Wait, Jay Z is Suing Who?

31 Mar, 2016

Jay Z’s streaming service Tidal had plenty to celebrate this week: it announced it had surpassed three million subscribers, that Kanye West’s Life of Pablo album had been streamed 250 million times in its first 10 days, and yesterday the company celebrated the one year anniversary since its star-studded launch last year.

But Tidal confirmed to Billboard today that Jay and his company have issued legal papers to the former owners of Tidal’s previous parent, Aspiro AB, for lying about the business specifics of the Tidal when Jay purchased it for $56 million last year.

Specifically, Jay has zeroed in on the subscribers numbers that were provided to him, said to be 503,000 at the time of purchase in January 2015.

Tidal’s current parent company — Jay Z’s Project Panther Bidco holding company — sent a letter to a number of Scandinavian companies who comprised the primary shareholders in the then-publicly-traded service announcing its intention to sue, claiming the number of subscribers was a strong variable in its sale price (rumored amounts of $15 million are unsubstantiated). The news was first reported by Norwegian paper Dagens Næringsliv.

Tidal, in a statement provided to Billboard, painted the suit in a more positive light, indicating that the original low subscriber numbers made its three million benchmark announced on Tuesday all the more impressive.

“It became clear after taking control of Tidal and conducting our own audit that the total number of subscribers was actually well below the 540,000 reported to us by the prior owners,” the statement said. “As a result, we have now served legal notice to parties involved in the sale. While we cannot share further comment during active legal proceedings, we’re proud of our success and remain focused on delivering the best experience for artists and fans.”

Dagens Næringsliv posited one possible explanation for the disparity in numbers. Several of Aspiro’s main shareholders appeared to be European-based telecom and media companies, which bundled subscriptions into other media packages.

“[T]he company’s own public number only said that 112,000 subscribers were direct subscribers, while 391,000 — about four out of five — [were] subscribers through its partners,” the paper says. Tidal reps did not respond to queries about this specific claim, though one source says that does not comprise the entirety of the problem.

For its part, a rep from one former shareholder who received the letter, Schibsted Media Group, noted that Aspiro was a public company at the time of purchase and thus its finances were public and transparent.

Reps have clarified to Billboard that there is currently no lawsuit, but that the legal papers serve notice that one is possible as Tidal considers its options moving forward.

Billboard

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