Sprint Joins Race to Add Content -- WSJ
January 24 2017 - 3:02AM
Dow Jones News
Network operator agrees to buy a third of music service Tidal,
run by artist Jay Z
By Austen Hufford and Hannah Karp
Sprint Corp. will buy one-third of Tidal, the streaming-music
service run by rap mogul Jay Z, the latest content deal secured by
a network provider.
The companies said Monday the deal would give Sprint customers
access to exclusive content on Tidal, though they must still sign
up and pay for the streaming service. A Sprint spokeswoman said
news about coming offers and promotions would be released soon.
Tidal's current management team will keep running the service and
Sprint Chief Executive Marcelo Claure will join its board.
Terms of the deal weren't disclosed. The service has only 1
million to 1.5 million paying subscribers, according to a person
familiar with the matter -- a fraction of Spotify AB's more than 40
million.
But its celebrity-oriented brand and relationships with artists
could be valuable for Sprint as it looks to differentiate itself
from competitors, while the fast-growing music-streaming market is
likely to keep expanding. Jay Z bought the service in March 2015
for $56 million from Swedish company Aspiro, which had created the
Tidal brand. He has given famous artists and bands small stakes in
Tidal and promised each millions of dollars worth of marketing.
But Tidal has been struggling to attract subscribers to keep up
with larger rivals such as Spotify and Apple Inc.'s Apple Music,
which has more than 20 million paying subscribers.
The company held talks with an array of potential buyers over
the years, including Samsung Electronics Co. and Napster, the
streaming service formerly known as Rhapsody, people familiar with
the matter said. In a meeting with Samsung executives in October
2015, for example, Jay Z proposed that Samsung buy Tidal for upward
of $200 million, some of these people said, but in some cases
potential buyers said they were put off by Tidal's lack of
transparency. A Tidal spokesman declined to comment.
Earlier this month, industry tracker MiDia Research estimated
Tidal had 1 million "commercially active subscribers." Tidal has
amassed many of its subscribers through exclusive releases from
superstar artists such as Kanye West, Rihanna and Beyoncé, many of
whom are connected to Jay Z. Beyoncé is married to Jay Z. The
streaming music service also promotes itself as more
artist-friendly and provides CD sound quality.
Streaming music is the U.S. recorded-music industry's biggest
revenue source, according to the Recording Industry Association of
America.
Tidal parent Aspiro lost 239 million Swedish kronor ($28
million) in 2015 as it worked to expand its customer base and get
music deals.
Tidal charges $20 a month for a high-fidelity version of its 40
million-song catalog and $10 a month for download-quality
sound.
In the financial statement, Aspiro said a board assessment had
concluded the company lacked funding for 2016 but added, "The board
believes the company will be able to secure new financing."
Network service providers have been striking content deals to
attract and retain new customers. AT&T Inc. made a deal with
singer Taylor Swift to share exclusive videos with its customers.
Verizon Wireless has a deal to stream NFL games to its
customers.
Shares of Sprint rose 2.8% to $9.18 on Monday.
Matthias Verbergt and Jonathan Cheng contributed to this
article.
Write to Austen Hufford at austen.hufford@wsj.com and Hannah
Karp at hannah.karp@wsj.com
(END) Dow Jones Newswires
January 24, 2017 02:47 ET (07:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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