Square buys majority stake in Tidal for $297m as Jay Z joins board
Square has bought music streaming service Tidal for $297 million, adding the platform’s founder Jay Z to its board of directors.
Jack Dorsey, Square’s CEO, spent last summer in the Hamptons with Jay Z and his wife Beyoncé – who also owns part of Tidal – alongside fellow artist Rihanna.
The stock and cash deal follows Dorsey’s announcement last month that he and Jay-Z had launched a Bitcoin fund to drive cryptocurrency’s adoption in India and Africa.
In the making for a few months, the majority share purchase will see Square offer financial services to Tidal’s artists to help them collect revenue and manage their finances.
Two fintechs have emerged in the last year catering to the music industry. One, BandPay, is striving to guarantee musicians get paid through its platform.
Tools and apps in the music industry exist which help maximize revenue – such as Applaud, Bandcamp, and Reverb Nation.
But as BandPay’s founder DeCarlos Garrison said last year, a lot fewer tools exist “for controlling the cost side of the business equation”.
Another start-up looking to help musicians is Los Angeles-based AmplifyX, which allows investors to build portfolios which directly fund specific musicians.
From 2015 to 2019, the entire music industry grew sales at a 9% rate. This growth totaled an industry-wide revenue of $20.2 billion in 2019, according to Motley Fool.
An industry bouncing back
Tidal isn’t the first sale Jay Z has made in recent weeks. He has also sold 50% of his champagne company, Armand de Brignac, to LVMH Moët Hennessy Louis Vuitton.
The entertainment industry’s downturn amidst the ongoing health crisis has impacted many of the sector’s investors and shareholders.
In June 2020, Warner Music Group held its initial public offering (IPO), raising $2 billion at $25 per share.
The successful IPO prompted speculation that the music industry could be profitable again. Warner features recording artists such as Ed Sheeran and Cardi B.
Jay Z bought Tidal alongside other artists for $56 million back in 2015. His intention was to take on players such as Spotify, Apple and Amazon.
He then sold 33% of it to Sprint – now part of T-Mobile – back in 2017. Jay-Z has since bought back the shares from T-Mobile, most of which will now go to Square.