Jay Z Launches New ‘Spotify-Killing’ Startup With Small Celebrity Army

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Tidal, Jay Z’s music subscription brainchild, launched earlier today with 16 musical heavyweights under its belt.

So far, the list of artists who’ve joined in includes Beyonce, Kanye West, Arcade Fire, Rihanna, Drake, Coldplay, Calvin Harris, Nicki Minaj, Usher, Jack White, Alicia Keys, J. Cole, Jason Aldean, Daft Punk, Deadmau5 and Madonna — all household names, all claiming that the current industry climate devalues their music. Specifically, they charge that sites like Spotify and Pandora prevent artists from ever seeing the full fruits of their generated revenue via those sites.

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On average, Spotify pays between $0.006 and $0.0084 per play. Pandora, meanwhile, doesn’t directly pay artists at all, instead funneling all royalties through SoundExchange, which only pays out 45% of net royalties to artists. However, that 45% is split between the artists themselves and the labels that represent them.

Jay Z acquired Tidal earlier this month from Aspiro, a Swedish umbrella company specializing in media technologies.

The media mogul is aiming to bridge the gap between consumer and producer by promising artists twice the standard streaming royalties as well as millions of dollars and an equity stake in the company for artists that get on board with the new streaming service.

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The revenue from this venture will come directly from the pocketbooks of subscribers, who can choose either a $9.99 “Tidal Premium” subscription that offers standard definition streaming or the $19.99 “Tidal HiFi” subscription that offers CD-quality audio streaming. However, Jay Z’s promise to his fellow artists to pay double the rate for streaming will only come from subscribers who opt for the $19.99-a-month service.

Tidal differentiates itself from services such as Spotify and Pandora by eliminating the free-tier subscriptions that most users have become accustomed to, as well as promising to offer premium exclusive content directly from the artists. The new service also touts that its subscriber base with be provided with music video content and editorial content.

Comparatively, Pandora’s premium service goes for $4.99 a month and allows for more skips (not unlimited) and less ads, while Spotify asks for $9.99 a month for no restrictions and no ads on their streaming.

While there’s an evident price differential between Jay Z’s service and its competition, he feels its warranted. He told Billboard:

“People are not respecting the music, and devaluing what it really means. People really feel like music is free, but will pay $6 for water.”

The rapper held secret meetings with his now all-star lineup of artists offering them each a 3% stake in the company’s holdings in order to secure content that would be exclusive to his Tidal streaming service.

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Tidal still has a long way to go to catch up to its competitors, however, currently holding only 540,000 subscribers — which is a far cry from Spotify’s hardened 15 million-strong user base.

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