Square is buying a majority stake in Tidal as “part of an effort to expand the company’s suite of financial tools to musicians and emerging artists,” Bloomberg reports.
The Background: Tidal is a music streaming service launched by Aspiro in 2014. Roughly a year later, rapper Jay-Z acquired the business for $56 million and “announced plans to turn it into the first artist-owned streaming service.”
- Musicians have long contended with exploitation from record labels, a frustration that hasn’t changed much as the industry has transitioned to streaming as many struggle “to make ends meet.”
- Jay-Z “didn’t align himself with any paupers” and brought in Rihanna, Kanye West, Calvin Harris and more as co-owners.
The Details: It’s a mix of cash stock, costing the payments firm $297 million in total. Jay-Z and Tidal’s other existing artist shareholders will retain an undisclosed level of ownership in the service. Tidal itself will operate as a separate company under the Square umbrella.
- Square CEO Jack Dorsey has a known desire to expand Square’s long-term vision and also has become close with Jay-Z in recent years, laying out several potential motivations for the move.
Playing The Long Game: Tidal had modest success early on thanks to exclusive new music from Jay-Z, Rihanna and Beyonce. It has since struggled to close the gap with competitors such as Spotify, Apple, Amazon and YouTube.
- A Norwegian newspaper reported Tidal had been overselling “its subscriber count and had been falsifying streaming data,” which the company denied.
- Jay-Z released his music on Spotify toward the end of 2019.
Looking Ahead: “It’s not immediately clear how Square will help Tidal build its business, but there is a lot of overlap between the music industry and Square’s existing market, which includes payments and commerce, says Jesse Dorogusker, the Square executive who will serve as interim leader of Tidal inside its new parent company.”
- Square said it “doesn’t expect Tidal to have a material impact on its sales or profit this year.”