New Wave of Accusations Flood Tidal

  • Tidal reduced royalty payout from 62.5% share of its revenue to 55%
  • Sprint owns a 33% stake in Tidal, which it bought for $200 million

Tidal’s back in the hot seat as the streaming company is reportedly not paying artist royalties on time. Will Tidal survive these cataclysmic events?

Why This Matters: Just last week, news broke that Tidal inflated streaming numbers for artist-owners Beyoncé and Kanye West. Though it shrugged off the accusations as a “smear campaign,” Norwegian publication Dagens Næringsliv is back with a new development.

Based on translations from Music Business World, the report highlights Tidal is “behind with payments directly to three major international record companies,” and several execs went on the record to corroborate the story. The most concerning account noted “people are talking about withdrawing [their music from TIDAL].” The comment came from Sveinung Rindal, country manager at Sony (SNE -0.43%)owned The Orchard, who based on his Linkedin also worked at Tidal until November 2016.

More over, Dagens Næringsliv alleged Tidal reduced royalty payout from 62.5% to 55% last April, “without consulting rights-holders or PROs.” The recent reports by DN follow a December story where it said Tidal had about 6 working-months left, despite a $200 million cash injection from Sprint (S +0.98%) in mid 2017.

Situational Awareness: The artist-owned and Jay-Z backed streaming company has been on deathwatch since inception. Reports that it’s manipulating user streams, not paying royalties on time, and lying about subscribers, doesn’t help Tidal’s “by artist, for artist” narrative. Meanwhile, it remains a relatively small player in a cutthroat industry where topdog Spotify boast of 75 million paid subscribers. Tidal is estimated to have closer to 1 million paid subscribers.  

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