists. This, of course, can be a double edged sword with the risk of being lost in the abundance. If the artists are getting screwed by the streaming services then I would say it is somewhat their own fault, and the listening public loves the more for less (or even free) model and it will be hard to wean them to a more profitable model for the content suppliers. I am wondering if, even though still in it infancy, the streaming model is inherently unsustainable.

[Musicophile]

 

I keep asking myself the same question.

 

You'll would assume that the CFO's of Spotify and Tidal as examples of a stand alone streaming business must have made some form of calculation of a break even point.

 

It may be easier for Apple and Amazon who can use streaming as a (even lossmaking) tool to sell more IPhones and who have already selling deals with the large record companies and just need to add a streaming component to the same contracts.

[Elescher]

I think this illustrates the whole problem with the streaming paradigm. The artists are getting screwed, the streaming services (including Spotify) are losing money and the subscribers benefit enormously in terms of cheap music. This is an unsustainable business model. There's no such thing as a free lunch.

 

Kinda reminds me of the old Socialism anecdote.

 

'Works great until you run out of other people's money'

[The Computer Audiophile]

Artists getting screwed is the same as it ever was. However, artists signed the contracts to screw themselves, and it's not the streaming services screwing them, it's the labels.

[james45974]

Artists getting screwed is the same as it ever was. However, artists signed the contracts to screw themselves, and it's not the streaming services screwing them, it's the labels.

 

I actually don't know but I would think that the streaming services are complicit to some point in the whole deal, they aren't lily white here!

 

It seems like a catch-22: more customers at a free or low fee rate, or higher subscriptions prices to customers and fewer customers. Something has to give. I would think that the likes of Apple and Amazon even have to show positive balance on the books from offsetting ancillary sales such as equipment or the shareholders will get restless.

[The Computer Audiophile]

I actually don't know but I would think that the streaming services are complicit to some point in the whole deal, they aren't lily white here!

 

It seems like a catch-22: more customers at a free or low fee rate, or higher subscriptions prices to customers and fewer customers. Something has to give. I would think that the likes of Apple and Amazon even have to show positive balance on the books from offsetting ancillary sales such as equipment or the shareholders will get restless.

I look at the streaming services like the new record stores. When consumers were getting ripped off with high CD prices, the stores weren't making more money, the labels were. The streaming services are tech companies with huge ownership stakes from the big labels. They pay back 70% of the money they make to the rights holders. If the streaming services were in on it, they'd be turning a profit. On the other hand, I think there is some creative accounting going on as well.

[earnmyturns]

I look at the streaming services like the new record stores. When consumers were getting ripped off with high CD prices, the stores weren't making more money, the labels were. The streaming services are tech companies with huge ownership stakes from the big labels. They pay back 70% of the money they make to the rights holders. If the streaming services were in on it, they'd be turning a profit. On the other hand, I think there is some creative accounting going on as well.

Great point! Reminds me of a twisted story from David Haward Bain's "Empire Express: Building the First Intercontinental Railroad." The railroad companies were floated on big stock offerings. Their board members (the likes of Stanford, Huntington, ...) then turned around and contracted out actual railroad building to contractors run by front men for the board members, and proceeded to bleed to bankruptcy while the contractors (and their indirect owners, the board members of the public railroads) made out like bandits. Federal land grants to the railroads along the railroad track (alternating 1 sq mile plots along the way) were also handed over to front companies at deflated prices. Lots more detail in that excellent book. Makes one wonder if we are seeing the same here, streaming losses are just a big transfer to the labels, with winners that we will only learn about much later if at all. We can be sure already that the artists are among the losers, which is why I buy more and more of my music from very small labels and Bandcamp.

[asdf1000]

I look at the streaming services like the new record stores. When consumers were getting ripped off with high CD prices, the stores weren't making more money, the labels were. The streaming services are tech companies with huge ownership stakes from the big labels. They pay back 70% of the money they make to the rights holders. If the streaming services were in on it, they'd be turning a profit. On the other hand, I think there is some creative accounting going on as well.

