"If the deal goes through, it will be because Apple has paid enough money [to Tidal], which could be a roughly 10x return for Jay-Z, so it's good business," said Mark Mulligan, a digital music market analyst. "Apple will also send a statement to the marketplace. So it's win-win. First and foremost, this is about buying the competition."
Reports of the potential deal come on the heels of complaints by Spotify, which is Apple Music's biggest streaming music competitor, that Apple is deliberately rejecting the newest Spotify app update for iOS. In a letter sent by Spotify's legal team to Apple, the lawyers claim that Apple refused to allow the update due to "business model rules" and that the block was causing "grave harm" to Spotify and customers. Copies of the letter have been making the rounds among congressional staff on the Hill.
“Platforms deliberately creating friction and obstacles between publishers and users is bad for business and ultimately hurts consumers," the Application Developers Alliance said in a statement about Apple's choice to reject Spotify's newest app.
On Friday, Apple general counsel Bruce Sewell responded to Spotify's claims on Buzzfeed.
Our guidelines apply equally to all app developers, whether they are game developers, e-book sellers, video-streaming services or digital music distributors; and regardless of whether or not they compete against Apple. We did not alter our behavior or our rules when we introduced our own music streaming service or when Spotify became a competitor.
In the streaming music wars, Spotify is a much larger threat to Apple than Tidal. Tidal has a reported 4.2 million users, compared with Apple's 15 million. But Spotify leads the pack at 30 million subscribers and 70 million free users.
Tidal, bought by Jay-Z 15 months ago, offers buzz and star power, which puts Apple Music in a stronger position in the music streaming business if a deal were to happen. The platform is home to many big-name music exclusives, such as Beyonce's visual album "Lemonade" and the entire discography of the late Prince. The service is partly "artist owned," with stars including Lil Wayne and Rihanna sharing a stake in the company, which promises to pay artists higher royalties than other streaming apps.
However, Roy Lamanna, who runs a music video monetization company, thinks that Apple's latest moves could ultimately be worse for artists.
"I'm concerned much of what Apple is doing is anti-competitive," he said. "Acquiring Tidal and blocking Spotify's new app from the App Store all seems to be an attempt to crush competition in the streaming space. Without competition, the service will be able to pay each artist as much, or as little, as it wants."