Network operator agrees to buy a third of music service Tidal, run by artist Jay Z

By Austen Hufford and Hannah Karp

Sprint Corp. will buy one-third of Tidal, the streaming-music service run by rap mogul Jay Z, the latest content deal secured by a network provider.

The companies said Monday the deal would give Sprint customers access to exclusive content on Tidal, though they must still sign up and pay for the streaming service. A Sprint spokeswoman said news about coming offers and promotions would be released soon. Tidal's current management team will keep running the service and Sprint Chief Executive Marcelo Claure will join its board.

Terms of the deal weren't disclosed. The service has only 1 million to 1.5 million paying subscribers, according to a person familiar with the matter -- a fraction of Spotify AB's more than 40 million.

But its celebrity-oriented brand and relationships with artists could be valuable for Sprint as it looks to differentiate itself from competitors, while the fast-growing music-streaming market is likely to keep expanding. Jay Z bought the service in March 2015 for $56 million from Swedish company Aspiro, which had created the Tidal brand. He has given famous artists and bands small stakes in Tidal and promised each millions of dollars worth of marketing.

But Tidal has been struggling to attract subscribers to keep up with larger rivals such as Spotify and Apple Inc.'s Apple Music, which has more than 20 million paying subscribers.

The company held talks with an array of potential buyers over the years, including Samsung Electronics Co. and Napster, the streaming service formerly known as Rhapsody, people familiar with the matter said. In a meeting with Samsung executives in October 2015, for example, Jay Z proposed that Samsung buy Tidal for upward of $200 million, some of these people said, but in some cases potential buyers said they were put off by Tidal's lack of transparency. A Tidal spokesman declined to comment.

Earlier this month, industry tracker MiDia Research estimated Tidal had 1 million "commercially active subscribers." Tidal has amassed many of its subscribers through exclusive releases from superstar artists such as Kanye West, Rihanna and Beyoncé, many of whom are connected to Jay Z. Beyoncé is married to Jay Z. The streaming music service also promotes itself as more artist-friendly and provides CD sound quality.

Streaming music is the U.S. recorded-music industry's biggest revenue source, according to the Recording Industry Association of America.

Tidal parent Aspiro lost 239 million Swedish kronor ($28 million) in 2015 as it worked to expand its customer base and get music deals.

Tidal charges $20 a month for a high-fidelity version of its 40 million-song catalog and $10 a month for download-quality sound.

In the financial statement, Aspiro said a board assessment had concluded the company lacked funding for 2016 but added, "The board believes the company will be able to secure new financing."

Network service providers have been striking content deals to attract and retain new customers. AT&T Inc. made a deal with singer Taylor Swift to share exclusive videos with its customers. Verizon Wireless has a deal to stream NFL games to its customers.

Shares of Sprint rose 2.8% to $9.18 on Monday.

Matthias Verbergt and Jonathan Cheng contributed to this article.

Write to Austen Hufford at austen.hufford@wsj.com and Hannah Karp at hannah.karp@wsj.com

(END) Dow Jones Newswires

January 24, 2017 02:47 ET (07:47 GMT)

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