A little more than a week after Apple made major news shaking up its update cycle, the tech giant could be on the verge of a massive acquisition.
Apple is reportedly in talks to acquire Tidal, the Wall Street Journal reports. Tidal, which has enjoyed massive good press of late, was briefly the most popular app in the app store.
A Tidal spokesman denied that executives had had talks with Apple, but take that with a grain of salt. Someone is leaking these rumors, so it could be someone within Apple gauging the market reaction.
Principal Tidal owner Jay Z purchased the streaming service for $56 million from Aspiro, a Swedish company. He initially made headlines by giving 19 creators stakes in Tidal. The company bills itself as artist friendly and offering a higher fidelity experience. Unlike Spotify, there's no free tier. Users must either pay $10 per month for standard fidelity or $20 per month for high fidelity. The service has 4.2 million subscribers, the bulk of whom came over during the string of exclusives headlined by Kanye West, Rihanna, and Beyoncé. It’s also the only service to offer Prince’s catalog.
Spotify, by contrast, claims 30 million paid users and 70 million free ones.
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So Apple’s interest might initially seem bizarre. Why buy a foundering service with a tiny subscriber base even with the massive advantage in exclusive artist relationships?
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So Apple’s interest might initially seem bizarre. Why buy a foundering service with a tiny subscriber base even with the massive advantage in exclusive artist relationships? Well, the second part of the sentence holds the answer.
Much like Beats, the headphone company for which Apple reportedly paid $3 billion, Tidal has a reputation as the hippest brand in streaming. While that reputation isn’t backed up by a subscriber base, Apple makes so much money that it doesn't need to worry about Tidal’s financial health, just its prestige.
Also noteworthy is the massive catalog. Apple can take Rihanna, Jay Z, Kanye, Beyoncé, and Prince and essentially play keep-away from services like Spotify. Though those artists allow other services to use their music, that would no longer be a major necessity with a massive built-in market of Apple users. Remember, streaming is more or less the death knell to the iTunes Store, which has increasingly become outmoded as people are less and less concerned with “owning” digital files.
Spotify seems too populist for Apple, which is a company founded on paying a higher price for a better experience. The streaming giant’s massive success also probably makes it too big to acquire. Though Tidal will doubtless carry a huge price tag, it’s still bite-sized when compared to Apple’s quarterly earnings. Apple’s own music streaming service is successful, but a distant third in terms of brand recognition and prestige.
So Apple wouldn't really be buying a subscriber base. Instead, it would be buying exclusivity, cache, and access to streaming libraries that no other service can match. Once Tidal is paid for, it would be folded into Apple Music and disappear in the morass of profits from the mothership.
Who knows if it’s a good deal, but this is a shark swallowing a minnow: The shark isn’t exactly concerned about nutrition.