Apple is in “exploratory talks” to acquire Tidal, the streaming music service run by Jay Z, the Wall Street Journal reports. Recode has confirmed that the companies are discussing a deal.
Why Apple might buy Tidal
It’s a classic tuck-in take-out.
Jason Miller / Getty
The fact that Tidal, which has been shopping itself for some time, is now talking to a buyer with incredibly deep pockets — and a streaming service — is not a surprise. (An Apple rep declined to comment.)
Why might Apple buy Tidal? How much would it pay?
One thing seems certain: This is a different situation from when Tim Cook, Eddy Cue and company paid $3 billion for Beats two years ago. Then, it was acquiring several executives, including Dr. Dre and Jimmy Iovine, plus the Beats Music team and a hardware business that was selling lots of expensive headphones.
Tidal, on the other hand, has much less to offer. In some ways, it would be a tuck-in; in others, a take-out.
- Tidal has about four million paying subscribers, according to the WSJ. (For context, Apple Music has 15 million.) Those can’t automatically be moved over to Apple Music, but Apple should be able to persuade many of them to come over.
- It has whatever Jay Z brings to the table for consumer marketing and artist relationships.
- Perhaps most importantly, a deal would take Tidal off the market as a competitor for artist exclusives, which have created much of its buzz. This presumably means Apple wouldn’t have to worry about not being able to stream the new Beyoncé album, for example. (Though Tidal’s artist and label deals will likely expire upon acquisition, as is typical.)
Apple also probably doesn’t have much competition for this deal, so it would be in a strong position. Samsung, the most logical buyer, walked away from its earlier talks with Tidal, according to a source close to the deal. Spotify can’t afford it. Google, which also owns a streaming service, could possibly also be interested for similar reasons as Apple. All this is worth something, but not a ton.
Additional reporting by Peter Kafka.
This article originally appeared on Recode.net.
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