Pandora’s box opens as Tidal wave of losses emerge

14 Sep 201610 Shares

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Tidal, the music streaming service owned by a host of musicians, including Jay Z, Kanye West and Beyoncé, just can’t turn a profit. Meanwhile, Pandora’s about to join the competition. Who said the streaming market was easy to crack?

The wheels on Tidal’s A-list wagon are wobbling after its losses surged to $28m in 2015, according to The Wall Street Journal – around triple the streaming service’s 2014 loss.

Losses are hardly alien to the music streaming industry but, with such a small subscriber base in comparison to the giant Spotify, or even the growing Apple Music, a worrying picture is emerging.

Income rose alongside losses, but, at a mere 30pc increase, that rise is far outweighed by the final result.

Tidal

Reports emerging over the summer months suggested that Apple was eyeing up Tidal to boost its own offering, in a bid to take on Spotify.

Tidal had 4.2m paying subscribers in June. Compared to Apple’s 17m and Spotify’s 30m, Tidal seems to be small fry in a loss-leading industry.

Spotify’s revenues of nearly €2bn last year (Tidal hit €42m) – up 80pc on 2014 – still saw losses top out at €173m, as companies try to work out how to monetise what is increasingly looking like a non-profit industry.

According to Spotify, 2015 was the company’s best year to date. Considering how much financial support is given to companies growing, rather than profiting, its existence is hardly under threat.

Though Tidal, swimming in shallower pools, must surely be under threat.

That threat can only be compounded by Pandora’s plans to launch two new music services, perhaps as early as this week.

According to Recode, the company has signed deals with Universal Music and Sony, and has Warner Music squarely in its crosshairs.

“Pandora says it wants to launch the new services ‘soon’ and says it will start changing the way it reports its financials in the fourth quarter of this year to reflect the new revenue streams,” reads the report.

This is all under the growing shade of YouTube, with Red offering up a potentially industry consuming option should it fully catch on.

With YouTube’s video streaming subscription game about to skyrocket, too, having 1bn users may be the only profitable option.

Music streaming image via Shutterstock

Gordon Hunt is senior communications and context executive at NDRC. He previously worked as a journalist with Silicon Republic.

editorial@siliconrepublic.com