Square, Inc. (NYSE: SQ), a financial technology company that enables effortless consumer to business transactions, announced on Thursday that it plans to purchase a majority stake in the streaming app Tidal. The deal was announced in a joint statement on Thursday from Square CEO Jack Dorsey and Tidal co-owner Jay Z, and represents a shift in focus for Square, which has never worked in the streaming sector before.
“It comes down to one simple idea: finding new ways for artists to support their work,” said Square CEO Jack Dorsey in a statement. Dorsey is also a co-founder and the current CEO of social media giant Twitter (NYSE: TWTR), though his work with both companies have caused concern for shareholders in the social media company’s stock in the past.
Square will purchase Tidal for $247 million in cash and stock. The company plans to operate separately from Square. Square, however, did say that it has plans to deepen the brand’s platform as a streaming giant with artists in mind—though it did not elaborate on what that might look like.
As part of the deal, Square will add Jay Z to its board of directors while the other stakeholders in Tidal will maintain their current shares. Other shareholders include artists like Beyonce, Jack White, Rihanna, Daft Punk, Nicki Minaj and Madonna, to name a few. Kanye West was originally a shareholder in the company, but was rumored to have left in 2017. West released his 2016 album The Life of Pablo as a Tidal exclusive along with several other artists that hold stake in the streaming company.
When the platform was relaunched in 2014 under its new ownership, it was advertised as a platform for artists, and maintains its position today as one of the only streaming platforms that boasts its fair payment of royalties to both artists and songwriters. Payout for artists has always been and remains to this day one of the biggest criticisms of streaming services, though Tidal’s success was lackluster at the time due to its limited catalog of music.
With Apple Music and Spotify ruling the streaming space, there is little room for innovation or competition—particularly for innovations that work in favor of artists. In 2014, Taylor Swift pulled her music from streaming platforms in 2014 in an attempt to push them to pay artists more. Swift released an essay in the Wall Street Journal, but her music was later added back with little to no change from the platforms themselves.
To put it bluntly, streaming giants have a lot of power in the music industry, and without significant change from either Apple Music or Spotify to work in-favor of the artists that have their music on them, neither will be incentivized to change unless a viable third party option enters the sector—and that, likely, is what Square sees in Tidal.