Tidal Is Fraudulently Inflating Subscriber Numbers, Report Says

by Paul Resnikoff

Tidal Is Fraudulently Inflating Subscriber Numbers, Report Says

How many subscribers does TIDAL really have? A new study is now accusing the Jay Z-owned service of completely fabricating their numbers.  And not by a little bit.

Tidal claims to have more than 3 million paying subscribers.  More than half of those are high-paying, $20-a-month audiophiles, according to the company.   Separate reports have claimed up to 6 million subscribers.

Sounds great, but is it true?

Now, a new investigative report says it’s all a fraudulent lie.  The accusations, which are being published by Markus Tobiassen and Kjetil Saeter of Norwegian publication Dagens Naeringsliv, are that Tidal has created fake accounts and lied to the media and partners.

That includes publications like Digital Music News, who have faithfully reported the subscriber numbers.

Tobiassen and Saeter interviewed staffers at TIDAL, as well as partners and confidential sources.  And the information that came back was pretty damning.  “When 16 of the world’s biggest pop stars, one a convicted cocaine smuggler and a former Israeli intelligence officer was not able to obtain enough customers to Jay Z’s Tidal, the company began to inflate subscription numbers,” the report alleges.

DMN spoke this morning with Tobiassen, who offered a translation of the report.  “On March 30th of last year, Tidal issued a press release stating that the company had reached ‘three million members,’” the report states.  “The news story reported worldwide was that Tidal had three million paying subscribers.  Tidal also specified to online newspaper The Verge that this figure did not include trial subscribers.  This was the last time Tidal reported a total number of subscribers to the public.”

The only problem with that?

“In April 2016, one month after the press release issued by the company claiming three million members, Tidal made payments to the record labels for around 850,000 subscribers. The figure reported internally by Tidal in April is 1.2 million subscribers.”

The report further states that Tidal itself reported a figure of 1.1 million to the major record labels in late 2016.  In other words, nowhere near the numbers reported to media outlets like Digital Music News and Verge.

Mark Mulligan, a music industry analyst at Midia Research, was unsurprised by the findings.  “I’ve suspected this for quite a while”, Mulligan told Dagens.  “Tidal has been very good at producing false numbers.  They’ve seeded the marketplace with numbers that cleverly lack precise definitions – and so can be easily misreported – and are often not directly

Actually, Mulligan previously conducted his own ‘back of the envelope’ calculation that raised his suspicions.  Specifically, he added up all streaming music revenues, then subtracted contributions from major services like Spotify and YouTube.  The remaining sliver simply isn’t big enough to equal 3 million paying subscribers.

In other words, Jay Z and Tidal’s claims are probably made up.  “There are other examples of companies over the year that have
misreported numbers or been overly creative, but this is the biggest and most high-profile case so far”, Mulligan said.

Not all of these sources are confidential.  Arthur Sund, former Manager of the streaming company’s Business Intelligence Department, is actually suing the company for deliberate misreporting.  His boss, Lior Tibon, accused Sund of cooking the books and fired him, leading to the lawsuit.

Sund says that 170,000 subscribers magically appeared in October.  But these were dead accounts being revitalized, with zero actual activity.  “My conscience is clear. If I have ever been involved in misreporting, then it has been under the instructions of Lior Tibon himself,” Sund told Dagens.

via Digital Music News

Yoel Molina Law

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