Marketplace Tech®

with Ben Johnson

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Hosted by Ben Johnson, this daily "journal of the Digital Age" airs during broadcasts of Minnesota Public Radio's Morning Edition.

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Silicon Tally: Game of Pirates

It's time for Silicon Tally! How well have you kept up with the week in tech news?

This week, we're joined by Annalee Newitz, Editor-In-Chief of Gizmodo, and author of Scatter, Adapt, and Remember: How Humans Will Survive a Mass Extinction.

Click on the multimedia player above to hear more. 


A hand-crafted IPO

Ahead of its IPO, Etsy priced its shares at $16, with an estimated value of $1.78 billion. But Thursday saw those numbers explode, with shares opening at $31, which placed the company value at $3.4 billion.

The 10-year-old marketplace for vintage and handmade goods, is a ‘B Corp,’ or ‘benefit corporation’ - i.e it’s certified as a company that benefits the community. It's notable because very few (Etsy is only the second) for-profit companies with B Corp certification go public.

“If it can do good for the community, for the consumer, for the vendors, it satisfies the B Corp requirement and gives them a good rating,” said Santosh Rao, head of research at Manhattan Venture Partners.

The other reason, Rao added, is strategic: “They need to keep the vendors happy. 80 percent of their business is repeat customers and loyalty is important for the company.”

Etsy’s vendors, however, are mostly small businesses that, on average, don’t make much more than the U.S. median income. That means they aren’t nearly as wealthy as those who typically invest in the stock market.

It’s always risky to buy stock in any company, Rao said, but “nothing wrong in having them come in and especially this one where they are committed to the community.”

Although Etsy hasn’t been profitable recently, the IPO is likely to help, according to Rao. It would help them raise the money to grow bigger and expand beyond the U.S.  

But the bigger Etsy gets, the higher the chances of its business becoming more commercial. That could be a problem since many, including Rao, believe its loyal customer base is the result of its stated mission to promote the opposite: artisanal goods and small, community-based businesses.

“It was designed originally for that,” said Rao. “It wasn’t meant to be a big, high-scale commercial operation and that’s where they made the market.”

Etsy could keep the commercialism at bay, said Rao, because it was a ‘B Corp.’

“They don’t have to necessarily look at the bottom line every quarter,” he said. “In the end they have to show a path to profitability to show they they are a good business but there’s no near-term, absolute imperative to show a profit.”

But even Rao believes there’s a strong likelihood of it being bought over by a bigger company. “I’ll give 60 percent odds that they will be acquired,” he said.



Why Nicaraguan businesses can't take PayPal

"Pay securely. Here, there, anywhere." That's the slogan currently on PayPal's website, and one of the central promises for digital payments of all kinds. But so far, the promise isn't accessible "anywhere." 

For instance: Nicaragua. 

On the country's Pacific coast, in a remote beach town, there is a Spanish school called Pie de Gigante. It draws an international crowd to its website. But its founder, Juan Delgado, says it has sometimes failed to convert them into real-world visitors, thanks to its website's inability to let them pay online to reserve a space.

"Right now, we're using a system that's a little bit complicated," he says. "We use a system of paying via Western Union or in cash."

 PayPal isn't an option. 

"In most of Latin America today, the only way you can take money out of your PayPal account is having a U.S. bank  account," says Arnoldo Reyes, head of financial services and business development for PayPal in Latin America and the Caribbean. 

The exceptions have required the company to navigate local regluations and to partner directly with individual banks. It's this kind of extra work that pushes companies like PayPal to focus first on bigger, wealthier markets. (Nicaragua is the second poorest country in all of Latin America, after Haiti.) 

"I mean, you can't take an Uber in Nicaragua," says Reyes.

"We're basically closed off," says Marcella Chamorro, an entrepreneur who first ran into the payment problem when trying to create a kind of Nicaraguan Ticketmaster. 

"I know a bunch of small business owners who need to find like a cousin in California who can open a bank account for them and then sell through PayPal to this bank account and then their aunt comes three months later to bring the cash," she says. "It's really complicated."

It makes it harder for locals than for people like Chris James--a British ex-pat who runs the Hostal El Momento in Granada, Nicaragua. He has a local, Nicaraguan bank account for cash and credit cards. But he also has a U.S. bank account, which he uses for receiving PayPal payments. 

"It's easier to have both really: accounts here and out of the country as well," he says. "That's what I find, anyway."

