“Investor sentiment in Apple this morning has been that they have made or are making a poor move in shooting to acquire the Tidal streaming music service,” Orange Peel Investments writes for Seeking Alpha. “”This acquisition would come after Apple acquired Beats by Dre just a year and a half ago and would help Apple round out its media offerings.
“Already, Apple is being berated on social media by those who are critical of this potential acquisition,” OPI writes. “We did a small bit of research and realize that a couple of factors are in play here and that this may not be the worst idea the company has ever had. Most importantly, we’re baffled at how people think this can be a ‘terrible idea’ without knowing how much Apple is willing pay and without clarity on what they are getting for their investment.”
What Tidal offers Apple:
• More than 3 million subscribers, about 1/5 of Apple Music’s subscriber base
• Exclusive access to Prince’s music library during the year of his death
• Subscribers pay up to $19.99 a month, in which is about double the average streaming music service. This is an easy segue into Apple offering a “hi-def” version of its service
• Data on all of these members
• Endorsements from all of the celebrities that have rallied behind title to get it to where it is today
Read more in the full article here.
MacDailyNews Take: It’d be a no-brainer acquisition.
SEE ALSO:
Why the heck would Apple want to buy Jay Z’s Tidal? – July 1, 2016
Why Apple buying Jay Z’s Tidal makes sense – and why it doesn’t – July 1, 2016
Desperate Spotify tries to manufacture an Apple App Store antitrust issue that does not exist – July 1, 2016
Spotify accuses Apple of ‘grave harm’ – July 1, 2016
Apple in talks to acquire Jay Z’s Tidal music service – June 30, 2016
Only at the right price. What is that price?. My guess is less than the $3billion they paid for Beats, which produced hardware as well as the streaming service.
Taking a bit of a tangent here, but since we’re on the topic of acquisitions, I’d love to see Apple buy the company behind Teamwork Projects and integrate it into a new Corporate iCloud account system. Call it “iCloud Business”, and enable devices to associate with a personal iCloud account as well as a business account. Then intelligently separate and manage the two accounts, keeping your work files, photos, tasks, projects, contacts, etc. on one account and your personal stuff separate. Don’t rely on IBM to do it all, there are basics that apply to most business users that Apple should control.
“Only at the right price. What is that price?. My guess is less than the $3billion they paid for Beats, which produced hardware as well as the streaming service.”
3 million users * $20 per month * 12 months * .3 standard Apple margin * 10.67 PE = $2.3 Billion
So roughly $2.3 Billion, of course this doesn’t take into account many things, such as how many customers will be lost, or how many new customers would be attracted to the combined service. It also doesn’t take into account halo-effect revenue, and not being a public company, we don’t know what assets and debts Tidal has.
However, ignoring all of that, which is a lot to ignore, 3 million users paying $20 a month is worth $2.3 Billion to Apple assuming they get a 30% margin on them.
There’s no need for Apple to acquire Tidal. It’s just an attempt by Apple to snuff out competition. Tidal isn’t doing squat and with the likes of Kanye who needs it. Apple is just trying to kill it off.
It could be argued that Tidal is already in its death throes, which if you take that perspective, means that your comment is remarkably inaccurate (and Jay Z sees the writing on the wall, and is getting out while the getting is good).
Though Tidal powered by Apple Music? It can easily afford to be a niche player, with AM getting the mid and low-end listener, while Tidal occupies the higher end.
The scenario I stated seems very likely, especially since Tidal seems to be undergoing a bit of a shakeup in the executive ranks.
Though as others have been saying, so much rides on how much Apple can get Tidal for. If relatively cheap, then why not (just roll it into Apple Music in the way I mentioned).
If not, just pass. I get the feeling Tidal will be available very cheap, very soon.
If Apple can afford to throw away billions of dollars on stock buybacks, I guess a billion or so spent on Tidal wouldn’t be much of a big deal especially if Apple can acquire those subscribers. I’m not necessarily hot on killing the competition because I think there should be enough consumers to support a few streaming services. I’d just like to see Apple do well and it doesn’t have to be at the expense of other services.
If they acquired Tidal AND Roon they could ease right into the Hi-Res market with real software that works and put that aspect of iTunes to bed.
Or they could just sell Apple Lossless files as an upgrade and ignore these wastes of time ( Tidal, and whoever).
Roon with Tidal integration with your playlist is no waste of time. It is the best implementation of local and streaming files organized and available on all devices, even when NOT streaming. Plus, you bring over their developers and subscribers.
If you have never seen how these two work together, it really is a thing of organizational beauty.
Apple could then up their .11 AC wireless to handle the higher bit rate. I’m sold already….(unless they muck it up!).
Or Apple can wait until the tide runs out and Tidal is gasping and flapping around like a fish on dry land.
Wall Street is a casino and they love M&A because they get fees. They would have no problem if Apple wanted to buy KFC as long as there is money in it.
Eddie Cue is obviously not up to the job and needs to go away. Tim Cook needs to stop raising money for scam-master Paul Ryan and get back to work at Apple.
Apple should not be in the business of buying up me too music rental services from rappers who fancy themselves businessmen. The so- called technology for Tidal cost like $56 million and was grossly overpriced at that point.
There is no problem with selling music as people with money to spend will gladly buy content worth owning. The problem is that music execs think some tatted up moron jumping around on a stage with a microphone to a drum machine is a musician. They also got a sugar high re-selling entire catalogs of music to people too lazy to rip the CDs they already owned and now that one time high is over.
Sucking down Tidal will be a good move for Apple! It’s a much better way of sending its money then leaving it in the bank. It will further cement Apple in streaming music and add another 1-3 million subs to its growing service.
I don’t think anyone calling this a good idea has thought it through. For example, this article talks about adding Tidal’s 3 million subscribers to Apple Music – but that totally ignores all the Tidal subscribers who aren’t already in Apple’s ecosystem. What’s Apple going to do with all the Tital subscribers on Android? Tell them “screw you, buy an iPhone”?
Is Apple supposed to also release their music service to Android? Wouldn’t that have negative effect on the iPhone, losing its exclusive access to Apple Music?
I think Apple has everything they need to make their music service more appealing to consumers, they just need to do it already. Buying Tidal would help with that, it’s a diversion.