Beyoncé and JAY-Z’s Piracy Problem

[Len]

On the Carters’ new song “NICE,” just before interpolating Guillermo Díaz’s famous Half Baked tirade, Beyoncé hocks a fat loogie at a longtime nemesis: “If I gave two fucks about streaming numbers I would have put Lemonade up on Spotify.” To this day, over two years later, her crowning achievement remains unavailable to Spotify’s 170 million monthly users, marked by a diplomatic notice on her artist page: “Beyoncé’s album ‘Lemonade’ is not currently available on Spotify. We are working on it and hope to have it soon.”

Everything Is Love, her new album with JAY-Z, is in part a celebration of the couple’s purported victory over the streaming giant, not to mention the music business writ large. Among the most significant developments in Bey and Jay’s industry ascent is their ownership of Tidal, the first musician-owned streaming service of its kind. The idea behind the company is to align the now-dominant mechanism for recording revenue with the interests of artists by putting the means of production in the hands of music’s biggest stars, ostensibly eliminating the middlemen. En route to this idealistic aim, Tidal has accumulated a mere ~1 percent of all paid streaming subscribers and has been accused of faking hundreds of millions of streams, a claim the company has denied.

So why then, if Beyoncé doesn’t give two fucks about streaming numbers, did she and Jay put Everything Is Love up on their competitors’ platforms less than two days after releasing it exclusively on Tidal?

It’s hard to know without hearing from the Carters, but it’s telling that other streaming services with significantly deeper pockets, like Apple Music, have either phased exclusives out, or, like Spotify, avoided that path in the first place. Tidal, on the other hand, has leveraged exclusive releases from their marquee crew in order to bootstrap subscriber growth; JAY-Z, Beyoncé, Kanye West, Rihanna, and others have put out records, singles, or videos on the platform. Apple Music’s Jimmy Iovine pointed at labels to explain his company’s big change of heart on exclusives. After an early flirtation with the practice, the major labels were smart to abandon the strategy: Exclusives fundamentally undermine the new business model of music.

In 2016, Universal CEO Lucian Grainge forbade his labels from granting exclusive releases to streaming providers. Frank Ocean had just fulfilled his Def Jam contract with the release of Endless and then summarily, shockingly eclipsed it with a second and far superior album, Blonde, independently released as an Apple Music exclusive. While a caught-off-guard Def Jam mulled legal action, something more interesting was happening out in the real world. Both of Ocean’s albums were pirated voraciously, being illegally downloaded 750,000 times in less than a week after its release, and 2,300,000 times to round out the month.

From Blonde to Drake’s Views (another Apple Music exclusive) to, yes, Beyoncé’s Lemonade, releases initially exclusive to a single platform have triggered corresponding spikes in illegal downloading. In the most twisted example of exclusives gone wrong, Kanye West’s The Life of Pablo was not only voraciously pirated but is now embroiled in a lawsuit because Kanye tweeted that the record would remain a Tidal exclusive. The premise of using exclusives to steal subscribers from competitors seemed to have had the adverse effect of encouraging subscribers to steal the exclusives instead.

File-sharing services made it possible to download any song you want for free, so why pay? That question answered itself: Music industry revenues started to drop in 1998 and continued to plummet every year thereafter. Reasonable people legitimately started thinking the music industry was just going to die. But, in the midst of all that chaos, a handful of companies—Pandora and Rhapsody came first—pitched a solution that sounded then patently ridiculous: If it’s infinite access that listeners want, why not give it to them, just better?

Streaming services like Spotify and Deezer started to pop up in the late 2000s, offering almost the entire history of recorded music for $10 a month. The economics were very simple: At the height of the music industry, the average American consumer spent about $28 a year on music. Ask listeners to pay $10 every month, and over a year you’re getting them to pay more than quadruple what they ever did—a better experience that makes more money.

