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 stock for a “significant majority ownership stake” and says Tidal will operate independently alongside Square’s other ventures.
Asking the obvious question in a thread on Twitter, 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 stake in Tidal will help artists find similar support in the new digital ecosystem.
“Given what Square has been able to do for sellers of all sizes and individuals through Cash App, we believe we can now work for artists to see the same success for them, and us,” tweeted Dorsey. “Square created ecosystems of tools for sellers & individuals, and we’ll do the same for artists. We’ll work on entirely new listening experiences to bring fans closer together, simple integrations for merch sales, modern collaboration tools, and new complementary revenue streams.”
Tidal was founded in Norway in 2014 before being bought by a consortium of artists led by Jay-Z the following year for $56 million. Artist-owners included Coldplay, Rihanna, Daft Punk, and Madonna. The new owners positioned Tidal in opposition to big tech’s streaming services, promising fans high-quality audio and exclusive content.
Tidal quickly ran into problems, though, failing to secure exclusive content over the long term or attract subscribers to rival the likes of Spotify. In 2017, the company secured a $200 million investment from Sprint (now merged with T-Mobile) but reports the following year said subscriber growth had stalled. At that time, the service was said to have roughly 3 million paying customers, compared to Spotify’s 20 million that same year.
Billboard reports that as of 2020, Tidal was still behind on payments to rights holders, a problem Square’s cash injection might solve. The company’s revenue reportedly 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 rose from $36 million to $55.19 million in that same period.
Now, Tidal has another chance to reinvent itself. Speaking to Billboard, Square’s hardware lead Jesse Dorogusker, who will serve as interim head of Tidal, said the company would build out new tools for artists while continuing to offer its streaming service to consumers. “We think the streaming service is an important part of it, and it 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 beginning that Tidal was about more than just streaming music, and six years later, it has remained a platform that supports artists at every point in their careers,” said Jay-Z in a press statement. “Artists deserve better tools to assist them in their creative journey. Jack and I have had many discussions about Tidal’s endless possibilities that have made me even more inspired about its future. This shared vision makes me even more excited to join the Square board. This partnership will be a game-changer for many. I look forward to all this new chapter has to offer!”