Riding the High-Res Tidal Wave

Yesterday’s re-launch of the Jay Z-owned Tidal music streaming service was notable on several fronts. As has been widely discussed, music streaming services have come to the fore over the last several years, thanks to the popularity of Pandora, Spotify and other web-delivered models that let consumers get a wide sampling of music in a more convenient manner than the purchase-and-download model first popularized by Apple’s iTunes.

Arguably, one of the more interesting aspects of the announcement was the bringing together of numerous high profile artists, not only to support the service, but to participate in its ownership. A-List musicians including Alicia Keys, Daft Punk, Kanye West, Usher, Deadmaus, Madonna, Rihanna, Chris Martin of ColdPlay, and Jay Z’s wife Beyonce, among many others, were introduced as co-owners of the service. Of course, it’s somewhat easy to scoff at the notion of an artist-owned entity, but it’s hard to deny it was an impressive turnout.

More importantly, the concept of a musician-owned business distributing the work of artists is something that could definitely appeal to a relatively wide range of other musicians. Certainly, Jay-Z is counting on that intra-industry appeal. His announced intentions of getting exclusive early releases from numerous major artists is going to be dependent on other artists’ willingness to join his experiment. Given his reported influence and reach in the music business, he might just be able to pull off a compelling set of content.

As has been discussed elsewhere, there does seem to be a growing sense among artists that streaming services are not paying them what they feel are fair rates. As a result, regardless of how these artists (or you and I) feel about Jay-Z or the significantly smaller size of the Tidal audience, that could prove to be a compelling difference in getting additional artists to come aboard.

Another difference in the Tidal service is the option of high resolution audio streaming. While this won’t be a mainstream option, the ability to hear music in uncompressed CD quality is something that does matter to some people — especially musicians. As a group, musicians are more particular about music formats and the ability to offer their music in high resolution on Tidal could prove to be more compelling to artists than many people realize.[pullquote]Combining the convenience of streaming with the quality of uncompressed audio is going to be a dream come true for many hard-core music fans.”[/pullquote]

In addition, there are a lot of consumers who care about higher music quality. There’s been a renaissance of interest in higher quality, over-the-ear headphones among many young music listeners. Also, the audiophile crowd—while not huge—does tend to come from higher income brackets and is willing to spend money, both on listening equipment and content. Companies like Pono and Sony in fact, have started to build a business catering to the FLAC (Free Lossless Audio Codec—a high resolution audio format) crowd. In addition to high resolution audio players, Sony has even built a set of high resolution audio headphones with a digital input that can take full advantage of the Tidal high resolution offering.

Admittedly, there is a great deal of controversy around the real benefits of high resolution audio, with several reviews from respected sites and publications reporting they couldn’t tell the difference between compressed and uncompressed source material. Scientifically, a waveform comparison between compressed and uncompressed music will show differences, but listening to audio is highly subjective and therefore subject to much debate.

One key factor is that several of the recent comparisons used higher quality compressed formats and not the lower 128kbps standard that likely form the vast majority of most people’s music libraries. I’d argue a wider audience of people probably can hear the difference between 128kbps files and the uncompressed audio found on hi-res audio players and the Tidal service. Ultimately however, it’s almost completely dependent on the quality of the entire listening chain—particularly the speakers or headphones.

Getting a music service to succeed is going to take more than just compiling a large musical library from an influential set of artists and offering unique time-limited exclusives for some content (although doing so will certainly help). In addition, offering high resolution formats will only appeal to a certain group of consumers. Nevertheless, combining the convenience of streaming with the quality of uncompressed audio is going to be a dream come true for many hard-core music fans. It’s certainly a wave that bears watching.

Published by

Bob O'Donnell

Bob O’Donnell is the president and chief analyst of TECHnalysis Research, LLC a technology consulting and market research firm that provides strategic consulting and market research services to the technology industry and professional financial community. You can follow him on Twitter @bobodtech.

26 thoughts on “Riding the High-Res Tidal Wave”

  1. This thing is DOA. I won’t give it six months before all those artists break ranks. It’s simple, people simply will not spend that much money to stream. The few that will spend are already using spotify or some other streaming services. Those people did not learn the one thing Steve Jobs told the record labels when he was trying to get them to join itunes for the ipod launched “go cheap and make your money in volume.” iTunes worked and took off because it was easy and cheap. It also came at a point where music was not competing for our attentions with a lot of other things.

    I consider myself an average music listener, meaning I already own most of the musics I like during the $.99 itunes days. I did the calculation of how much I spent on music buying all of last year, $56 that’s how much I spent. It was all singles that cost anywhere from $.79-$1.29 and the beautiful thing is I still have a digital copy. Music streaming will not and cannot grow with the current model of $10 per month, it simply can’t, it would be too niche and it will force a lot of folks back to the napster days, we already have that legally, with youtube.

