Tidal shuts ‘Direct Artist Payouts’ scheme after paying $500k


Tidal launched its ‘Direct Artist Payouts’ [DAP] feature in November 2021, as its first step towards a more user-centric system for streaming royalties. The scheme involved re-routing up to 10% of each Tidal HiFi listener’s monthly subscription to their most-streamed artist.

Now Tidal is shutting down the feature, with CEO Jesse Dorogusker explaining why in a stream of tweets yesterday.

“We enrolled 70K artists & distributed $500K, far short of our goal. We’ve decided to end DAP and do something w/ higher impact,” he explained. “The DAP program focused only on a listener’s #1 artist, which left much, much less room for emerging artists to get paid.”

(Tidal’s parent company Block recently said that its ‘corporate and other’ revenues, which are primarily Tidal, were $206m last year. $500k is thus just 0.24% of that figure, although likely higher as a percentage of Tidal’s revenues specifically due to the other elements in its ‘corporate and other’ accounting.)

What’s happening now? Dorogusker said that Tidal will instead “sharpen our focus” on its ‘Tidal Rising’ program for emerging artists by investing more than “10x what we distributed via DAP” into “backing and celebrating emerging artists through education, custom promotion, and future direct-funding”.

Context for that comes in a separate announcement in January of a partnership with Universal Music Group to “work together to explore an innovative new economic model for music streaming that might better reward the value provided by artists and more closely reflect the engagement of Tidal subscribers with those artists and music they love”.

At the time, Dorogusker said that Tidal was “setting aside our current fan-centered royalties investigation to focus on this opportunity for more impact” – a clear pointer, in hindsight, to this week’s announcement of the DAP program’s closure.

Tidal Rising now appears to be the focus for finding that impact, and as Dorogusker’s comments yesterday made clear – “future direct-funding” – the idea of direct payouts to artists is still on the table. We’d love to see listeners kept in the equation somehow: perhaps with a role (voting?) in choosing some of the artists for Tidal Rising.

If that’s kept entirely in Tidal’s control, it can expect its choices to be watched closely by the industry. Labels and distributors will quickly sound the alarm if they perceive UMG to be getting more than its fair (market) share of slots on the program, given its partnership with Tidal.

We’ll take an optimistic view though. Tidal tried something new with its streaming payouts, designed to reward artists. It didn’t quite work as well as it hoped, so now it’s trying something different. The streaming economy needs more experiments like this, and more discussion of the results too.

Written by: Stuart Dredge