Square, the mobile payments firm run by Jack Dorsey, Twitter’s co-founder, has acquired a majority stake in Jay-Z’s Tidal audio and video music streaming service in a $297m deal.
Under the terms of the deal, Tidal’s superstar co-owners, who include Beyoncé, Madonna and Rihanna, will retain their stakes and become the second largest shareholders. Jay-Z will join Square’s board of directors.
It is the second deal in as many weeks for the rapper after he sold half of his Armand de Brignac champagne company, better known as Ace of Spades, to LVMH, the luxury goods company. While the terms of the deal were not disclosed, the brand has been valued at $630m by Forbes.
“Why would a music streaming company and a financial services company join forces?!,” Dorsey posted on Twitter, posing the obvious question as he announced the news. “It comes down to a simple idea: finding new ways for artists to support their work. New ideas are found at intersections, and we believe there is a compelling one between music and the economy.”
Square said it has taken a “significant majority ownership stake” in Tidal, which Jay-Z bought in partnership with other artists for $56m in 2015. The service, which counts artists such as Coldplay and Daft Punk as owners, differentiated itself by offering high-quality audio and video and paying better royalty rates to artists than rivals such as Spotify.
While Tidal has carved out its niche, offering more than 70m songs and 250,000 high-quality videos, the global market is dominated by Spotify, Apple Music and Amazon Music. Last month, Spotify announced its own high-resolution streaming option, which will compete against Tidal. In 2017, Jay-Z removed most of his music from Spotify, but restored it in 2019 for his 50th birthday.
Square, founded in 2009, offers financial tools for small businesses, which will help artists to explore options such as receiving digital payments direct from fans. “There are tools they need to be successful and that we are going to build for them,” said Jesse Dorogusker, a Square executive who will run Tidal on an interim basis.