I've read several different analyses of the financials of companies like Spotify and Tidal.
Their basic problem is that they basically have no prospect of winning out on economies of scale.
With both of them, the majority of their costs are licensing of the music they distribute, and those costs are currently based on subscriber volume.
So, with their current number of customers, they are losing money; if they double their number of subscribers, their revenue doubles, but their licensing costs also double, so they lose more money.
(Unfortunately, their fixed infrastructure costs are a small enough percentage of their total costs that they pretty much don't count... and even overhead like server bandwidth is proportional to the size of their subscriber base.)
A few industry folks have also commented that: "As long as they keep signing up more subscribers, and the investment market is good, people will keep pouring in money to keep them afloat."
(Unfortunately, that's almost always followed by: "... but that won't go on forever.")
However, it's obvious that something is going to have to change.
- they may have to raise prices
- they may have to split into niches (if you would pay $20 a month for "Tidal Rock", they would make the same $20, but wouldn't have to pay licenses for rap music you'll never play)
- they may have to find other revenue streams (commercials, sponsored content, bribes from record producers, or premium "pay-per-view" content... who knows)
- faced with this situation, they may succeed in negotiating a new licensing arrangement (if they paid based on what people listen to rather than what they make available they may save money)
The catch with licensing is that the music production companies are also hurting from reduced disc and other media revenues, so they don't want to reduce their licensing fees.
However, one way or the other, reality is going to rear its head - sooner or later.
I see little doubt that streaming is here to stay.... but I wouldn't bet the players will stay the same.
I would remind everyone that the revenue situation is quite different for companies who ONLY do streaming and for those who include it with other services.
For example, when Amazon includes streaming as part of their Amazon prime service, it "adds value to the total offering" - which changes the equation considerably.
So, for example, someone like Google might be happy to offer Tidal as a part of their new service offering, and be less concerned with the actual bottom line.
However, at least Roon is active, and seems to be doing well....
So, if Tidal changes hands next month, it's a fair bet that Roon WILL make a deal with the new owner, or find another streaming service to replace them in their portfolio...
And, as long as Roon maintains a subscriber base, and a solid revenue stream, and remains determined to continue to provide a viable service, that will hopefully remain the case...
I suspect you'll see the same trajectory as we have with cable....
Cable TV offers far more services than it did originally...
And the price is far higher...
However, according to industry surveys, and in contrast to what the dish companies would like you to believe...
The majority of cable TV customers say they DO NOT plan to cut that cord...
(So, apparently, most of the people who thought cable was worth what it cost five years ago still feel that way...)
My guess would be that, as people buy less discs, they will simply become willing to "donate more of their entertainment budget to streaming music".
(And, in five years, rather than a separate service, Tidal may just be a $35/month "check box" on your cable bill....)
I agree about TIDAL but I could see Spotify operating at a loss for a long time just because we've seen other companies do the same. They have such a huge brand identity but look at Yahoo which, at one point, was king so maybe not.