The world's largest music company, Universal Music, is teaming up with the streaming service Tidal to jointly develop "a more artist and fan-friendly streaming model", according to a statement.

The aim is to examine how different economic models can promote subscriber growth, strengthen user loyalty and generate more benefits from the fan-artist connection.

The announcement comes a few weeks after Universal boss Lucian Grainge wrote a memo to his employees why he believes a new billing model is needed.

Benjamin Fisher

Editor in Business.

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In the letter, which, as always, could be read quickly on various industry websites, he once again denounced the glut of, from his point of view, too many new tracks on the streaming services, often of poor quality.

100,000 are said to be uploaded to this every day.

He also complained that the services used artists, like celebrities, who work with Universal, with a "large and passionate" fanbase to get consumers to subscribe, but the algorithms then often navigated them to content that unified them "Significant artistic standards" were missing, but the services cost less license fees and some were even commissioned by them.

There are also "thousands upon thousands" of exactly 31-second snippets that are only uploaded to exploit the system.

Why is Universal working with Tidal?

In the current system, called Pro-Rata, a stream from this limit is included in the calculation.

All major services use pro rata.

Billing is done individually for each market in fixed periods, with the income flowing into a pot and then being distributed among all available songs based on the number of hits according to market share.

It makes perfect sense that Universal is now working with Tidal to develop a new system.

The service, once taken over by rap star Jay-Z, is now part of Block, Twitter founder Jack Dorsey's financial service.

There hasn't been an update on the number of subscribers for a long time, but Block's figures suggest that Tidal's revenue for the quarter was in the mid-double-digit millions.

Far away from Spotify's billions and Deezer, the smaller French service with 9.4 million subscribers, recently reported more sales.

Spotify currently has 205 million subscriptions.

But in addition to the 9.99 euro subscription in hi-fi quality, Tidal also offers a “HiFi Plus” for 19.99 euros.

Up to 10 percent of the 19.99 euros should go directly to the most streamed artist of the respective user every month.

With this, Tidal wants to appeal to "super fans", i.e. listeners who want to stream music in the best possible quality and who are very keen to support their favorite artists, as the then Tidal COO Lior Tibon explained in an interview with the FAZ in April 2022.

In addition, Tidal partially billed the streams of these “premium” users using the user-centric model.

In this way, their contributions are only distributed among the songs they have heard – provided the rights holders have approved the model.

At the same time, the pro rata model was used.