A report from the Wall Street Journal yesterday has Apple in talks to buy Jay-Z’s Tidal streaming service, and even though Tim Cook’s company has a truck load of cash on hand, this is one acquisition that seems to be a waste of money.
When Apple purchased Beats two years ago for around $3 billion, the company received not only infrastructure that was later used to launch Apple Music, but also executive talent in Jimmy Iovine and Ian Rogers (who has since departed), and branding recognition from Dr. Dre. The general consensus is that the company vastly overpaid for what it received, but at least you could look at the deal and see that it made some sense because a few pieces fit into the larger picture of what Apple was trying to do.
Not so with Tidal. It’s a company reportedly in executive disarray, so there’s no operational talent to acquire. Apple already has all the infrastructure it needs for streaming delivery, so there’s nothing to be gained there either. Tidal does have a high resolution CD quality audio tier, but Apple has been collecting hi-res masters for its Mastered For iTunes program for more than three years now, so it’s even ahead of Tidal in this area, so that’s not a fit either.
Maybe the one thing that might be interesting to Apple is that fact that Tidal has 4.2 million paid subscribers, many of them attracted to the service because of Jay-Z’s brand, and exclusives from Beyonce, Rhianna, Kenye West and Prince. Buy Tidal and you get the users, but who’s to say that those subscribers can easily be retained?
Granted, if the price was right (meaning very low – $100 million or less feels right), it may be a worthwhile gamble for Apple, if for no other reason in that it takes it off the market (although none of Apple’s deep pocket competitors seem to be interested). [Read more on Forbes…]