Jay Z Close To Entering Streaming Music Business
Rapper, husband of Beyonce and all-around business mogul Jay Z (also known as Shawn Carter) is set to enter the growing streaming music industry. Late last week, a subsidiary of Jay Z's S. Carter Enterprises called Project Panther Bidcom Ltd. made a $56.2 million dollar bid for the Swedish streaming company Aspiro. Aspiro's board unanimously approved the deal. A vote from shareholders is still to come.
Aspiro actually has two streaming services offering audio and video, called WiMP and TIDAL. Aspiro claims to offers "HiFi quality audio" and says TIDAL gives users something they call " lossless sound quality," which allows users to enjoy music "the way it was intended by the artists."
Nevertheless, Wired magazine reports Aspiro's music subscription services currently have about half a million users, compared with streaming behemoth Spotify's 15 million paying customers.
Jay Z's bid for Aspiro is one more sign of the growing interest in streaming. Last year, Apple bought headphone maker Beats By Dre, which had its own streaming service. Apple is hoping to use that service to compete in an already crowded field currently dominated by Spotify, Pandora and Rdio. Google is in the game as well with YouTube's new service Music Key. And Sony launched PlayStation Music, which operates through that popular gaming system.
In a statement published by The Hollywood Reporter, Jay Z's subsidiary, Panther, said the pending acquisition of Aspiro acknowledges the recent shift in the industry:
"Panther believes that the recent developments in the entertainment industry, with the migration to media streaming, offers great potential for increased entertainment consumption and an opportunity for artists to further promote their music. Panther's strategic ambition revolves around global expansion and up-scaling of Aspiro's platform, technology and services."
It's not surprising that Jay Z would enter the streaming ring. His career has spanned two eras, one in which physical sales were dominant, and this one, when digital sales and streaming are the new normal. Jay Z had his first No. 1 album in 1998, with almost all sales of his classic Vol 2 Hard Knock Lifecoming in physical form. But his latest No. 1 solo album, 2013's Magna Carta Holy Grail, was released first as a smartphone app, prompting changes to the ways analysts count album sales.
Jay Z is jumping into a world whose growth hasn't come without strife. For years, artists have complained that streaming services, especially Spotify, don't compensate them enough. Spotify says the average payout to rights holders of songs is anywhere from $0.006 to $0.0084 "per stream." Of course, a hit song might be streamed millions of times.
Some of those revenue issues have led big-name artists like Taylor Swift to remove their catalogs from services like Spotify. And several other artists, including Jay Z's wife, Beyonce, often wait months to release new music on Spotify and other streaming services, in hopes of boosting physical and digital sales of their work.
But whatever issues artists may have with streaming, it continues to grow, while other forms of music consumption decline. Apple iTunes sales were down 14 percent in 2014. And Nielsen Music reports all physical album sales were down also 14 percent, while total digital sales were down 9.4 percent last year. But streaming, as a whole, saw a 54.5 percent increase from 2013 to 2014.
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