A Jay Z lawsuit is reportedly in the works in which alleges that the former owners of the music streaming service exaggerated the number of then subscribers at the time when the rapper’s investment arm, Project Panther Bidco, had purchased Tidal parent company Aspire.
It’s been reported that the lawsuit is expected to be for $15 million, according to The Business Insider. Jay Z had originally purchased Tidal and Aspiro in March of 2015 for a reported $56 million. The rapper claims that at the time, his team was told that the streaming service has 503,000 worldwide subscribers, a figure his suit alleges was misleading.
Anders Rikter, a communications manager for Schibsted, one of Aspiro’s former major shareholders, said, “We want to point out that it was a publicly traded company that was acquired, [which means] transparency of financial reporting [was required]. Otherwise we have no comments.”
Tidal made major waves earlier this week when the company announced that it had reached 3 million worldwide subscribers, a figure no doubt influenced by exclusive rights to Kanye West’s The Life of Pablo, which, as Tidal tells it, was streamed 250 million times in 10 days following its release.
While Jay Z is quiet about the litigation, Tidal sent a public statement on the lawsuit:
“We are excited that one year after TIDAL launched, we have surpassed 3 million subscribers globally. The growth in our subscriber numbers has been even more phenomenal than we’ve previously shared. 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. 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.”
Jay Z started off by writing several letters to the previous shareholders of Tidal and owner of Aspiro (Tidal’s parent company), expressing dissatisfaction with inflated user numbers when Project Panther Bidco (Jay Z’s finance company) bought the service.
Anders Rikter, Schibsted Communications Manager, said that the company was “unsympathetic” to those letters, and explained that transparency in financial reporting was upheld. For starters, this was a requirement of a public traded company.
Perhaps the numbers aren’t as solid as they appear. While Tidal announced its three millionth subscriber, it still falls way behind Spotify’s 30 million and Apple Music’s 11 million.
Due diligence is the chore of the buyer, though a lawsuit can surface after the deal is signed. But the bigger issue could be lurking in the fundamentals.