The situation has been changing. In the last few years, PayPal has partnered with local banks to make receiving payments possible in Peru, Chile, Costa Rica and—on Monday—the Dominican Republic. But as for Nicaragua, Reyes says while the country is on PayPal's radar, the company couldn't give any specific timeline.


Google accused of abusing its search engine dominance

Authorities in the European Union have filed a complaint against Google claiming the company violated anti-trust laws. 

More specifically, there's accusations that Google has abused its search-engine dominance to steer people to other Google products and services. Authorities have also announced an investigation into Google's Android operating system.

Click the media player above to hear Marketplace Tech guest host Adriene Hill in conversation with Marketplace's Molly Wood. 


How to make a movie for $300

When Walter Woodman and Patrick Cederberg made "Noah," a 17-minute film focusing on a young man’s relationship online, the intention was to shoot at least part of the film in the real world.

But they quickly realized how expensive it was to build a set or hire a crew, including actors.  

“We just basically thought, 'Ok, how could we just make all of this happen on a computer screen?'” said Walter Woodman, one of the directors. “He (Noah) has to see that his girlfriend breaks up with him. How are we going to do that? We could do that through a Facebook post.”

That was easier than it sounded. They tried making fake Facebook accounts but Facebook deleted them. So Woodman and Cederberg turned their own profiles into those of the film’s protagonists: Noah and Amy.

“We kept breaking up and getting back together,” said Woodman. “So our actual friends would mess up takes and we would be like 'No, don't comment on this!'”

The point of filming the entire movie online, Woodman said, was to “peel back the curtain of artifice that is these constructed media profiles.”

“I think the view that you get from Noah is a really voyeuristic view,” he added. “You get to see not only what people type but what they backspace.”

The biggest takeaway from this project? The fact that it cost $300. That, according to Woodman, is among technology's biggest contributions.

“There’s less barriers to tell stories and less barriers means you’re going to get people who are saying what they actually want because they don't need to go through the typical gatekeepers that once prevented really creative people from making stuff,” said Woodman.  


The button that's got everyone clicking

The Reddit “Button” that started out as an April fool’s prank has turned into an internet obsession. As of this writing, nearly 750,000 people have pushed it.

What exactly is it? It's a button with a timer that counts back from 60 seconds. Anyone who had a Reddit account before the day the button launched can push the button and reset the clock. But they can only push once. And no one knows what happens if the clock gets to zero.  

So what’s the big deal? “I think the short answer is, there’s a lot of reasons,” said Kelly Goldsmith, Assistant Professor of Marketing at Northwestern University. She’s been reading what a lot of people have said online about their experience of pushing the button, which range from competition to status.

“But it also seems like there’s a strong sense of affiliation and a strong sense of community,” said Goldsmith. “But on the other hand, it could just be driven by curiosity.”

Curiosity about when the next person is going to push it? Or how long it’s going to keep going? Or what might happen if no one pushed it?

“That’s really what keeps it so mesmerizing,” said Goldsmith.

Although a strong sense of community is making people push the button, Goldsmith said, “the motivating power of curiosity” was part of it too.

“I don’t think gets enough attention in the academic literature, but it’s (curiosity) definitely a strong driving force,” said Goldsmith.

When she first heard about it, she admits she was in favor of people banding together not to push the button so they could see what would happen. But since then she’s changed her mind because she think so many people working together to keep the button going is a positive affiliation. But that doesn’t mean she’s going to push the button right away.

“I would absolutely be of the group that waits to get the clock as low as possible,” said Goldsmith. “Again, just for curiosity's sake. How low can it go? What would happen if no one pushed it?”



Apple Watch: Day 1

The much-awaited Apple Watch was finally available for a preview on Friday. Customers could try on the smartwatch in Apple stores in nine countries, including the U.S., China and Japan.

As expected, people made appointments and lined up at Apple’s flagship store in Manhattanthe one on fifth avenue where you walk into a glass cube and down a spiral staircase to reach the store. What was the scene like?

“It was pretty subdued,” said Meg Cramer, producer at Marketplace Tech, who also made an appointment to check out the Apple Watch on the very first day. "There was a line of maybe a dozen people out front waiting to get in. Everyone had made an appointment already.”

What was unexpected was how they were greeted as they walked down the staircase. “This is the weirdest part,” said Cramer. “There were like a 100 apple store employees cheering and clapping.”

The applause continued until the store was full. They were cheering, Cramer suggested, because these customers had been waiting for the Apple Watch for a long time.

“I think if you’re there for the very first appointment on the very first day, you already know more about the Apple Watch than any Apple store employee could tell you,” said Cramer.

