When Shawn “Jay Z” Carter bought the public Swedish and Norwegian company Aspiro for US$56 million in March 2015, he appeared to be making a boldfaced gamble. The rapper-come-entrepreneur hedged his bets on the widely-publicised relaunching of Aspiro’s high-fidelity audio streaming service Tidal to target an as-yet-quantified market of music listeners who desire both the easy convenience of wireless streaming and the myriad benefits of lossless audio playback. Tidal offers a $9.99/month Premium tier that - using reduced, lossy audio quality - directly competes with the the largest current streaming service Spotify, along with a $19.99/month HiFi tier that offers lossless audio compression, heretofore unseen on a popular streaming service.
Reigning giant Spotify has been hesitantly slow in introducing a premium lossless tier to their service. In December 2014, seven years after the company launched, founder and CEO Daniel Elk told Billboard that Spotify were at that time trying to get an idea of how and indeed if to implement lossless streaming in their service:
“Lossless music – is that a higher priced tier? Is that something that comes with deluxe editions? How should we package subscriptions to consumers? That’s a very big topic right now on the label side.”
Elk hints at record label reluctance being a key issue in bringing lossless audio to the public, however Tidal managed to negotiate deals with the so-called “Big Three” labels - Universal, Sony, and Warner Music Group - as well as a bevy of independent labels. In fact, Tidal’s content numbers over 25 million tracks, as opposed to Spotify’s 20 million. How then can Elk’s statement ring true? If Carter was able to negotiate deals with the labels managing Tidal’s 25 million tracks in a matter of months, it stands to reason that lossless streaming is not a high priority in Spotify’s business model.
The launch of Apple Music - the tech giant’s much-too-late entry into the streaming game - at the end of June hammers the same point home. Apple’s audio streams in a 256 kilobits per second (kbps) AAC format (the same quality that has long been used, and long been insufficient, for iTunes Store downloads), while Spotify’s Premium tier offers Ogg Vorbis-encoded lossy 320kbps playback. In general terms, the lower the bitrate the worse the audio quality, however AAC (Apple Audio Codec) is generally considered to be a superior format to Ogg Vorbis. The end result is lossy sub-CD audio quality across Apple Music and Spotify that will be considered roughly equivalent in the ears of most casual listeners using standard listening equipment.
Tidal offers audio encoded AAC 320kbps for their Premium tier, while their lossless files are encoded at a CD-equivalent 1411kbps, 16-bit/44.1 kHz, using FLAC and ALAC. This means that the files which are being streamed through the HiFi tier are encoded with no loss to their original audio quality, hence the term lossless. Any encoding that is less than lossless has inherently lost something, hence the term lossy.
While lossless audio is universally regarded as a superior listening experience, streaming it through Tidal does raise a few issues. Number one in the minds of most people is the fact that in order to enjoy lossless audio, high quality listening devices must be used; this means that the headphone port on your smartphone is going to be a major hindrance towards enjoying the full quality of your lossless files, as will any white Apple earbuds or low-to-mid tier Bluetooth speakers. In essence, you will have to start spending significant amounts to buy equipment that is advanced enough to actually render the lossless audio in all its glory.
A second issue for Tidal HiFi is that of bandwidth; a lossless album will consume roughly three to four times the amount of disk space as a lossy 320kbps version of the same album. This means that your wireless bandwidth consumption after streaming the same amount of music via Tidal HiFi as Tidal Premium or Spotify Premium will be roughly three to four times as large, and accordingly you may exceed your data limit in short order. Your files will also load slower, and the wireless connection may experience some drop-outs and buffering issues due to the considerable amount of information that must be streamed.
Both elements, when combined with the industry-high exorbitant price of US$19.99 for a Tidal HiFi subscription, will lead to the same outcome: enjoying lossless audio through Tidal will cost you more - much more - than lossy audio ever will. Not only does Tidal HiFi cost double the ~$10 average of most streaming service’s Premium tiers, the benefits of lossless audio will eat through your data cap alarmingly quickly, and will be worthless if you do not begin to invest in the seriously expensive world of audiophile listening equipment.
Here we reach Carter’s gamble: the rapper turned entrepreneur has assumed that where Apple and Spotify are ignoring a segment of the music streaming market there is considerable money to be made. Tidal Premium does not offer much in the way of usability, convenience, content, or features versus the industry-leading Spotify or the nascent Apple Music; Tidal’s primary draw-card is that of offering what the others will not, in high fidelity, CD-quality audio playback. And yet two weeks after launch, Tidal had dropped out of the top 700 most popular smartphone apps, and as of March this year the service only numbers 580,000 paying subscribers, as opposed to Spotify’s 20 million. A dismal 17,000 additional users are shelling out US$19.99 every month for Tidal HiFi.
Then there is the problem of profitability: even Spotify, with their ~34x as large user base, have financial losses increasing at a faster rate than their revenue; the company has never turned a net global profit, and in fact 2014 saw Spotify announce a US$180m net loss. Perhaps Apple Music, with the company's tens of billions of dollars behind it, can succeed where Spotify has not. Yet Carter, who spent a paltry $56m for Aspiro in 2015, is in above his head; not only is his service predicated on the (apparently false) idea that Spotify and Apple are underestimating their user’s desire for streaming lossless audio, Carter has been unable to successfully market, promote, and sell his brand. In fact, as Tidal slipped from the App Store rankings, he even resorted to personally calling paying Tidal users and thanking them for their business, a seemingly desperate tactic for the high-flying multi-millionaire.
