(By Billy Steele | Published on January 18 2017 for engadget.com)
Following reports last week that Tidal hasn't been honest about its subscriber numbers, Sprint kicked off the week by announcing that it's buying a third of the streaming service. It's no secret that Tidal has struggled to gain any ground on Apple Music and Spotify, even with a portfolio of artist exclusives. The company reportedly has financial issues to contend with as well, so a big influx of cash likely made the decision easy for Jay Z. However, there are no obvious benefits for Sprint.
Sprint didn't reveal any terms in its announcement this morning, but Billboard's sources say the deal is worth $200 million. Some easy math will tell you that puts Tidal's overall value at $600 million. That's quite the increase from Jay Z's $56 million investment back in 2015. What's more, Mr. Carter and his fellow artist owners will retain stakes in the company. If all the reports about Tidal's debts and subscriber woes are indeed true, $200 million is a nice return on investment. It also adds 45 million Sprint customers as potential subscribers, depending on how the two companies bundle their services.
Billboard also reports that the deal includes a "dedicated marketing fund" of $75 million just for exclusive content. Sprint announced this morning that exclusives for its customers would be a by-product of its buying a stake in Tidal, but stopped short of offering any details. It will be interesting to see how that plays out in the months to come as artists like Beyoncé, Rihanna and Kanye West won't likely limit a new album to the nation's fourth-largest carrier. A new single or video? Maybe. A timed exclusive on an entire album? Doubtful.
If Sprint probably won't see the full benefit of Tidal's exclusive releases, what is it getting out of the deal? For now, it looks like the answer is: not much. The carrier said today that more details on "exclusive offers and upcoming promotions" are on the way. That could include a discount off Tidal's monthly subscription price for Sprint customers and perhaps some type of free access to the service. It also likely means that Tidal streaming won't count against your monthly data allowance, if you don't already have an unlimited data plan. However, that type of partnership could've been possible without a financial investment. Others, including Sprint, have already done it.
Back in November, Sprint and Napster announced a deal where customers could have their monthly streaming fees tacked onto their phone bill. There wasn't any discount, just the benefit of combined billing. It did the same with Spotify in 2012, before adding free six-month trials of that streaming service to customers on Framily plans in April 2014. Sprint also began selling Amazon Prime monthly subscriptions to its customers last March. At $11 a month, it's actually more than the $99 annual fee you can pay directly to the online retailer, but you avoid having to commit to a full 12 months up front.
The only obvious benefit for Sprint right now is that its CEO, Marcelo Claure, will take a seat on Tidal's board of directors. Shortly after Jay Z bought Tidal and its parent company, Aspiro, the New York Post reported that the wireless carrier and its owner, SoftBank, had purchased a minority stake in the streaming service. SoftBank later denied that was true, but it looks like it's had its eye on the music subscription for a while now. The Japanese company also reportedly tried to purchase Universal Music Group, one of three major record labels, for a cool $8.5 billion back in 2013. That offer was said to have been rejected. Sprint and Tidal are promising "a first-of-its-kind experience for music fans," but they will need to really wow us for the deal to make sense for the carrier.