    1. I think it’s generational, or at least age-determined. I had that very discussion earlier this year with my niece who wanted a Pandora sub, I argued for actually buying tracks or even used CDs instead, which is what I did at her age. You can get 10 e-singles or 5-10 used CDs for the price of a sub.
      But teens just don’t get buying, and don’t get files (forget about ripping). Buying because 2 months from now the music the Cool People listen to will have changed, and they can’t conceive of listening back to the old stuff (which is probably a good thing ^^), so they need the ephemerality-attuned sub model. And files because iDevices don’t have room for them, nor tools to manage them, and the whole concept is foreign to non-techies.

  2. When I finally bought another pair of headphones (a set of Etymotics and later a set of Klipsch) because the earbuds just did not stay in my ears, I was amazed at how good the compressed files actually sound. I am less concerned with compressed audio as I once was. Compression and recording for a compressed format are miles ahead of where we were back in the 90’s and early 00’s.

    However, I disagree “the ability to hear music in uncompressed CD quality is something that does matter to some people—especially musicians.” My experience with musicians, and I know and work with a lot, is musicians tend to be the least concerned and least discerning about the quality of the recording. While I would agree that they are quite concerned with how their instrument sounds (even I still prefer a tube amp over any modeler for my guitar), when it comes to recordings, musicians tend to be more concerned about the music and less about “fidelity”.

    In the end, the success of such a service is not going to be just about the catalogue and artist owners, as you say. It will be about a compelling product that serves and (as is so popular to say these days) “delights” the customer. If fidelity, even CD quality, were all that important a function in and of itself, I believe it would already be a major differentiator and already high on customer demand.


    1. Joe, while I understand your point, I think there are certainly musicians (like me) who do care about higher quality. As with any profession (or hobby, as in my case), there’s going to be a wide range of different attitudes towards a particular issue.

      1. No insult intended. Just my experience with a lot of professional musicians. There certainly are musicians who care, but not usually because they are a musician and no more than most people. The audio techs and engineers (live and studio), however, are a different beast.


  3. I think is a great move so long as they can keep it exclusive for all artiste involved, and convince other to join in

    1. It could be a great move for the artists. But as Kirk McElhearn points out on his website, they are not disclosing (yet?) how much of a cut the artists will get.


    2. What? When are people going to learn that we live in a digital age? The problem with the music industry is that they are trying to keep in place an old business model in the digital age. It simply won’t work, it can’t. It’s like the newspaper trying to keep their business model and infrastructure in place when the web basically obsolete it. The music industry needs to change the way it’s currently constructed and do business, it needs to adjust to this new world or risk losing a lot more than it can bargain for.

      1. I don’t think so

        Why should tech companies that treat art as a commodity be the ones who decide of its value instead of the one who create them

        The good part about all of this is the joint ownership and exclusivity for Higher quality music that can attractive to those who love music.

        Unlike tech startup, artists have huge follower who are willing to do anything and pay any price for their favorite artists, combine them all together around a streaming platform can be extremely popular. so long as it work great

        1. You don’t get it, innovation and advancement in tech have changed and will continue to change businesses all the time. It’s not up to those companies to decide, it’s the buying public that decides. Right now, most people don’t see the value in music, not with everything fighting for our attention. This thing will not work because that’s not where the people are. Don’t get me wrong, there is a niche market for this, they will always be one in every market.

          Let’s see how long those exclusives last and how much money and conversion it can do. The problem with the likes of spotify and pandora is streaming is their business and there is no money or very little money in that business simply because it can’t scale. Signing more people do not bring your cost down instead it goes up. There is a reason why non of the streaming music companies have yet to be profitable. It’s a long game, and the only ones that will be left standing are the platform owners (Apple, google, microsoft) and maybe one independent player.

          At the end of the day all those artists will not risk losing their own money, they will do what most of us would do, which is go where the money is at and tidal is not it.

          1. here is a perfect analogy

            why do you think that the new York time can charge a premium for quality content that most other website cant ?

          2. I said they will always have a niche market for those, plus as big as the NY times is their premium model is a little over 1 million subscribers. Plus that argument is the exception not the rule. That’s like comparing Taylor Swift taken her music off spotify, she is the exception, she is well establish and has a large enough fanbase that will support her. How many Taylor Swift is out there? While the NY times can hide behind a paywall all the local and regional newspapers have been decimated.

          3. that the whole point
            many of these artiste also are well establish and has a large enough fanbase that will support them too when combine their music together

            Good music is an art that is worth paying for.

