Jay-Z Launches a New Way for Music Artists to Get Paid

You wouldn’t steal a piece of artwork off of a museum wall, would you?

Yet people do nearly the same thing every day by downloading or streaming music for free. Thanks to a recent announcement from Jay-Z, artists will now be compensated fairly.

On March 31 hip-hop mogul Jay-Z announced the launch of a new artist-owned streaming alternative called Tidal. This new streaming service will address the compensation issue that has plagued the industry since the early days of file sharing. Artists involved in the project include Rihanna, Jack White, Calvin Harris, Madonna, and many other influential artists. A number of these artists plan on releasing new music exclusively to Tidal first, and then to other streaming services later on.

AP

Unlike other major streaming services, Tidal will have no free version, instead having a $10 version for digital or “compressed” content, and a $20 version for CD-quality streaming. This allows Tidal to pay the artists higher royalties than services that have free tiers. In addition to royalty fees, artists who have ownership in the company receive 3 percent of the shares, with Jay-Z holding the rest.

This announcement comes just months after pop superstar Taylor Swift pulled all of her music from Spotify, largely because she felt slighted by much of it being given away for free.

Free streaming services provided by Spotify and Google allow users to stream millions of songs free of charge, only paying the artists of those songs a very small royalty. Nearly everyone else in the world is compensated for his or her work, and it’s refreshing to see a business leader like Jay-Z take initiative by developing a new model to fairly compensate artists for the music they produce.

Before Steve Jobs began corralling digital music distribution with the creation of iTunes, mainstream consumers were unapologetically stealing music from their favorite artists. Digital downloads started with peer-to-peer file sharing services like Napster and LimeWire, and this normalized music theft for an entire generation. Apple is currently planning on releasing a new streaming service this summer, and there’s much speculation on how it will compete against the current competitors.

Due to the current systems, many artists are forced to “sell out” early in their careers in order to stay profitable. Artists do not make the same kind of money they did prior to the industry’s digital revolution, so it’s become common for them to tour and sell their music to corporations to make up for that. Artic Monkeys are an example of a group that did this, as their music was used in a Bacardi commercial shortly after the group began making money.

Although in the past selling out was seen as “uncool,” it’s now becoming more and more understandable, and many musicians do not have a choice. When a group spends thousands or millions of dollars on creating and recording an album, or even just a song, it’s only fair that they are compensated for that. The fact that someone can go buy that album for $15 and put it online for the world to access for free is not fair whatsoever, and it leaves the artists scrambling to make up that debt.

These new profit-generating maneuvers are in sharp contrast to revenue models of the late 20th century. Back then, bands and performers were able to sell records, a physical item for listeners to purchase. Now, with everything being digital, consumers have lost the romance involved with owning an album. It becomes less of an experience, and does not foster as much of a relationship with the artist.

Although modern technology makes it hard to sell a tangible music product, an artist-owned service at least brings the artists closer to the listeners. If Tidal is as successful as I hope it will be, it will have listeners more satisfied, and leave artists with more money in their pockets.

Chris Markowski has carried the titles of author, investment banker, equity analyst, muckraker, all around trouble-maker and most importantly consumer advocate. He is the personality behind Watchdog on Wallstreet and founder of Markowski Investments.

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