Sprint has reportedly spent $200 million to buy one-third of Tidal
Since its launch in 2014, Tidal has been an underdog in the streaming space dominated by big tech giants like Apple and Spotify. Tidal began as somewhat of a rebellion by a few major recording artists attempting to differentiate from larger tech brands, but also to cash in on the recent music streaming craze.
This rebellion may have hit a rough patch in recent weeks. Last week, reports of falsified subscription numbers covered headlines. Now, Sprint has reportedly agreed to purchase a 33% stake in the company for $200 million.
Acquired by Jay-Z for $35 million in 2015, Tidal offers a unique, two-level subscription service: the first level gives users lossy streams of music releases, while the second gives a lossless FLAC stream of the same releases. In purchasing the streaming service, the entrepreneurial rap mogul brought along along Beyonce, Kanye West, deadmau5, Daft Punk and half a dozen more celebrity partners, who will maintain partial ownership after Sprint comes aboard. The mobile carrier’s valuation of Tidal at $600 million gives Jay-Z quite the ROI on the $35 million investment he made two years ago.
Speculation regarding why Jay-Z and owners of Tidal decided to sell a portion of the company largely comes down to the subscriber acquisition challenges that the company faces; Forbes reported last week that Tidal was overestimating their total subscribers in triplicate. Additionally, solid industry foundation held by Spotify and Apple have proven to serve as major obstacles in Tidal’s user acquisition endeavors. Luckily for the artist-led streaming platform, all of Sprint’s 45 million customers will gain access to Tidal. From Sprint’s perspective, the benefits seem slim, aside from a seat for the wireless provider’s CEO on Tidal’s board of directors.