Square, Inc., the financial services company founded by Twitter CEO Jack Dorsey, is acquiring a majority stake in Tidal, the high-fidelity audio and video streaming service led by Jay-Z. Square is paying $ 297 million in cash and shares for a “significant majority stake” and says Tidal will operate independently alongside other Square ventures.
Asking the obvious question on a Twitter topic, Dorsey said: “Why would a music streaming company and a financial services company join forces?!” His answer: to find “new ways for artists to support their work”. Just as Square gave sellers new tools to make money, Dorsey says the company’s participation in Tidal will help artists find similar support in the new digital ecosystem.
Square is acquiring a majority stake in TIDAL through a new joint venture, with the original artists becoming the second largest group of shareholders and JAY-Z joining Square’s board. Why would a music streaming company and a financial services company join forces ?!
– jack (@jack) March 4, 2021
“Given what Square has been able to do for salespeople of all sizes and individuals through the Cash App, we believe that we can now work to make artists have the same success for them and for us,” tweeted Dorsey. “Square has created tool ecosystems for salespeople and individuals, and we will do the same for artists. We will work on totally new listening experiences to bring fans together, simple integrations for product sales, modern collaboration tools and new complementary revenue streams. “
Tidal was founded in Norway in 2014 before being purchased by an artist consortium led by Jay-Z the following year for $ 56 million. Artist owners included Coldplay, Rihanna, Daft Punk and Madonna. The new owners have positioned Tidal in opposition to the streaming services of great technologies, promising fans high quality audio and exclusive content.
However, Tidal quickly ran into problems, failing to guarantee exclusive content in the long run or attracting subscribers to rival Spotify. In 2017, the company secured a $ 200 million investment from Sprint (now merged with T-Mobile), but reports the following year that subscriber growth has stagnated. At that time, it was said that the service had about 3 million paying customers, compared with Spotify’s 20 million in the same year.
Advertising panel reports that in 2020, Tidal was still late in making payments to rights holders, a problem Square’s cash injection could solve. The company’s revenue grew 13 percent to $ 166.9 million in 2019, according to financial documents filed in the UK by parent company Project Panther Bidco, but losses also increased from $ 36 million to $ 55 , 19 million in the same period.
Now, Tidal has another chance to reinvent himself. Speaking for Advertising panelSquare hardware leader Jesse Dorogusker, who will serve as Tidal’s acting boss, said the company will develop new tools for artists while continuing to offer its streaming service to consumers. “We think that the streaming service is an important part of it and is growing and will continue to grow,” Dorogusker told the publication.
As part of the deal, Jay-Z will join Square’s board of directors. “I said from the start that Tidal was more than just streaming music, and six years later, he remained a platform that supports artists at all points in their careers,” said Jay-Z in a press release. . “Artists deserve better tools to help them on their creative journey. Jack and I had a lot of discussions about Tidal’s endless possibilities that made me even more inspired about his future. This shared vision makes me even more excited to join Square’s board. This partnership will be a game changer for many. I look forward to seeing all that this new chapter has to offer! “