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Tidal’s future is brighter after Sprint’s investment

Tidal’s future is brighter after Sprint’s investment


And why this deal may get more interesting in the near future

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Two years after the initial discussions began, Sprint has made a substantial investment in Tidal, acquiring 33 percent of the company. The deal will help stabilize Tidal, which has had issues keeping up with its payments to music labels over the past year, according to multiple sources and numerous reports.

Tidal has been looking for a partner for the past year, according to sources, with Samsung and then Apple considering, but ultimately declining, to acquire the company. After those two moves failed, Sprint — Tidal’s first potential partner — came back to finish the deal that should’ve been completed in April 2015.

The deal will also spur the creation of a $75 million marketing fund for Tidal artist exclusives and initiatives, according to Billboard. That means we may see more exclusive albums showing up on Tidal this year, and we’ll definitely see more concerts and music videos funded by the service.

Tidal is now reportedly valued at $600 million

Sprint will use the partnership as an incentive to gain and keep subscribers, who could potentially get access to early tickets or private shows from some of Tidal’s artist-owners. Carrier deals with streaming services have worked extremely well for some — Deezer’s deals with Orange in France and the UK come to mind — while others like Rhapsody haven’t found success with the same strategy. But right now it’s unclear exactly how the partnership will work on Sprint’s end.

Will new subscribers get Tidal free for six months? Will Tidal count against data caps for users not on Sprint’s unlimited data plans? Will Sprint users get access to exclusives before standard Tidal subscribers? Sprint and Tidal haven’t provided any information as to exactly the kind of benefits Sprint customers will see, but Sprint says more information will be “available soon.”

While these are the obvious motives for the deal, there’s another potential move that could benefit both parties in the long run — if the Trump administration plays ball.

The potential of SoftBank acquiring T-Mobile and pairing it with Sprint was revived last month after Trump met with SoftBank CEO Masayoshi Son. Although the merger was squashed under the Obama administration, the Trump administration is seemingly more open to the possibility of having three national carriers.

A Sprint / T-Mobile merger could be a boon for Tidal

If that deal were to happen, it would give the newly combined Sprint / T-Mobile company around 118 million subscribers and a large stake of Tidal, which it could push as an incentive to steal customers away from AT&T and Verizon. Given that this isn’t a standard carrier deal that could be annulled after a corporate acquisition, Tidal would be in position to greatly benefit from the merger.

The biggest remaining question about the Sprint-Tidal deal is where the 33 percent stake that Sprint purchased — which Billboard says is worth $200 million — came from. Jay Z, who initially purchased the company in 2015 gave 3 percent shares to 15 artist-owners who initially came on board before the relaunch of Tidal, and likely gave up some more shares to the artists who joined over the past 18 months.

That would still leave Jay Z as the largest shareholder with somewhere in the ballpark of 30 to 40 percent of the company under his control. Now that Sprint is on board, is it the majority shareholder in Tidal, or did the artist-owners dilute their shares in return for the higher valuation?

Does Jay Z still control Tidal?

Given the losses that Tidal has suffered over the last year — which ultimately fell to Jay Z — it’s likely that he sold a large portion of his shares in return for a nice pay day and a little less stress on his bank account. But we can’t know that for sure, as Tidal hasn’t respond to a request for comment.

Given Tidal’s public perception, it’s still going to be a lot of work for Sprint to get its users on board, even with the possibility of an extended free trial. (And on top of that, Sprint’s history of acquisitions and investments isn’t that great.) However, if Tidal can roll out a lineup of artist exclusives like it did in 2016 and Sprint can manage to lock in new users to the streaming service with some financial incentives, the service does have a chance to rebound in some fashion.

Despite the huge shadow of Spotify in Europe, Deezer has thrived on the backs of carriers, and no one expected that. Tidal is hoping the same thing can happen in the US.