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Jay Z's Tidal Music Streaming Service Is Fraudulently Inflating Subscriber Numbers, Report Says (digitalmusicnews.com)
A new report published by Markus Tobiassen and Kjetil Saeter of Norwegian publication Dagens Naeringsliv is accusing Jay Z's Tidal music streaming service of fabricating their subscriber numbers by creating fake accounts and lying to the media and partners. The company claims to have more than 3 million paying subscribers with more than half of those paying $20-a-month. Digital News Music reports: Tobiassen and Saeter interviewed staffers at TIDAL, as well as partners and confidential sources. And the information that came back was pretty damning. "When 16 of the world's biggest pop stars, one a convicted cocaine smuggler and a former Israeli intelligence officer was not able to obtain enough customers to Jay Z's Tidal, the company began to inflate subscription numbers," the report alleges. DMN spoke this morning with Tobiassen, who offered a translation of the report. "On March 30th of last year, Tidal issued a press release stating that the company had reached 'three million members,'" the report states. "The news story reported worldwide was that Tidal had three million paying subscribers. Tidal also specified to online newspaper The Verge that this figure did not include trial subscribers. This was the last time Tidal reported a total number of subscribers to the public." The only problem with that? "In April 2016, one month after the press release issued by the company claiming three million members, Tidal made payments to the record labels for around 850,000 subscribers. The figure reported internally by Tidal in April is 1.2 million subscribers." The report further states that Tidal itself reported a figure of 1.1 million to the major record labels in late 2016. In other words, nowhere near the numbers reported to media outlets like Digital Music News and Verge.
And even he had the sense to get his music off Tidal.
Well, if they've admitted to the labels that they lied to the media, then that might be true, though it also might be an unfair business practice that their competitors could challenge.
But if they made a public claim of 3m and then simply only paid for 1m, then the labels can at least force them to prove they're not withholding license fees. They might have to give the labels full access to their books in order to resolve this, they might even have to pay for an outside auditor to avoid being on the hook for 3m subscriptions.
If they disclosed the discrepancy to the labels at the time, then they're probably fine on that side. But keep in mind that the labels are also competitors. These are frenemies as much as partners.