JAY Z'S NEW MUSIC COMPANY "TIDAL" BOUGHT FOR $56M IS NOW WORTH $250M IN 2 MONTHS

At the end of January, it was revealed that an
investment group led by Jay-Z had purchased a
Swedish music company called Aspiro for $56
million in cash. $56 million was a 60% premium
over the company's value the day before the deal
was announced.
Aspiro operates two music streaming services,
WiMP and Tidal . Both are positioned to offer
higher-quality streaming music than can be
provided by rival services. Tidal was just recently
launched in the UK and US. WiMP has been in
operation much longer, and at the end of 2014,
reported to have 512,000 paying users in Poland,
Germany, Denmark, Finland, Iceland, Norway and
Sweden. Impressive stats, but even so, barely
scratching the surface of Spotify's 15 million
paying subscribers. Spotify is available in 58
countries, as of this writing.
You probably recognize Tidal because we wrote
about its awkward launch party in NYC two days
ago. Jay unveiled his plans for Tidal with the help
of 15 music superstars like Kanye West, Madonna,
Deadmau5 and Rihanna. He also gave each of his
15 partners a 3% equity stake in the streaming
service.
(GUILLAUME
BAPTISTE/AFP/GettyImages)
(GUILLAUME BAPTISTE/AFP/GettyImages)
Tidal attempts to differentiate itself from the crowd
in two main ways: 1) Tidal offers a slightly higher
quality stream of music than competitors (get
ready for buffering), 2) Artists will get a larger cut
of the revenues. These are good goals, but
unfortunately, Tidal has received a decent amount
of criticism because the monthly fee is more than
twice the equivalent plan offered by Spotify. There
is also no free (ad-supported) version of Tidal.
Most of the feedback we received about Tidal
basically questioned why anyone would pay any
monthly fee for music, let alone 2X the current
standard. It's also a little ironic to see a group of
musicians who have a combined net worth of
$2.8 billion position themselves as super heroes
fighting for "fair trade" rights for artists.
Anyways… Regardless of what you think of Tidal, it
has certainly turned out to be an amazing
investment for Jay-Z.
As we mentioned, Jay bought Tidal's parent
company Aspiro back in January for $56 million.
When he bought the company, Tidal had 17,000
subscribers. Today it has over 100,000. What's
even more impressive is that Jay and his
investment partners recently took on an
investment round from Sprint's parent company
Softbank, that would give the company a market
cap of $256 million .
After giving away 45% of the company's equity to
his 15 partners, Jay and his original investors
own the remaining 55%. Jay is reportedly the
largest stakeholder. Assuming he owns 30-45% of
that remaining equity, Jay has seen the value of
his investment increase from $17-22 million to
$77-$102 million . That's a 363% return in two
months.
It's still way too early to call Tidal or Aspiro a
success. 100,000 subscribers is not even a tiny
scratch compared to Spotify's 15 million. What
happens to Jay's investment if no one else signs
up? Or worse. What if he loses subscribers who
realize they could save $120 a year switching to
Spotify. Even more, if they choose not to pay for
any sort of music service.
Where do you think Tidal will be in a year?
Thriving and competing with the majors, or
languishing in the tech cemetery?

Credit:CelebrityNetWorth