While most claim Tidal as one of the best, if not the best, streaming services when it comes to sound quality and artist revenues, there is conflicting information whether the business is a success or a failure.
It is heard that Tidal is losing both money and users, and will soon run out of cash. This information is spread by referencing to a Norwegian article by Dagens Næringsliv. It is hard to verify the information, since the article is written in Norwegian. The company Tidal itself contradicts and “claims it will break even soon, before achieving profitability in mid-2018”, as a spokesperson for Tidal told Engadget.
What is interesting though are the sheer numbers. There is a total of $600 million that is said to be spent during the 3-year start-up phase by Tidal, which makes it a $200 million per year. Although we are using streaming services nowadays like electricity from the outlet – not thinking about the technology or costs -, the streaming business is really an expensive one.
In 2009, the guardian calculated for Spotify (founded in 2006) costs for hosting and storage of $1,5 million, $2 million for bandwidth costs and about $10 million for music licensing costs. Not taken into account are the costs for software development and everything to run a company.
While the prices for storage and bandwidth aren’t that different nowaday, Spotify grew a lot and therefore costs are much higher now. While the guardian calculated with 5 million users, Spotify claims now to have more than 60 million users. Therefore, the $200 million per year for Tidal seam reasonable.
But what is fundamental different, is that Spotify had to spend less than 10% of what Tidal has to spend now after being 3 years in business. This can explain, why Tidal is struggling – and why it is so hard for new streaming services to get into the market. Only the big companies like Amazon, Apple, Google, Facebook or Microsoft have the financial background to risk it.
In conclusion I dare say that Tidal is a bit of welcome variety, not only when it comes to sound quality but also to revenues for artists.