It was announced today that Sprint (S) purchased 33% ownership in the music-streaming service Tidal for $200 million. The deal will also place Sprint’s CEO Marcelo Claure on Tidal’s board. Sprint’s will now be able to offer its customers exclusive content similar to Apple Music. This offer is intended to tease new customers to Sprint and away from the likes of Verizon or T-Mobile. Details are still emerging about how current Sprint customers and Tidal will be optioned, and mainly, if Sprint customers will be given a free subscription.
Sprint has been struggling to retain customers. T-Mobile has surpassed it, which a few years ago seemed impossible. But, the deal is not surprising as telco companies continue to snatch up content companies to hedge against their traditional models. Sprint is buying its way into the streaming/media industry and the deal is low stakes, even if it is unclear how much it will benefit them in the long run.
Tidal should also get a nice subscriber boost from the deal. Ever since its inception, Tidal’s ability to compete with Spotify and Apple Music was in question. Recently, the acquisition rumors started to swirl and the current deal with Sprint is a pretty strong lifeboat for the service. In 2015, Tidal lost $28 million and does not have anywhere near the subscribers of Pandora (78 million) or Apple Music (20 million), but only a weak 3 million. This number was also in question by Norwegian journalists who believe this to be an inflated fabrication. The service has not been popular with customers. It has touted itself as artist-run, but its “exclusive” content has been hazy at best.
However, the Tidal’s valuation skyrocketed to $600 million overnight and this represents a significant bump from the $56 million Jay-Z paid for it. The music mogul and rap legend said this in the press release: “Sprint shares our view of revolutionizing the creative industry to allow artists to connect directly with their fans and reach their fullest, shared potential…Sprint understood our goal right away and together we are excited to bring Sprint’s 45 million customers an unmatched entertainment experience.”