Some of the visitors had already pre-ordered the Watch, meaning they had woken up at 3 am to make the appointment just so they could go to the store and try on the smartwatch. Kelvin Hall was one of the lucky few to nab an appointment.

“It definitely does look like something you would wear on your wrist anyway,” said Hall. “I am sure it will take me a little while to get used to using it, but I definitely bought into it with my money as well as my fashion.” 

People might be surprised at how the Apple Watch actually looks, said Cramer, because most similar wearable devices look like “a mix between a watch and a smartphone.”

“The Apple Watch looks cool, it looks fashionable, and I think it looks better than any other smartwatch out there right now,” added Cramer.

But why would someone want to try it on if they had already decided to buy it?    

“It’s just fun to be there,” said Cramer. “I have been following the Apple Watch since the fall, and I am not going to buy one, but I got a little excited holding this piece of technology that one of the most important technology companies in the world has been working on for years and years.”


Silicon Tally: Defending your digital life

It's time for Silicon Tally! How well have you kept up with the week in tech news?

This week, we're joined by Jason Scott, the curator of the Internet Arcade.


Ex Machina imagines a robot indistinguishable from man

Ex Machina, an independent film about artificial intelligence and deadly robots, hits theaters this weekend. And its release won't be without controversy.

One point of contention: the plot relies heavily on the well-known Turing Test, which is designed to test a robot's ability to mimic man's behavior to the extent that it is indistinguishable from a real human being. Without giving too much away, the movie questions what it would mean to create completely autonomous robots, and how it could potentially go very wrong.

"My interest in AI is to do with it superseding us. It's a sort of evolutionary way of looking at it. We are limited in our potential."

-Alex Garland, Ex Machina writer and director

Click the media player above to hear Ex Machina writer and director Alex Garland in conversation with Marketplace Tech host Ben Johnson.


Watching the Apple Watch

Appointments for interested consumers to check out the Apple Watch start on Friday in Apple Stores. But a select few have already been wearing them. Musician Pharrell Williams was wearing one the other night while serving as a judge on NBC's singing show "The Voice."

Editor-in-Chief of the website The Verge Nilay Patel has also written a big feature about wearing the Apple Watch throughout the day.

Click on the multimedia player above to hear our conversation about whether you should buy an Apple Watch.

Correction: a previous version of this story misspelled Williams' name. The text has been corrected.


Matt Walsh on politics, comedy and 'Veep'

Comedian and actor Matt Walsh was at SXSW Interactive in March to talk about "Veep," the HBO comedy series in which he stars.

Walsh is also co-founder of the Upright Citizens Brigade, an improv comedy troupe and director of "A High Road," an independent feature film. He is currently working on his second film, A Better You, which he reportedly shot digitally in 10 days.

We caught up with him to talk about politics, comedy and how "Veep" portrays Washington DC.

How has the internet made your job as a comedian easier? Or harder?

Easier or harder. Well, I was recently talking with a screenwriter friend of mine. One of the interesting things about technology is things like Google and texting have really challenged plot devices. Like if you can imagine a film noir movie where people could just text each other? You would never tail someone, you would never meet them in an alley.

I had to get to a phone...

Yeah, exactly. You don’t run out after the press conference and get into a phone. And then in terms of being like an actor, I guess it makes you …. you kind of have to be engaged, I think, with your audience. I do Twitter. I like twitter because it's mostly one way. You don't feel the burden of, oh, I have to get back.

What about Twitter as a form of comedy? Does it have any similarities with improv?

It does in that some days I’ll just try to tweet something. For example, I’ll just start writing and not thinking about it and then I’ll go back and edit it. So you're sort of improvising your thought. Some people who are great at twitter, they have like 10 jokes banked in their drafts. I  never do that. Like I see, "Oh that’s a cool picture, and I’ll get rid of it and I am like, I did my homework today ... I am done with my Twitter homework."

You have three young kids.

We have three young kids.

What’s funny to you about how they interact with technology?

Well, my son who is seven-and-half, Jude, because I work in Baltimore, he likes to text me on the iPad now, and because of that predictive texting, like if you start the world "he" it'll sometimes say "Hershey" or "helium" and then you can just guess. So it’s like, "Hi dad, how are you elephant balloon Times Square is the house ready boyfriend guerrilla."

Do you know what I mean? But it’s like two or three paragraphs. I think he thinks it makes  him sound smart. So he’s using all these big words and it’s like, "Holy cow! You wrote me five paragraphs." And then I read it and it’s sort of ridiculous.