So does the apparent lack of interest in lossless audio from within the burgeoning world of audio streaming signal a wider disinterest from the music community in high fidelity sound? After all, audiophile-grade speakers, headphones, amplifiers, and DACs remain niche products, far too expensive for the many, and viewed by most as toys for the rich. The cost of such setups regularly exceeds five figures for barely an entry-level home stereo, and if Tidal HiFi will only appeal to such audiophiles while remaining far more expensive and less convenient for those with cheaper listening equipment, it is hard to imagine the service’s subscribers ever increasing to a Spotify-challenging level. After all, Amazon’s best selling listening items in each of the three main classes are a US$6 pair of Panasonic earbuds, a US$70 pair of Sennheiser wireless headphones, and a US$28 DKnight Bluetooth speaker - all fine products, but none of which will be able to convey the extra detail contained in a lossless audio file.
The iTunes Store with its less-than-stellar audio quality enjoyed over a decade of dominance in the worlds of online and physical music sales; in the wake of music's digitisation, CD sales have more than halved in the last five years alone. Yet recently we have seen iTunes Store sales themselves plummeting by at least 13% per annum, while in 2014 Nielsen reported that sales of new songs online were down 10.3% while the amount of online streams rose by 54%. The demand for streaming, then, is the prevailing hope of the music industry, while the music-consuming populous, the vast majority of whom listen with low-to-mid-range equipment, seem contented with the sub-standard lossy compression used by all of the most popular streaming platforms.
Neil Young’s Pono media player/download service, which supports 24-bit 192kHz lossless audio that the company claims is better than CD quality, attempted to modernise the vinyl-loving audiophile market, but the service was met with an overwhelmingly lukewarm reception. Many have been left wondering whether there is any place in the market for the famed singer’s product. David Pogue of Yahoo Tech conducted a double-blind test featuring fifteen volunteers aged 17 through 55 who were tasked with comparing the same three songs in two different ways: Pono Music lossless downloads played on a US$400 Pono Player and heard through a high quality pair of headphones, versus lossy 256kbps AAC iTunes Store downloads played on an iPhone through Apple Earbuds.
The results of Pogue’s study found that not only did the Pono lossless setup have no discernible advantage over the Apple lossy setup, his subjects actually preferred the lossy setup by a wide margin, whether they listened to the lossy files on the iPhone through the high quality headphones or the Apple Earbuds. All but one of Pogue’s subjects stated they would not invest US$400 in the Pono player based on the results; how then can one expect many Tidal users to spend US$240 a year on subscription fees alone, plus higher bandwidth and equipment costs, when the benefits of lossless audio (even at Pono’s supposedly Tidal-beating super-HD standard) are not at all apparent to the average listener? Tidal offer their own testing service, through which you listen to two versions of five tracks and attempt to guess which version is a lossless file; it is a safe bet to say that very few people will be able to ace this test, even using expensive sets of headphones and every fibre of their concentrative powers.
It is almost as though Carter doesn’t think he can beat Spotify or Apple at their own game or thrive in the unexplored lossless streaming market… But then of course, there is another possible motive behind Tidal for the Brooklyn rapper.
Carter launched Tidal this year with a messy, bizarre press conference in which he introduced the sixteen musical artists who each co-own a share of the service - himself, Beyoncé, Rihanna, Kanye West, Nicki Minaj, Daft Punk, Jack White, Madonna, Arcade Fire, Alicia Keys, Usher, Chris Martin, Calvin Harris, deadmau5, Jason Aldean, J. Cole - followed by breathless, hyperbolic ramblings from all involved on the importance of “chang[ing] the status quo”, and “re-establish[ing] the value of music.”
The ensuing media hype, “artist-owned” company-as-a-movement advertising ploy, star-power attraction, niche lossless brand focus, and the promise of exclusive content from the service’s artist/owner conglomerate - recently fulfilled in the form of the Tidal-only release of Lil Wayne’s latest record and Prince’s back-catalogue - all serve to drive the company’s value up hugely from its small-time Scandinavian roots. Tidal claims to have gained 100,000 subscribers immediately following the star-studded press conference; it is not inconceivable to think that, however comparatively small the service’s gains may be when placed alongside Spotify’s massive user-base, Carter will be able to generate many millions more in valuation before year’s end through clever continual emphasis of his company’s unique selling points.
In the event of such a rise in valuation, all that would remain for Carter to do is sit back and let the company sell to the highest bidder, most likely Apple, who could use the impressive roster of co-owners and the lossless streaming feature-set to bolster their Apple Music service. This is not a ridiculous proposition: much of Apple Music’s current technology was gained when Apple bought the audio company Beats in May 2014 for US$3 billion. Beats, co-founded and branded around another hip hop magnate, Andre “Dr. Dre” Young, began in 2006 as a manufacturer of so-called high-end headphones and earphones, and developed a moderately successful streaming service of its own named Beats Music.
When Apple acquired the company, they gained an A-list celebrity endorsement, pre-packaged marketing focus, youthful music listener respectability, and streaming know-how. For the tech giant, US$3 billion is pocket money, while the future sales of Beats-branded headphones, earbuds, and speakers, not to mention revenues from the Beats Music-integrated and Young-assisted Apple Music, stand to be a significant chunk of change in future. It is not far-fetched to imagine that Carter has similar acquisition-based ambitions for his Tidal side-project.
While Tidal is by no means the first company to attempt the popularisation of lossless audio, it is so far the boldest attempt at fusing high fidelity sound with internet streaming, the new music consumer’s method of choice. Perhaps, through acquisition or competition, lossless songs will find their way onto the services provided by the biggest names in streaming; for now, high fidelity remains a low priority. High up-front costs and a modern over-emphasis on ease of use are obstacles no lossless audio company has successfully navigated, and current streaming business models don’t support the concept of high quality sound. The difference in listening experience is there to be discovered by those with the inclination and means, yet for the foreseeable future, high fidelity remains a niche indulgence in a world where cost and convenience are prioritised above all else. As standards for music consumption fall, a small tide rises.
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