Wednesday afternoon, Jay Z, along with TIDAL executive Vania Schlogel, discussed his new streaming venture with a group of students at the Clive Davis Institute of Recorded Music. In a Q&A, the rap mogul answered questions delivered by NYU professor Errol Kolosine and prepared by students about everything from the company's equity structure, the contents of the documents signed during TIDAL's press conference, and whether or not Jay believes that one day there will only be one streaming service. Read a transcript of the event below.
How will TIDAL change the industry with regards to artists' bottom line? Spotify has received much criticism for the portion of revenue that the artists receive through their music being streamed there. Is TIDAL a direct response to this criticism?
Jay Z: Not a direct response. You don't want to single anyone out, per se — but currently we pay the highest royalty percentage. And there is no free tier service. If you have five people paying for music, and ten people consuming it, then the artist starts at -5. We start at 1. There is no free tier and we'll pay the highest royalty percentage. That's how we'll change the industry, as well as through a number of other things which I'm sure you guys are gonna ask about, so, I don't want to go too into it on the first question.
What's the most difficult part about balancing being an artist yourself, staying true to your artistry, and also being a producer that needs to stay conscious about record sales?
J: When you're in the studio, you're just making music from your heart. For me, I've always been that way. I was an artist, I was executive producer on my first album so, I've always had to manage both. I couldn't get a record deal. It wasn't by choice - I couldn't get a record deal, so I had to figure it out. We started by selling records out of the trunks of our cars. We went to some stores in Brooklyn and some other places and then we spread from there. I guess the short answer is: When you're in the studio you're an artist, and when you're outside of that you've got to figure out how to get your music heard.
Will TIDAL offer a student discount for subscriptions like Spotify does in the near future?
J: Oh. Okay, well I'm going to let Vania answer that one.
Vania Schlogel: Yes. When we look at the data, the data says that students don't really care about paying for streaming. I actually don't believe that, necessarily — I think that this demographic here, sitting in the room, cares very deeply about music. I think in fact that a lot of you have a deeper emotional connection with music than any data says. And so the short answer for that is, absolutely yes, because we want you all to be Team TIDAL and to be a part of this.
How difficult is it for an indie artist to put their music onto TIDAL? Services like Spotify can be very difficult, if not on a label or going through a digital distributor. Does the same apply for TIDAL?
V: There is that difficulty, I know, with other services. I'm not a musician, but some of my friends are and they tell me "I had to go through an aggregator, I had to wait six months for this and that and nobody paid attention to me." And these are all things that we hear and that are very personal to us, and that we are addressing. The truth of the matter is, we took control of this company a few weeks ago. We're still a very young, nascent company and we have a lot of initiatives that we're working on, especially when it comes to indie talent, emerging talent, giving people visibility, giving people a forum to put their music up and giving them control of their distribution and their creative content, how they want to communicate with their fans. Those are all initiatives, and that one specifically is something that we're working on addressing.
J: As well as having a discovery program, where established artists can take things that they like and just showcase them. It's all about paying it forward and working very cyclically and discovering new music. Imagine if Win from Arcade Fire puts up an artist that he discovered in Haiti — and he had this idea, actually, I don't want to step on his idea — and through the curation process gets something really good and introduces it to the world. And then the world is inspired by that sound. It gets a little ethereal from there, but just the possibilities of what TIDAL can do are really exciting, on a creative front.
How is TIDAL's payout structure for artists different from competitors such as Spotify?
J: I know everyone thinks "new company, main business competitor is Spotify" but we're really not here to compete with anyone, we're actually here to improve the landscape. If just the presence of TIDAL causes other companies to have better pay structure, or to pay more attention to it moving forward, then we've been successful in one way. So we don't really view them as competitors. As the tide rises, all the boats rise.
V: The royalty rates will be higher than other services. In addition to that, there won't be that free tier that's been depressing the recorded music industry, and frankly been a part of what's been driving the downfall of the recorded music industry, is that free consumption. Music is not free, fundamentally. Someone came in and produced that beat, someone came in and sang that song, someone wrote that song. Someone came in to clean the studio afterwards. There is an entire ecosystem around this, and we've somehow come to believe that it's okay to pay hundreds for consumer electronics but to pay nothing for the music that helps sell it. It's around the education process, with that there will higher royalties. And then another point that I want to touch on that's really important philosophically, not just from a dollars and cents perspective, is the equity ownership. All artists who come in — and this is an open platform, an open invitation — will participate in the equity upside. And that is important, too, because of that participation in the process, by having a board seat, by actually being an owner in this. It's a different type of involvement.
Will "exclusive content" be available for purchase anywhere?
J: I don't know. It's available for streaming immediately. I don't know where streaming will go in the future. The analytics that we're seeing tell us that streaming is the next thing, and downloads are going down. I feel like with the history of this platform, from vinyl to where we are now, it just seems like the next logical step. Before you had a CD, you put it in, you had the download, they eliminated the CD so just downloads. Now you're going to eliminate the download and you just play it. So it just seems like the next logical step in what's going to happen.
So you don't think there will probably be much of a need?
J: Not from the analytics that we're seeing. It seems like downloads have gone down.
What exactly were the contents of the document that was signed during the press conference?
J: Just a declaration that we're going to work really hard to improve what's going on in the pay system as we know it. You guys may have seen some of the stats like, Aloe Blacc had a song that was streamed 168 million times and he got paid $4,000. For us, it's not us standing here saying we're poor musicians. If you provide a service, you should be compensated for it. And not just artists — just think about the writers and the producers. Like an artist can go do a Pepsi deal or something — I shouldn't have singled out Pepsi — but they can go get an endorsement deal somewhere and you know, go on tour and sustain themselves, it helps their lifestyle. But what about the writers who do that for a living? The producers? That's it for them. What about Jahlil Beats, who produced Bobby Shmurda's "Hot N**ga"? He went on to get a $2 million record deal or whatever, and Jahlil Beats just put the song out. So he wasn't compensated for that song at all. There are dozens — more than dozens, there are thousands and thousands of those sorts of stories of someone who worked at their craft, worked really hard at the studio, they did their job and people loved it and consumed it and they just went home. I think we'll lose a lot of great writers in the future because you have to do something else, because you can't sustain a lifestyle, and I think that's a shame. That someone has that talent and just isn't being compensated because someone needed a business to profit off of their work. And we've seen that time and time again, we've seen it time and time again. Companies that pretend to care about music and really care about other things — whether it be hardware, whether it be advertising — and now they look at music as a loss leader. And we know music isn't a loss leader, music is an important part of our lives.
As musicians, we're taught to value the quality of high fidelity music, and we're most likely willing to spend extra. While we may be in the minority, the general public is more than content with purchasing or streaming mp3 files at little to no cost.
Just goes to show how fecking delusional some celebrities are.