I heard someone describe "Veep" as way more realistic than "House of Cards" when it comes to politics in Washington.


Which seemed like a great compliment and also moderately concerning.  

Yeah. People laugh and say, "Boy, your show is exactly like DC!" And I'm like, "That shouldn't be funny! That’s a really important business you guys should be doing." But again I think that is what comedy does. It reminds you of ... I always say politics is trying to push ideals and yet the reality is it’s like flawed people. You know, [they] get this bill, they are eating barbecued chicken or they are from downstate Illinois, and they are sitting on the senate oversight committee that wants to talk about the navigation on a drone and should we fund it for 2 more billion or not and they are like…

They’re like, "There's barbecue on that page…"

Yeah. They are just normal, flawed human beings. I mean basically we should have a dictator and we’d be all better off.

You heard it here first.


A group of Atlanta educators caught cheating

Eleven educators in Atlanta’s public school system were convicted last week in what’s being called the largest cheating scandal in American history. The group included teachers, testing officials and school administrators in the state of Georgia.  

The cheating was discovered through an unrelated data analysis by state officials in 2009. They examined standardized tests from schools across the state and found that an overwhelming number of Atlanta’s public schools reported tests where the wrong answer was erased and replaced with the right answer.  

“What the takeaway is, as state prosecutors just proved, is there was a district wide conspiracy to  cheat on these standardized tests,” said Rose Scott, a reporter and co-host of A Closer Look on WABE, Atlanta’s NPR station.

It’s still unclear, said Scott, whether teachers influenced students to change test answers or changed the answers themselves. “It’s a combination of both according to state officials and state investigators,” she added.

The analysis was fair overall, said Scott, because the state officials had not singled out public schools in Atlanta.

“But when the data came back, it showed that there was a high number of wrong to right erasures,” she said.

The cheating has raised other questions about the Atlanta public school system - for example, 80 percent of the students in it are at or near the poverty level, said Scott.   

“A huge percentage of them need additional resources for taking this test, but those additional resources did not mean teachers changing answers just to pass them on to the next grade or teachers changing answers to meet a high standard that was set by the district to begin with,” said Scott.



Researchers want to predict future traffic

Microsoft is helping researchers in Brazil study whether they can predict traffic congestion 15 minutes to an hour before it happens.

The plan is to use Microsoft's cloud computing service to store and crunch data from multiple sources.

"The Traffic Prediction Project uses data available by social networks, department of transportation, and data that the users create themselves while they move around the city," Juliana Salles of Microsoft Research said in a promotional video.

Those data points aren't new, and neither is work to predict traffic jams. In fact, such predictions are happening now, says Peter Keen of Digital Traffic Systems.

"It is being done now. It can always be done better," Keen says, because right now prediction models depend on past traffic information.

"You have historical trends of what the volume's going to be at a given day of the week, at a given time of day," says Keen, which can help make predictions that are accurate much of the time, especially about typical traffic patterns on major passageways.

Keen says predictions can be better if both past and current data is combined. But such data is often in multiple formats and multiple databases, and hard to combine.

Rahim Benekohal, professor of civil and environmental engineering at the University of Illinois who studies traffic flows, says we already know a lot about traffic patterns. 

"By understanding how the congestion grows, where the congestions grows and what's the cause of it," says Benekohal, you can often predict future congestion without the need for crunching huge amounts of data.

In fact, Benekohal says, most of us can predict traffic congestion just from our own past experience with around 80 percent accuracy. Still, he says he admires the effort being undertaken by Brazilian researchers with the help of Microsoft.

Keen adds that there have been a lot of efforts to research traffic congestion prediction, but no one has yet discovered "a magic bullet," he says.


Should weapons have a kill switch?

When the Iraqi army gave up Mosul in June 2014, the fleeing soldiers left behind large amounts of weaponry that had been supplied by the United States. By some accounts, three army divisions’ worth of Humvees, helicopters, anti-aircraft missiles and tanks fell into the hands of ISIS.

The news made Jonathan Zittrain, a Harvard professor and one of the directors of the Berkman Center for Internet and Society, wonder if there was some way to build weapons that could be turned off remotely. Like the way you turn off a smartphone that is lost or stolen.  

In an article he published in Scientific American, Zittrain argued: “It is past time that we consider whether we should build in a way to remotely disable such dangerous tools in an emergency. Other technologies, including smartphones, already incorporate this kind of capability.”

