
Apple in Exploratory Talks to Acquire Jay Z’s Tidal Music Service - kloncks
http://www.wsj.com/articles/apple-in-talks-to-acquire-jay-zs-tidal-music-service-1467325314
======
rloc
I 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.

~~~
k-mcgrady
>> 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.

~~~
rloc
>> "He really said that?"

[http://daringfireball.net/linked/2014/05/08/beats](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.

~~~
k-mcgrady
>> "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).

~~~
rloc
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).

------
k-mcgrady
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.

~~~
semi-extrinsic
> 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.

~~~
k-mcgrady
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.

~~~
semi-extrinsic
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.

~~~
wlesieutre
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.

------
uptown
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.

~~~
tedmiston
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

[http://genius.com/31930](http://genius.com/31930)

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.

------
cocktailpeanuts
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.

~~~
gleenn
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.

~~~
cocktailpeanuts
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.

~~~
prawn
$50m in the hole means he's carrying $50m in debt.

------
tuxracer
Unpopular music service to acquire even less popular music service. With those
forces combined they will be unstoppable! /s

~~~
colinbartlett
Isn't Apple Music already the #2 most popular streaming music service behind
Spotify? I'd hardly call 15 million paid subscribers unpopular.

~~~
markcerqueira
How many of those 15 million are people who forgot to turn off auto-renew on
their free trial?

~~~
Throwaway23412
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.

~~~
Tiksi
I once paid $80/mo for a year for a server I forgot I had.

It happens.

~~~
dawnerd
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.

~~~
mdrzn
I'd be happy to unsubscribe you from those services, in exchange for 50% of
what I'll save you monthly.

------
DKnoll
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.

------
heavymark
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.

~~~
magic5227
They aren't buying it as a competitor, its likely for the talent+exclusive
content offerings.

~~~
tedmiston
Exactly. Love it or hate it, exclusive content = monetization in a market
where streaming services struggle to differentiate beyond their catalogs.

------
Mandatum
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.

~~~
coldtea
> _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.

------
niftich
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...](https://www.amazon.com/gp/help/customer/display.html?ie=UTF8&nodeId=201530920)
[2] [https://www.statista.com/chart/3899/paid-subscribers-of-
musi...](https://www.statista.com/chart/3899/paid-subscribers-of-music-
streaming-services/)

------
bedhead
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.

~~~
Moto7451
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.

