[Blind Gossip] Whenever you see a group of celebrities of various ages and genres get together for anything other than an official reason (e.g. a major awards show) you are right to suspect that something beyond pure friendship is at play.
In the case of this group of celebrities, it’s business. They are talking about teaming up in a surprising new venture that will leave some of their old allies in the lurch… and will greatly benefit themselves financially. No announcements planned for the next two weeks, but we should know in the new year whether or not they go through with their interesting business strategy.
Celebrities: Taylor Swift, Beyonce, Jay-Z
Business Plan: Working together on new music streaming service
What, did you think that Beyonce and Jay-Z just started hanging out with Taylor Swift because they are actually friends who have sooo much in common? Because Beyonce is just dying to spend her Saturday nights baking cookies with a country/pop girls ten years her junior? Because Jay-Z has a thing for Scottish Fold cats?
Come on! We’ve told you before that Jay-Z and Beyonce are ALL about the business (It’s Not Friendship Or Love). They showed up at Swifty’s house to woo her for Jay-Z’s new music streaming service!
You may recall that Taylor Swift pulled her music from the streaming service Spotify last year. Basically, her dispute with them was about the percentage that she, as an artist, was paid from sales of her music.
Jay-Z (together with a group of investors) just purchased Aspiro, which owns the streaming service Tidal WiFi. And guess which artist just announced that she is going to be streaming much of her music over Tidal Wifi? That’s right: Taylor Swift!
(Yes, Justin Timberlake was also at the TS birthday party, but he has not yet announced a commitment to Tidal.)
Here is an excerpt of an article about the deal from CNBC:
Jay Z’s Tidal trumps Spotify
by streaming Taylor Swift’s music
In November 2014, music fans everywhere went crazy when Taylor Swift pulled her entire catalog of music records off streaming service, Spotify.
Fast forward five months, and Taylor Swift has dealt a further blow to Spotify by announcing her return to streaming on Jay Z’s service, Tidal.
Newly taken over by the multimillionaire rapper as part of a $56 million deal for its parent Aspiro, Tidal now offers users the entire music catalog of Taylor Swift… almost. Despite showing its image and songs on the website’s service, Swift’s multi-platinum selling album, “1989,” will not be available to its users.
Tidal is a premium music streaming service, which requires users to pay out $19.99 every month, if they want to experience “high fidelity sound quality, high definition music videos and expertly curated editorial.” Her music is also available on streaming platforms Beats Music and Rhapsody, which requires payment like Tidal.
This backs up comments Swift made throughout last year, saying that musicians should be compensated appropriately for the music they produce.
“It’s my opinion that music should not be free, and my prediction is that individual artists and their labels will someday decide what an album’s price point is,” Swift wrote when talking about the value of music, in an op-ed for the Wall Street Journal, last July.
So, in July, Swifty complained about her dissatisfaction with streaming deals. In November, Swifty pulled out of Spotify. In December, Jay-Z and Beyonce showed up at her house. In March Jay-Z announced the Tidal deal and Swifty’s participation. It all makes sense now, right?
While we usually focus on the celebrity relationships side of things, let’s talk a little about the business side of this deal!
While Jay-Z locking down Taylor Swift as one of his first artists was certainly a major coup, the fact that Swifty is not streaming her entire catalog over Tidal tells us a few things.
First, she is probably not an investor in the deal. If she was an investor, she would be all in. She is probably just one of their key artists, and her commitment to being part of the streaming service was likely an integral part of Jay-Z’s being able to secure financing from his other partners.
Secondly, her holding back a little was an incredibly smart business decision. If Tidal does well, she can use her album 1989 – as well as future projects – as leverage to secure an actual piece of the company for herself. If it doesn’t do well, she will still receive her stream of income from record sales.
Third, Taylor is not cutting herself off from other streaming services. She will continue to stream her music over other services (but not Spotify, obviously).
Why is Taylor hedging her bets? Well, the streaming business looks like it should be very lucrative, but companies are actually having trouble making money. Take Spotify. Their revenues are over $1 Billion a year… yet they still aren’t profitable! And Tidal plans to give up a bigger bigger percentage of their revenues to artists than Spotify does, which will cut their profits even more.
So the business model is not yet perfected to the point where everyone is making money. Yet Taylor Swift is guaranteed a nice cut from her album sales, and has the potential to make even more money down the road if the model succeeds. Like we said… SMART!
Lots of you guessed the people and event, but only NYerInTheKnow got everything right! Most of you were thinking small, with the players teaming up for a album or a tour. This is bigger. This is BUSINESS!
Related: It’s Not Friendship Or Love
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