          4. While I agree that tech is uprooting business models, I take issue with your comment that people don’t see value in music. I’ve done research that across people from 18-75, they average 8 hours of listening to music on their devices per week, with a significant skewing upwards for younger people. People who spend that much time do care about it, but the options they’ve been presented with make it appear as if they won’t pay for it. That’s where I think we need to agree to differ. As you mention in other posts, free streaming is not a viable long-term business model, so soon many people will need to pay something to get access to the content they want. It may not go to Tidal, but I think they have a reasonable shot.

  4. If you think that CD quality is high definition, you are a little confused. True high definition is master “tape” quality, which is something that recording companies normally don’t want distributed in case it can somehow be copied indefinitely.

    1. Tony, thanks and yes, I’m certainly aware of that. But in the context of today’s environment, good ‘ol 44.1k CD quality does get treated as high-resolution. I probably could have been a bit more clear on that point.

  5. They can try, but I suspect the music business is headed back to the old days where you make money from live entertainment not recorded media. I don’t think that’s necessarily a bad thing.

  6. “As has been discussed elsewhere, there does seem to be a growing sense among musical artists that streaming services are not paying them what they feel are fair rates.”

    This is important.

    The traditional music industry was monolithic and monopolistic, able to extract enormous value from listeners, while providing low value to listeners, who often found themselves over-paying for the same track multiple times on different media. Discovery was mainly via FM radio, a captured sub-industry, and variety and choice was narrow. Compensation for artists was very high, but to a narrow section of artists, as in winning a lottery. It was a good example of an inefficient “market” and was in retrospect, excellent disruption-bait.

    ITunes was the disruptor. Discovery was revolutionized, and with it variety and choice. Indie exploded, new genres exploded, geographic boundaries vanished. Value provided to listeners was perhaps an order of magnitude higher, while value extracted by the industry remained reasonable. Intermediaries between creation and consumption were removed, compensation was still generous yet across a much larger range of participants. The market was more efficient and served listeners better and artists well.

    The next disruption is in progress now, but the transition towards “free” has gone too far. Artist revenues through streaming are a fraction of those through iTunes. There is an old saying, which I’ll mangle, if an outcome isn’t possible, it won’t happen. A vibrant music industry can not be supported by free content, and there is ample demand for a vibrant music industry. Something will change, the only questions are what, and how.

    1. That’s not a bad post. Except that artists have rarely made a living from their recordings with few exceptions, even among the top artists. I remember when I first learned that one of the boy groups at the height of their popularity (I forget which one, maybe Backstreet Boys or Boys to Men) didn’t make a dime from their album until over two years after its release.

      Moves like this and others like Steve Vai’s Favored Nations label have always been about trying to make it fair for the artists because there is a huge disconnect between what labels negotiate and what the artists actually see. This move is not just about Spotify and Pandora, but a play against the status quo recording industry. There are so many players between the artist and their recordings, its almost a comedy. One would be better off being a studio musician on many of those hit albums. You get paid regardless of how well the album does and usually right away.


      1. Yes, although there’s no doubt many artists got very rich as well. It’s always been a rotten industry. Not only was it like playing a lottery, the lottery was rigged. Probably still is.

        1. It isn’t so much that artists got rich, it is where the revenue was generated. Particularly in the early stages of ones recording career, it isn’t from the recordings. Once they start producing themselves (and other artists), writing their own songs, playing their own instruments, etc, do they start to earn more from their recordings.

          These days all those things are easier than ever. The problem is it is still difficult to beat the machine’s marketing power. I imagine that is one area that the artists hope putting all their weight behind Tidal will accomplish.


          1. Isn’t there a long history of new labels being created with the vision of doing things better, eventually to fall into the same corrupt practices as the rest of the industry? Is this going to be different?

            I suppose it makes sense to think of the problem in two dimensions. One is the overlying economics of selling music, which has changed with the technology. The other is the economics inside the industry, which have always been problematic. While new technologies give artists the tools they need to actually create and distribute their own music, and people can theoretically discover it without the need for promotion, promotion still makes a big difference.

          2. I’m sure everyone who has made the plunge thinks they are doing something better. But not all of them fall into the same corrupt practices. My example of Steve Vai’s label is still pretty well respected by the musicians who record there.

            I think the problems are the same throughout the arts, artists are expected or otherwise need to become experts on things that have nothing to do with art. It’s a tough reality. But it is something I’ve been “preaching” lately to artists—that as soon as you decide your art is how you want to put food on the table, roof over the head, and shoes on the feet, everything changes.


Leave a Reply

Your email address will not be published. Required fields are marked *