Somehow, it worked. By 2016, revenues began to grow for the first time in almost two decades, largely on the back of streaming revenue. Piracy was even reported to have declined by many measures. Streaming has now become so robust that Goldman Sachs estimates there will be as much or more money in music by 2030 as there was before its business model fell apart in the late ’90s.

This development is stunning in part because the antidote to music’s problem didn’t turn out to be access—anyone can get the entire history of recorded music for free on Napster, Limewire, Kazaa, Oink, what.cd, or the Pirate Bay—but rather convenience. Piracy may have been free, but it required the know-how to navigate a torrent service, locate the right link, download it, extract files, transfer them to a media player, and then perhaps sync those files to an mp3 player. Streaming music just involves hitting play. Ultimately user experience and ease made streaming, despite formidable odds, viable. So viable, in fact, that they’ve birthed $30 billion valuations and become marquee initiatives of some of the largest companies in the world.

Exclusives, however, hemmed this effect. They were conceived of to catapult subscriber growth, but in practice negated the primary appeal that streaming has over stealing, which resulted in concomitant relapses to piracy. To illustrate, check out one of Reddit’s biggest threads on the release of Everything Is Love: Almost no one is talking about the music. They’re just talking about how to get around the exclusive.

The irony is, while the rate of Tidal’s subscriber growth is the subject of dispute between JAY-Z and independent music research groups, it’s unclear whether the exclusives tactic has helped the service get permanent subscribers at all. And with no Jay albums streaming beyond Tidal and Lemonade missing on other services as well, there’s also the slight chance of a long-term effect to their legacies, as monolithic as they may be. If Bey and Jay’s strategy is to be heard and stay vital to the culture, they’ve taken a small bet that wagers a whole generation growing up listening to streaming services they’re silent on.

Carter-helmed projects aside, today the offerings of every major music service are verging on parity. First the Beatles fell, then Taylor Swift relented, and finally Prince’s estate ended once-conspicuous discrepancies between streaming libraries. And while streaming is the main way Americans pay for music, no individual service has a majority of subscribers. As a result, if you’re an artist, arbitrarily deciding not to exist on a specific streaming platform can simply mean you’re not interested in capturing a meaningful segment of the money or reach you might get from your recordings. If that decision ultimately results in listeners stealing your music, is it worth it?

This is not to suggest that Beyoncé and JAY-Z’s fleeting exclusive listing of Everything Is Love is anything but an honest attempt to let (some) artists own the engine of their livelihood (“Pay me in equity,” Bey demands on “APESHIT”). This isn’t just a righteous goal, it’s also a logical result of streaming’s broader disintermediation of obsolete industry conventions. But, in doing so, the Carters have unintentionally engaged in a gambit that undermines the fundamentals of their business. The power today is with the listeners, as it has been since we stopped needing anything other than an internet connection to get every song in the world. The choice is not between Tidal and Spotify—it’s between streaming and stealing.

After the numbers rolled in this weekend, it turned out that Everything Is Love—a surprise album from two of the biggest artists this century—hadn’t even topped the charts the week after its release, with a mere 123,000 sold or streamed. This could be due to any number of reasons, ranging from surprise-album fatigue to the record’s unusual Saturday night release date to 5 Seconds of Summer’s chart dominance. But the decision to keep Everything Is Love off Spotify’s free tier for the first two weeks clearly played a role.

It’s possible that getting music to listeners is, at this point, little more than an accessory to the couple’s larger plans. Tidal got $200 million from Sprint en route to a $600 million valuation—a meaningful development that now makes the valuation of any elevator break a billion dollars once both Carters get in it. Being incredibly rich and powerful in the service of artists and black culture at large is an eminently respectable goal they’ve been very transparent about since before Spotify was a twinkle in anyone’s imagination. It’s got to feel good to look at the people who once controlled their work and say something to the effect of, “you not a boss, you got a boss.” If that’s the ultimately the idea, it’s no accident that Beyoncé finishes her dismissal of Spotify with her main point: “I ain’t never seen a ceiling in my whole life.”