He was referring to the “kill switch,” a feature that allows Apple users to turn off their iPhone remotely so it cannot be turned on or accessed without the original owner’s permission.  

“I probably shouldn't have called them kill switches,” said Zittrain, while speaking to Marketplace Tech. “This would really be a not kill switch.”

If we can turn off our smartphones from a distance to prevent them from being used by others, said Zittrain, why not try and do the same for deadly weapons? “We are talking tanks and anti-aircraft missiles and such,” he said.

How would the technology work? “Well, the technology is, of course, really tricky,” admitted Zittrain. “The last thing you want is for any form of kill switch or disabling mechanism to be triggered by the adversary when the thing hasn't been stolen.”

He thinks one way to do this would be to have equipment naturally expire at a certain date unless it’s renewed by a code. But in order to equip weapons with such technology, Zittrain added, consumers must be “down with the plan.”

“This is not about a secret kill switch,” he said. “This is about a perfectly open one. Ideally, viewed as a feature rather than a bug.”

 He believes those who buy the weapons and deploy them in battle need to be invested in what happens to the weapons when the war ends or if they fall into the wrong hands.

He points to landmines as an example of what happens when consumers are not invested.

“Who’s going to take responsibility for digging it all up?” said Zittrain. “The consumer might be indifferent to the fact that it’s going to last 6 years because they don’t expect the war to go on that long but it could have incredibly important consequences.”



Is this the most elaborate Easter egg ever?

The Easter egg—as in the the hidden message in computer programs or video games—got pretty interesting as the sixth season of the animated series Archer unraveled. The show’s creators plotted an elaborate Easter egg, thanks to lead motion designer Mark Paterson, who hid around 40 clues for an internet journey that superfans slowly but faithfully decrypted.  

If you’re wondering how complicated can it really get: the list of clues included a so-called HEX code, which led to a URL, which led to a weird YouTube video and then a craigslist advertisement and it goes on.

This isn’t the first time Archer’s creators tried something like this. They have planted jokes and hidden messages in previous episodes, but they were usually isolated; independent of each other.

“This time I wanted to do something that connected them all together so there was some kind of trail,” said Mark Paterson. “So it would constantly keep it going. They had to go from one to the next and maybe come back to the episode to get the next clue.”

Although he planned most of it ahead of time, he also kept adding to it, deepening the trail and making it more complicated.

“I spent a weekend adding in about 30 to 40 additional steps,” said Paterson.  

One of the most complex clues involved a spectrogram, which, Paterson explained, is “a way of encoding or hiding the message within the audio data.”

Basically, it’s something visual that’s in the audio data but you cannot see it in waveform.

“Most audio programs would show you the waveform by default,” said Paterson. “You have to go the extra step to find the spectrogram.”

But who could possibly succeed at this without some help?

“The nice thing about Archer is the fans are ... always looking out for this kind of thing,” said Paterson. “I was banking on them knowing to be looking for stuff. They have previously shown that they have found stuff.”

Bonus: Click below to hear Casey Willis, the show's co-Executive Producer, in conversation with Marketplace Tech host Ben Johnson.


Silicon Tally: $19.99 problems, but low-def aint one

It's time for Silicon Tally! How well have you kept up with the week in tech news?

This week, we're joined by Aminatou Sow, co-founder of Tech LadyMafia and co-host of the podcast, Call Your Girlfriend.


Algorithm as Art

Imagine an auction where you could buy algorithms, or code. Like the one the dating website OkCupid uses for calculating compatibility between two people. If you think that’s too far-fetched, you’re in for a surprise.

New York’s Cooper Hewitt Museum recently held an auction exactly like the one described above: algorithms in all forms—from code scribbled on paper to a thumb drive—were represented in artistic ways, ready to be auctioned off to the highest bidder.

“The Algorithm Auction,” as it was known, was the work of Ruse Laboratories, which describes itself as the “preeminent gallery of pure code.” That is, it’s a company that wants to get people to see code as art—art that can be auctioned. Achieving that goal, according to some observers, would increase the popularity of coding, as well as attract more money in the form of philanthropic donations.

“When you read the code as a computer scientist you can see the brushstrokes and the flourishes and the trills that the technologist uses when they craft what they are creating,” said Benjamin Gleitzman, one of the co-founders of Ruse Labs, speaking at the auction.  “I think it’s time the general population understands the beauty of code.”

One of the hottest items on the auction block was, in fact, OkCupid’s compatibility calculator.