I think these same tech companies will be forming their own labels soon. Or at least allow artists to remain independent but still give them the promotion they need and in turn the tech companies get a larger slice of the pie. I think what happened with Frank Ocean's latest Apple Music exclusive album and how he said goodbye to his label, is a sign of things to come. For popular music that is.

 

But if this allows these streaming services to be profitable then hopefully that allows them to also grow their non-mainstream music catalogues too.

 

Sent from my Blackberry DTEK50 using Tapatalk

[Pepsican]

One other aspect to consider is also how running a business has changed. What the dot com companies (and before them the Japanese) have shown us is that market share is just as important as generating cash. Market share itself represents value.

 

When you set up a digital business compared to a brick-and-mortar business, your investment cash flow is wholy different. Digital requires large upfront investments, that are fast paced. BAM is much more incremental and gradual in terms of its cash flow. Look at how Tidal, Spotify and Apple Music went global almost overnight and compare that to how long it took in the old times to distribute music. What Tidal did, is the equivalent of setting up world wide distribution and arranging shelf space on virtually every record shop to sell its goods.

 

Market share is also seen as much more important than previously. With start ups like Uber, Spotify and whatelse, the growth figures, not the financial figures determine their stock price and value for investors. It's gotten to the point where a business model (the method to make money off your customers) is now considered less important than the approach to get market share. Get market share first (and thus lock in your clientele) and worry about the money later. The big worry for investors with Tidal is that it is not growing as fast as Spotify and Apple Music (note: Tidal also offers a lossy service at the same price as Apple and Spotify), not that it made a loss. After all, Spotify makes a loss too and they're going to the exchange to get listed in 2017. No, the big worry is Tidal's marketing; it's failing.

 

Tidal wanted to do things differently: no free music, but instead lure customers with exclusive releases and hope they will stick around. Based on Tidal's figures, they don't stick around. These people subscribe for the exclusive under a one-month free contract and then drop off again after the month. This differs from Spotify where you can listen for free (and get addicted over time) and in return the company gets the time to work you over to convert you to the other (paid) side.

 

What could be a differentiator for Tidal is that Tidal is artist owned. So there is probably more commitment to make Tidal a success. But it depends on whether the management is willing to admit to its mistakes and change or whether they'll dogmatically continue down the chosen path, whether Tidal will succeed.

[james45974]

The music industry is literally a big black hole! Wasn't David Byrne, among others, agitating for more transparency a few years ago?

 

Sent from my KYOCERA-C6745 using Computer Audiophile mobile app

[89reksal]

This Bloomberg story from today gives a more optimistic outlook. Funny how Tidal isn't even mentioned.

 

The Music Industry Is Finally Making Money on Streaming - Bloomberg

[Musicophile]

This Bloomberg story from today gives a more optimistic outlook. Funny how Tidal isn't even mentioned.

 

The Music Industry Is Finally Making Money on Streaming - Bloomberg

 

Bloomberg must have quite a different definition of "making money" than the rest of the world.

 

There is not a single mention of profit margins in the article, only revenues.

 

Everybody can "make money" very easily then if you sell 1$ for 50 cents!

[Jud]

Bloomberg must have quite a different definition of "making money" than the rest of the world.

 

There is not a single mention of profit margins in the article, only revenues.

 

Everybody can "make money" very easily then if you sell 1$ for 50 cents!

 

I don't know if Amazon is running any/much of a profit yet, but they're an online commerce giant in most folks' minds. It remains to be seen whether streaming companies will be able to get stockholders/investors to fund losses for as long as Amazon did or has.

[firedog]

Bloomberg must have quite a different definition of "making money" than the rest of the world.

 

There is not a single mention of profit margins in the article, only revenues.

 

Everybody can "make money" very easily then if you sell 1$ for 50 cents!

