Mobile payments company Square has agreed to acquire a majority stake in Tidal, the streaming platform owned by Jay-Z, for $297m.
Square said it would pay for Tidal in a mix of cash and stock and will name Jay-Z to its board of directors. The deal will see the financial services company expand its portfolio into music streaming as competition among platforms such as Spotify and Apple ramps up.
“It comes down to one simple idea: finding new ways for artists to support their work,” said Jack Dorsey, Square’s co-founder and chief executive. “New ideas are found at intersections, and we believe there’s a compelling one between music and the economy.”
The sale extends a successful run for Jay-Z, the musician and entrepreneur, whose given name is Shawn Carter. Less than two weeks ago he announced he sold half of his champagne company, Armand de Brignac, to Moët Hennessy, the brand owned by luxury giant LVMH.
Jay-Z — together with a group of musicians including Kanye West, Rihanna and the French electronic music duo Daft Punk — bought Tidal in 2015 for $56m. They unveiled plans for Tidal as a music service “built by artists, for artists” to much fanfare.
Gathered together on stage, the artists proclaimed they wanted to “forever change the course of music history”, but the reality has been different. Tidal, which costs at least $20 a month, has struggled to gain ground in the hugely competitive streaming market.
“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,” Jay-Z said in a statement on Thursday.
Dorsey and Jay-Z also teamed up last month to set up a new endowment with 500 bitcoins that will support development in India and Africa.
Square’s share price has risen by nearly 500 per cent since the lows of March, making it one of the biggest corporate winners of the pandemic.
Its meteoric share rise was driven by businesses setting up ecommerce operations during worldwide lockdowns, and a growing number of consumers paying digitally rather than in cash during the past year.
Revenues more than doubled in 2020, according to Square’s annual report, partly due to a spike of bitcoin related transactions made on its Cash App, a peer-to-peer mobile payment app.
Over the past year, Dorsey, who is also the chief executive of Twitter, has been under enormous pressure to drop one of his leadership roles from activist hedge fund Elliott Management, which has a minority stake in the social media company.
In November the eclectic executive, who had angered Elliott in late 2019 when he announced his intention to spend half a year in Africa, reached an agreement that allowed him to stay on at Square and Twitter.