By Peter Rudegeair
Square Inc. has created a one-stop financial shop for coffee
shops, flea markets and all manner of small merchants. Now it is
trying to do the same thing for musicians, teaming up with Jay-Z's
Tidal streaming service.
The digital-payments company said Thursday it is paying $297
million in cash and stock for a majority stake in Tidal, and Jay-Z,
born Shawn Carter, will join the company's board.
The idea is to bring Square's digital payments and money-moving
services to the artists who use Mr. Carter's streaming platform.
Square -- best known for its signature white card reader that plugs
into phones and tablets -- also lends to businesses that use its
payment-processing services. Its Cash App payment app allows people
to digitally store and transfer their money like they would at a
"We're interested in a 360-degree view of artists as
small-business owners. Streams is just a subset of what they do,"
Jesse Dorogusker, Square's top hardware executive who will lead
Tidal on an interim basis, said in an interview. He pointed to live
performances, merchandise sales and collaborations that have become
increasingly lucrative pieces of musicians' businesses in recent
While the biggest stars have teams around them to manage
finances and collect royalty streams and other income, many
midlevel and smaller artists operate like entrepreneurs with fewer
"Their businesses are complicated and disparate and the tools
they have to manage that are many and are evolving," said Mr.
Dorogusker. "Our sellers have benefited from pulling that all
together. Artists don't have that today."
The rise of music streaming has caused the value of music to
soar in recent years, feeding the growth of a new creator economy.
Tech-focused upstarts pitch tools, data and analytics to artists,
while financial players offer advances or loans to record a new
album or launch tours based on an artist's cash flow.
Square will use data it gets from Tidal to help figure out
exactly what services to offer artists. The company, for example,
uses the cash-flow data it gets from small-business customers to
make lending decisions. It could potentially do the same for
musicians on Tidal, Mr. Dorogusker said.
Tidal was founded in Norway in 2014. Jay-Z, in partnership with
other artists including Kanye West, Rihanna, Jack White and Alicia
Keys, bought the service the following year for $56 million. In
2017, the rapper sold 33% of the company to Sprint, which is now
part of T-Mobile US Inc. Those shares were repurchased before the
sale to Square this week, according to a person familiar with the
Tidal's current shareholders will remain co-owners.
Tidal, which boasts a catalog of more than 70 million songs and
250,000 high-quality videos, was an early entrant into
high-fidelity audio streaming. But it is facing new competition on
Amazon Music introduced a high-resolution version of its service
for $14.99 a month at the end of 2019, and Spotify last month said
it would introduce high-resolution streaming audio later this year.
Tidal charges $19.99 a month for its high-fidelity service.
Tidal attracts a small but loyal fan base. It has focused on
artist relationships and serving an avid audiophile subscriber base
more than marketing itself to a broader, mainstream audience.
Tidal last disclosed its subscriber counts in 2016, when it said
it had three million subscribers overall, 45% of whom paid for its
HD service. It currently has less than 10 million, according to a
person familiar with the matter, lagging far behind Spotify's 345
million and Apple Music's more than 60 million.
Square already has its fans in the music business. The company
has recruited hip-hop artists, one of Cash App's most devoted user
groups, to help bring aboard new users during the pandemic. To
promote Cash App and their single, "WAP," rappers Cardi B and Megan
Thee Stallion gave away $1 million to fans who messaged them on
Twitter with their Cash App usernames, called "cashtags."
Last April, Spotify introduced a feature allowing cash-strapped
musicians to fundraise directly on their artist pages via a Cash
App link. (Cash App also donated $1 million in $100 increments to
artists who raised funds using the app.)
Square sees an opportunity to innovate within the streaming
service, Mr. Dorogusker said, and could explore helping artists
sell merchandise or concert tickets, or introduce features that
allow more interaction between artists and fans.
"The streaming service is a unique place that artists and fans
do connect, and that's underutilized right now," he said. "There
isn't a lot of interaction."
In 2019, Norwegian authorities began an investigation into
allegations that Tidal inflated streaming numbers -- and therefore
possibly payments -- for albums by Mr. West and Beyoncé. Mr.
Dorogusker said Square has "done our due diligence and we feel good
about what we have learned."
Square said Tidal will operate independently within Square,
alongside its seller and Cash App platforms. It expects to close
the deal in the second quarter.
Colin Kellaher contributed to this article.
Write to Peter Rudegeair at Peter.Rudegeair@wsj.com
(END) Dow Jones Newswires
March 04, 2021 15:42 ET (20:42 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.