 

You are correct, but Bloomberg seems to be talking about revenues for the

recorded music industry as a whole, and saying that streaming is responsible for the growth in revenues. So I guess the point would be that it is good for the music production companies if not for the streaming companies themselves.

Of course if the music production companies have or will have large stakes in the streaming companies, the point is sort of moot, as then it is just a question of where you want the profits to show: in the production side or the streaming side of your company.

[duxservit]

This Bloomberg story from today gives a more optimistic outlook. Funny how Tidal isn't even mentioned.

 

The Music Industry Is Finally Making Money on Streaming - Bloomberg

 

My theory (a theory only) is that "content" has become so commoditized that it's going to hard for the music industry to get back to the 1999 peak. Perhaps there just isn't enough money to be made.

 

Fewer people are paying for news (paper and digital) because news is practically free, with lots of places/sites that relay or repackage news items. Music is no different.

 

Just as Uber has broken-up the artificially created closed taxi ecosystem in some cities, so new and fast-to-setup cloud-based content delivery systems (like Netflix) promises to disrupt the monopoly of the Labels.

 

Bitcoin is seeding disruptions to the banking world.

[james45974]

This Bloomberg story from today gives a more optimistic outlook. Funny how Tidal isn't even mentioned.

 

The Music Industry Is Finally Making Money on Streaming - Bloomberg

 

Interesting, with Pandora and Amazon planning to start subscription services I wonder where the customers will come from? I would guess that there is going to be cannibalization of the other services, I don't hear too much evidence of people subscribing to more that one service.

[master]

For starters they need to kill the free/freemium model. Just doesn't work.

 

Folks will either pay or be without, but getting them used to a free ad supported model, and then trying to convert them to paying customers with a monthly subscription model will not work.

 

Look at video, other than Crackle there are no free legal streaming solutions. That's one reason, all of the video streaming services are doing better.

[mansr]

For starters they need to kill the free/freemium model. Just doesn't work.

 

Folks will either pay or be without, but getting them used to a free ad supported model, and then trying to convert them to paying customers with a monthly subscription model will not work.

 

Look at video, other than Crackle there are no free legal streaming solutions. That's one reason, all of the video streaming services are doing better.

Video also differs in that people generally watch a film once, maybe twice, while we tend to listen to the same music many times. This makes the value proposition in buying vs subscribing quite different.

[The Computer Audiophile]

For starters they need to kill the free/freemium model. Just doesn't work.

 

Folks will either pay or be without, but getting them used to a free ad supported model, and then trying to convert them to paying customers with a monthly subscription model will not work.

 

Look at video, other than Crackle there are no free legal streaming solutions. That's one reason, all of the video streaming services are doing better.

I believe this is counter to what people in the industry are saying.

 

Why don't you think it works?

[master]

Video also differs in that people generally watch a film once, maybe twice, while we tend to listen to the same music many times. This makes the value proposition in buying vs subscribing quite different.

 

I believe this is counter to what people in the industry are saying.

 

Why don't you think it works?

 

My argument is in terms of making people pay for something. If you start with a free/freemium model, going forward it is going to be next to impossible to make them pay for it down the line. Most industries that started with a free/ad supported model have not been able to transition to a paid/subscription model.

 

Tidal does not have deep pockets, at least not to the extent like Apple or venture capitalists. If it did, I'd say they are in a much better position than Spotify whose major chunk of the business are ad supported free listeners. Apple on the other hand makes more money from hardware sales, and it is in their best interest that folks are locked in to their services (even at a loss to Apple).

 

How many of us would pay for a newspaper? I don't even need to go to a website to get the latest news, it gets delivered to me on my smartphone screen via Google Now. Using Windows 10 has also been a similar experience, breaking news gets delivered on the Windows Tiles as it happens. Ebooks vs. physical books, etc. the list goes on, and while most industries have learnt to adapt and move on, the music industry is trying to lock the stable door after the horse has bolted. Tidal has bolted/locked the door and so most of us (including myself) pay for lossless streaming music simply because it is not available for free from anywhere else.