Twitter CEO Jack Dorsey has announced that Square, his financial services company, has acquired a majority stake in music streaming service Tidal.
Square will pay $297 million in a mixture of cash and stock, with existing artist shareholders remaining as the second largest group.
Why Has Square Bought Tidal?
Square is acquiring a majority ownership stake in TIDAL through a new joint venture, with the original artists becoming the second largest group of shareholders, and JAY-Z joining the Square board. Why would a music streaming company and a financial services company join forces?!
— jack (@jack) March 4, 2021
Square, Inc. was founded by Jack Dorsey and Jim McKelvey in 2009. It helps small businesses grow and get financing, accept payments, and manage inventory.
You might wonder why a financial services company has acquired a music streaming service. Taking to Twitter to answer that very question, Dorsey said that “making the economy work for artists [on Tidal] is similar to what Square has done for sellers”.
Square believes it’s best placed to help musicians discover ways to support their work and make better business decisions. That’s the business spiel, anyway.
Is Tidal a Good Purchase?
You’ll be forgiven for wondering whether Tidal is a worthy purchase, especially when many consider Spotify to be a better music streaming service than Tidal.
Tidal launched in 2014 by Norwegian company Aspiro. It was then bought by a group of artists led by Jay-Z, including Rihanna and Beyoncé.
Tidal sold itself on exclusive content from the artists with a share in the company. However, over time, that exclusive content has found its way to the other music streaming services.
Another selling point is Tidal’s lossless music quality, but again that’s something that other services like Amazon Music offers, and Spotify will soon have too.
Here’s the problem: Tidal has around three million subscribers (though even that is debatable, with reports that it faked those numbers) and has been unable to turn a profit. It lost $37 million in 2018. It’ll be interesting to see what Square’s purchase does to Tidal. Will the service shift focus? Will it double down?
As part of the purchase, Jay-Z is expected to join Square’s Board of Directors. Jesse Dorogusker, Square executive, will act as the interim lead of Tidal through the closure.
In Square’s press release, Dorogusker said:
Square has also set a high standard for building elegant, accessible, and fair tools for sellers and individuals to economically empower them. Together, TIDAL and Square will be music-obsessed and artist-focused while we explore new artist tools, listener experiences, and access to financial systems that help artists be successful.
We’ll see what the future holds for Tidal. Music streaming is a busy marketplace. Can Dorsey and McKelvey put Tidal to the top? Time will tell.