U.S. operator Sprint has agreed to buy a 33 percent stake in the music streaming service Tidal. As part of the deal, Tidal and its artists will create exclusive content for Sprint customers. No financial details of the deal were disclosed, although Sprint is said to have paid around US $200 million. The rapper Jay Z, his wife Beyoncé and the other artist-owners of Tidal will continue to run Tidal’s service, while Sprint CEO Marcelo Claure will join Tidal’s board of directors. Sprint and Tidal will also create a dedicated marketing fund specifically for artists, which will allow them the flexibility to create and share their work with and for their fans. The partnership follows Tidal’s recent unveiling of Master quality recordings, as it continues to focus on the high end of the streaming market. Tidal is available in more than 52 countries, offering over 42.5 million songs and 140,000 videos. First launched by the Swedish company Aspiro, Tidal was acquired in 2015 by a company backed by Jay Z and relaunched in more markets.
In the ongoing drive for mobile operators to stay relevant and not devolve into being mere providers of a commodity-type service, streaming entertainment content—especially exclusive content—has emerged as a major factor. Sprint’s purchase of a large stake in Tidal instantly makes the U.S. operator, which is majority-owned by Japan-based Softbank, a player in the streaming music game. Tidal is not one of the biggest music providers; Spotify, one of the global leaders, has 43 million subscribers, while Tidal claims 3 million and some reports say only 1 million.
Still, we think the acquisition of the stake is a coup for Sprint. For one thing, the fact that Tidal will create content exclusively for the operator means that Sprint will have a powerful tool with which to retain subscribers and attract new ones. For the operator, Tidal will be a brand enhancer that can sharpen the competitive edge. In addition, while Tidal’s customer base may be small, the company targets a high-end demographic with its relatively high pricing. And the fact that it is artist-controlled not only ensures that its offerings will be high-quality, it also affords another marketing opportunity to Sprint, which will be able to enlist the celebrity artists for promotional campaigns.