According to reports, Tidal company has “received about 100 payment default records” and its parent company Aspiro has posted a $28 million dollar loss in the year since Jay Z purchased the streaming service back in March 2015.
Aspiro AB, the Swedish holding company that Jay Z and a group of other musicians bought in early 2015, recorded a net loss of 239 million Swedish kronor ($28 million) last year, according to a legal filing. That compared with a net loss of 88.9 million Swedish kronor in 2014.
Over the same period, revenue rose 30% to 402 million Swedish kronor from 309 million kronor.
The spill of red ink at Tidal parent Aspiro illustrates the challenge the music-streaming service faces in competing with much-larger rivals such as Spotify AB and Apple Inc.’s Apple Music.
Despite significant marketing efforts, Tidal is stuck between consumers reluctant to pay for tunes they can easily access free, and record labels, which often demand upfront payment for copyright fees.
Spotify, while also recording a net loss in 2015, expanded much faster than Tidal, doubling its revenue to 1.95 billion euros ($2.19 billion). Tidal’s parent company had net cash of 35.4 million Swedish kronor at the end of 2015, down from 63.5 million kronor a year earlier. That was despite receiving a cash injection of 93.6 million kronor through a rights issue.
A person familiar with the matter said the financial statement doesn’t paint a complete picture of the situation at Tidal because it doesn’t reflect all U.S. revenue and financing.
The financial statement, which Aspiro filed with Sweden’s company-registration office Bolagsverket, describes a company straining to pay its bills. Short-term debt to suppliers shot up to 158 million Swedish kronor last year, from 34.7 million kronor in 2014, according to the document.
Aspiro didn’t return calls and messages seeking comment.
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.”
Aspiro’s statement implies the company paid nearly 300 million Swedish kronor in royalty fees to record labels last year, or roughly three quarters of revenue.
The company, which has a workforce of 86 people, said other costs—a line that would typically include promotion and marketing expenses—rose to 218 million Swedish kronor last year, from 77.2 million kronor in 2014.
In June, Tidal said it has expanded its user base to 4.2 million paying subscribers, many of whom it amassed this year with a string of exclusive releases from artists such as Kanye West, Rihanna and Beyoncé, Jay Z’s wife.