Sprint on Monday jumped into recording mogul Jay Z’s streaming-music business Tidal, buying a 33 percent stake in a company with superstar power.
Customers of Sprint will gain access to “exclusive content” from Tidal, whose founding artists include Jay Z and his wife, Beyoncé, two of the recording industry’s wealthiest artists, along with music greats Kanye West and Alicia Keys.
The companies’ announcement said little about how the two will mesh, and Sprint declined a request for an interview. The limited news surrounding the deal left outsiders wondering how Sprint hopes to benefit from what unconfirmed reports by two music industry publications called a $200 million investment.
“I don’t see any of the pieces of the puzzle coming together,” Berge Ayvazian, a wireless industry analyst for Wireless 20/20 , told The Star.
Other reports said the investment provides a timely boost for Tidal’s streaming music service that faces stiff competition from Spotify and Apple Music, both of which are larger than Tidal. The music industry has questioned how many subscribers Tidal has, in some cases — even questioning the accuracy of reports it made previously.
From Sprint’s perspective, Ayvazian said, there may be potential in bring advertising to music videos available through Tidal, or Sprint may seek to link Tidal to its planned relaunch of its prepaid wireless Virgin Mobile brand.
Analyst Bill Ho with 556 Ventures LLC wondered why the investment came from Sprint rather than its financially healthier parent company, Tokyo-based SoftBank Group Corp. Tidal says it operates in 52 countries, and SoftBank has investments in many countries. Overland Park-based Sprint operates only within the United States.
Ho said Jay Z does provide Sprint with a “big name” appeal to potential millennial consumers, but at the same time he noted that streaming music is outside Sprint’s core business of providing wireless service. Sprint also will be a minority owner in Tidal.
Tidal is adding Sprint CEO Marcelo Claure to its board of directors as part of the agreement.
The biggest question left unaddressed was how much Sprint paid. Billboard and Music Business Worldwide each cited sources they did not identify for the $200 million investment amount, which means Tidal is worth about $600 million in total.
The partnership with Sprint comes on the heels of Tidal’s announcement to provide “master” quality recordings from a variety of labels and artists.
Sprint’s direct investment goes further than its earlier foray into streaming music.
In April 2014, Sprint offered a free three-month trial with Spotify in connection with a new phone launch. Under then-CEO Dan Hesse, Sprint launched a special edition of the HTC One phone that featured Harman Kardon speakers and the ability to handle high-quality audio files.
Sprint’s investment in Tidal comes as other wireless carriers are making deals that allow them to own content that consumers would access with their mobile devices. For example, AT&T has agreed to buy Time Warner Inc., and Verizon has bought AOL.
Jay Z and the other Tidal artist-owners will continue to run the streaming service, the companies said.
“Sprint shares our view of revolutionizing the creative industry to allow artists to connect directly with their fans and reach their fullest, shared potential,” Jay Z said in a release. “Marcelo understood our goal right away and together we are excited to bring Sprint’s 45 million customers an unmatched entertainment experience.”
Tidal allows artists from around the world to connect with fans. The service offers a catalog of more than 42.5 million songs and 140,000 videos. The service provides CD-sound-quality music and high-resolution video.
“Jay Z saw not only a business need, but a cultural one, and put his heart and grit into building Tidal into a world-class music streaming platform that is unrivaled in quality and content,” Claure said in the release.
“The passion and dedication that these artist-owners bring to fans will enable Sprint to offer new and existing customers access to exclusive content and entertainment experiences in a way no other service can,” Claure added.