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Apple Music's next beat: Buying rival Tidal?

The company is in initial talks to acquire rap mogulJay Z's Tidal streaming-music service, according to a published report late Thursday.
SAN FRANCISCO — Could Apple be pursuing a new tune in its music strategy?

The company is in initial talks to acquire rap mogul Jay Z's Tidal streaming-music service, according to a published report late Thursday.

The Wall Street Journal, citing people familiar with the matter, characterized the discussions as preliminary.

Apple declined comment. Tidal did not immediately respond to an email message seeking comment. But a company spokesman denied Tidal executives held talks with Apple, according to the Journalreport.

Should a deal occur, it would radically reshape an online music market in which Apple Music trails market leader Spotify, music analysts say.

"I would be surprised if this doesn't happen. First and foremost, Tidal has very limited options," Bob Lefsetz, a music industry analyst, told USA TODAY. "Jay Z bought it to sell it and who's going to buy it? Amazon is the only other option and it's going in a different direction."

"There is huge motivation for Apple to buy it," Lefsetz says. "It's at war with Spotify."

The simmering rivalry reached a boiling point of sorts this week, when Spotify accused Apple of blocking a new version of its iPhone app, according to a Re/codereport.

“This latest episode raises serious concerns under both U.S. and EU competition law,” Spotify General Counsel Horacio Gutierrez wrote in a June 26 letter to Apple General Counsel Bruce Sewell. “It continues a troubling pattern of behavior by Apple to exclude and diminish the competitiveness of Spotify on iOS and as a rival to Apple Music."

On Friday, Sewell responded with a letter to Spotify. “We find it troubling that you are asking for exemptions to the rules we apply to all developers, and are publicly resorting to rumors and half-truths about our service,” Sewell wrote.

The report of Apple's interest in Tidal came hours after Apple announced a partnership with NASA on the eve of the Juno mission, which is expected to enter Jupiter's orbit on Monday.

NASA will send back sounds of space for artists to make music with, to be featured on Apple Music and iTunes.

Apple launched a Destination Jupiter page Thursday on iTunes, with songs inspired by the mission from Brad Paisley, Corrine Bailey Rae, Trent Reznor and others.

Apple announced a redesign of its Apple Music service at its June Worldwide Developers Conference to make it easier to navigate, a year after it launched the service. Prior to that, Apple acquired Beats Music for $3 billion in 2014. The company currently has 15 million paid subscribers.

The $9.99 monthly service lags behind Spotify, with 30 million subscribers. Apple Music also offers Beats 1 radio station, which is free.

Last year, Jay Z acquired Tidal for $56 million. He launched the streaming service during a star-studded event featuring wife Beyonce, Kanye West and Madonna. As of March, it had 3 million subscribers.

Earlier this year, Jay Z filed a lawsuit against Tidal's previous owners, claiming they gave him inflated subscriber numbers when he acquired the service.

Contributing: Jessica Guynn, Jefferson Graham and Brett Molina

Follow USA TODAY San Francisco Bureau Chief Jon Swartz @jswartz on Twitter.

Source: USA Today:

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