Jay-Z’s Tidal Sells To Payments Company Square In $300M Deal

Jay Z

It seems that this is the season of deals for rapper-cum-businessman Shawn “Jay-Z” Carter as just barely two weeks after he reached a deal to sell half of his premium champagne brand to luxury goods giant LVMH, he’s reached yet another deal to sell one of his main business ventures, the music streaming app Tidal.

Tidal has agreed to be taken over by Square, the payments company led by Jack Dorsey who’s more popular for his role as the CEO of Twitter. In a statement, Square said it’ll pay the sum of $297 million in a mix of cash and stock to acquire a “significant majority ownership” stake in Tidal leaving the remaining minority stake will be held by Tidal’s artist shareholders.

  • The exact percentage that Square is buying in Tidal isn’t disclosed but it’s definitely over 50% given it’s a majority stake. With Square’s statement of acquiring a “significant majority ownership”, one can guess somewhere between 50%-80% of the company.
  • Following Square’s purchase of Tidal, Jay-Z will remain a minority shareholder in Tidal alongside other of the company’s artist shareholders which include renowned names like Alicia Keys, J. Cole, deadmau5, Kayne West, Rihanna, and of course Jay-Z’s wife Beyoncé.
  • Jay-Z will get a board seat at Square once Tidal’s sale is completed. 
  • Jay-Z paid $56 million to buy Tidal in 2015. He then saw the company through a reported $200 million investment by telecoms company Sprint (now merged with T-Mobile) that valued the streaming app at $600 million. Now, with Square paying $297 million to take control of the company, it seems that Jay-Z fared well financially from the deal but not unprecedently.
  • Tidal’s most recently known annual financials was for 2018 when it reported a net loss of $37 million on $148 million in revenue. The music streaming app draws revenue from 56 countries where it’s present in.

Notably, Tidal had struggled to gain ground in the music streaming market amid intense competition from bigger services like Spotify and Apple Music. Despite Jay-Z’s prowess and music influence coupled with that of the other Tidal artist shareholders, the music streaming app didn’t fare so well and isn’t even among the top-ten music streaming apps in the US, according to Statista.

Square pitches its acquisition of Tidal as one that opens it up to a new market vertical: musicians. It’s definitely odd for a payments company to be acquiring a music streaming app but it seems that Square is hoping to leverage Tidal’s reach and Jay-Z’s influence in the music industry to get a foothold in the music market with its payment services.

Square itself has been on a tear recently, fresh off a year (2020) where it reported a record annual revenue of $9.5 billion. With a monetarily-sweet just-wrapped-up-year and a surging stock as a result, Square can definitely afford to cough out nearly $300 million in cash and stock to buy Tidal for a strategic purpose.

Even so, Tidal’s owner Jay-Z and Square’s CEO Jack Dorsey are known to be close friends who have been spotted hanging out with each other several times and also done business deals together with a recent Bitcoin fund for entrepreneurs in India and Africa. 

Now, with Square acquiring Tidal and Jay-Z getting a board seat at Square as a result, the friendship between both is likely to get even stronger.

Photo credit: Joella Marano, licensed under CC BY-SA 2.0

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