Jay-Z Could Learn A Business Lesson From Mark Zuckerberg Or King David
Last night, a friend and I got into a discussion about whether tech billionaires had a superior business model or were extremely lucky. In particular, we discussed why Facebook took off despite MySpace having 100 million users. Any venture capitalist would have been apprehensive about investing in a company that did the same thing as the industry giant. The best explanation we could come up with for Facebook’s success was that it was simpler to use.
I went home and applied that model to other David and Goliath tech scenarios to see if it still held true. Google won over [insert 1990s search engine] because its clean homepage made search simpler (thanks to Marissa Mayer). Uber and Lyft won because hailing a ride from a phone is easier than hoping you find a cab on the street. Netflix won because it is easier than going a video store. Even walking to the mailbox was too much work, so it transitioned to a streaming service. iTunes won because it is easier than going to a record store.
I’m sure you’re thinking about examples that do not fit within my model, such as Beats by Dre. That company doesn’t fit because they never had a competitor in the headphones space. Apple’s earphones (technically, not the same) are packaged with iPhones and iPods, so people did not make a choice to adorn the ubiquitous white cultural icon. Under Armour did not make anything simpler or easier, but it doesn’t fit the model because it is not a tech company. Jawbone and Pebble didn’t have any competitors.
All that is to say, Jay-Z was given bad business advice. Someone told Jay-Z that paying $54 million for a streaming service that specialized in high-fidelity (“HiFi”) streaming quality would be enough to dethrone Spotify, Rdio, Beats Music, etc. It doesn’t matter if you can secure Taylor Swift’s pre-1989 catalog, either (I’ve still got that on Rdio, btw). Mark my words, when Tidal relaunches at 5pm EST on March 30, 2015, it will become an instant failure.
Don’t get me wrong, I am an audiophile who cares about the quality of his music. But I’m not going to pay $20/month for that luxury. If you get the standard quality, you’re paying the same as what you would pay for its competitors. However, Tidal’s website makes it clear that it is branding itself as a HiFi streaming service.
I’m a proud iPhone user (I’ve owned a 3GS, 4S, and 6), but I’m aware that there are phones with superior features, such as a better camera. However, I was miserable with my three Android phones (HTC One X+, Nexus 4, and Asus Padfone) because they could not match the simplicity of my iPhone. For me, the simplicity of iMessage, a streamlined music player, remote earphones, and uniform software updates are enough to keep me on iOS.
Perhaps, I’m missing something. Let’s weigh the pros, cons, and neutrals of Tidal:
Pros: Music quality (Tidal HiFi); early album releases; celebrity endorsements
Neutral: Music quality (Tidal Premium); price (Tidal Premium); catalog size
Cons: Price (Tidal HiFi); price (if you have an existing family plan); price (does not offer a free version); switching catalog from competing streaming services; sharing with friends from competing streaming services; data usage (HiFi probably will use more data); data usage (T-Mobile does not charge for Spotify or Rdio)
Star power may be enough for selling sneakers, but it does little in a very crowded streaming field. A field in which Apple is struggling to break into. Let me repeat that. Apple has to rebrand Beats Music because it is still getting pounded by Spotify. I also should note that Tidal is not the only Hi-Fi streaming service and Spotify (as one would imagine) has already announced that it is working on Hi-Fi streaming.
In sum, Jay-Z was a little naive (or, perhaps, arrogant) for Jay-Z to think his imprimatur would catapult a service that has gone relatively unnoticed since it launched in October 2014. If Meerkat couldn’t break the App Store’s Top 100 in its first run despite a wave of media coverage (see what I did there?), Tidal seems, as Jay-Z would put it, DOA.
David outsmarted Goliath by using something simple: a rock. However, without simplicity, there’s no way the Roc is not going to take down any giants.