“Because our match algorithm can be represented ... as a formula, not simply lines of code, we represented it as a piece of art showing two people falling in love on different ends of the world, being connected by that formula,” said co-founder Chris Coyne, who attended the auction.



The FCC prepares for legal challenges to net neutrality

When the  Federal Communications Commission (FCC) issued new rules on net neutrality earlier this year, it expected legal challenges to follow soon. Chairman Tom Wheeler even said as much back in November, according to The Hill: “The big dogs are going to sue regardless of what comes out.”

Well, the lawsuits have begun. In the last few weeks, the FCC was sued separately by a trade group and Texas-based internet provider, Alamo Broadband Inc. The group, United Telecom Association, represents major companies including Verizon and AT&T.

Both claim the government is overstepping its authority with the FCC rules, and seek to overturn them.

“What they are arguing is that the FCC rules apply ‘onerous restrictions’ on them and should be waived,” says Brian Fung, a technology reporter at The Washington Post. “This is the first opportunity by internet providers to challenge FCC rules and they are taking it.”

So what happens next? For one, Fung  says, the rules will only go into effect about two months after they are published in the Federal Register, where people will have access to the actual text of the legislation. But they haven’t been published yet.

“But already the FCC is working to respond to the lawsuits and said that they were going to basically move to have the cases thrown out,” says Fung.

There’s a chance that might happen because a lawsuit against the FCC by Verizon in 2010 was dismissed on grounds that the rules it was challenging hadn’t been published yet.   

Meanwhile, Congress is attempting to pass bipartisan legislation that would repeal the net neutrality rules. The goal would be to replace them with regulations, which, according to Fung, would “enshrine some of the same principles into law,” except the FCC would not be involved.  

Given President Barack Obama’s support for the FCC’s new rules, he is likely to veto such a bill, added Fung.

“That’s why getting democratic support for a bill is going to be so important,” he says.  



Amazon to launch new "Home Services" marketplace, the e-commerce retailer that sells practically everything, is also looking to become an even bigger part of our lives.

The company is now launching Amazon Home Services, an online marketplace aiming to connect shoppers to services—everything from changing the oil in your car to planting a garden.

So far Amazon Home Services is being rolled out in 40 states, offering up to 700 distinct services. Given Amazon’s supreme brand recognition and the fact that shoppers are already used to the platform, moving into the service sector makes a ton of sense according to Amy Koo with Kantar Retail.

"They want to actually get much closer to the shopper and really become the trusted advisor,” says Koo. “To really have a share of life, in understanding what is it that they [the customer] need. Want is it that they want." 

While Amazon has struggled with profitability in the past, Sucharita Mulpuru with Forrester Research says matching third-party services with Amazon customers could be a major boost.

"Whether it’s selling physical products through third parties or services through third parties, those both represent lucrative opportunities for them," says Mulpuru

Given the amount of electronics Amazon sells Mulpuru says she could see it going toe to toe with Best Buy’s Geek Squad, or even home services sold by Lowes or Home Depot.


Jay Z is Appleā€™s newest rival in streaming music

The market for streaming music just got more competitive: rapper Jay Z  launched Tidal, his new service, this week. Tidal promises, “high fidelity sound quality, high definition music videos and expertly curated editorial,” as well as equity to musicians who decide to join Jay Z in owning the service.

Tidal will also not be offering any free content. Instead, it will offer two monthly subscriptions based on audio quality: $9.99 for standard compressed audio and $19.99 for higher quality files, such as CD.

“There are some of us audiophiles who believe that this higher quality audio is better but most people, including, for example, my mother-in-law just don't’ care,” says Ian Sherr, executive editor at CNET. “And Jay Z has got to convince us all that this is worth paying potentially more money.”

The only way Tidal can compete, Sherr adds, is if there are more “audiophiles” out there  who would be willing to pay higher prices for better quality.

“What we do know is that the landscape is littered with people who have failed at this,” says Sherr. “And  failed at streaming in general. It’s expensive.”  

Does Jay Z offer no advantage? He does, according to Sherr: “Him. He has the Jay Z brand behind him. He also has the Beyonce brand.”

So far that’s helped him successfully court musicians for exclusive access to their tracks, at least for a limited time.

“That could be compelling,” says Sherr. “People love to be the first to hear things. People love to be the first to see things.”

Jay Z might be late to the game, but that doesn’t mean the move won't work. There are other pitfalls, however.

Says Sherr, “What Jay Z has at stake is obviously money, but also if he isn’t able to pull this off, it’s going to raise questions about, does the music industry understand how to actually sell to consumers?”



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