Twitter CEO Jack Dorsey’s digital payment company Square has finalized its purchase of Jay-Z’s shares in Tidal. The deal was made for $302 million and gives Square an 80% ownership of Tidal. When the sale was first announced, Square had stated their intention to buy a majority stake for $297 million, a little shy of the final price.
The second-largest group of shareholders is the artists that Jay-Z sold shares to when he first acquired the streaming platform from Aspiro in 2014, including Alicia Keys, Win Butler and Régine Chassagne of Arcade Fire, Beyoncé, Calvin Harris, Coldplay frontman Chris Martin, Daft Punk, Damien Marley, deadmau5, J. Cole, Jack White, Jason Aldean, Kanye West, Lil Wayne, Madonna, Nicki Minaj, Rihanna, T.I. and Usher, among others. While Sprint Corporation bought a 33% stake from Tidal in 2017, they don’t appear to still be significant shareholders.
Jay-Z and ROC Nation CEO Desiree Perez are set to remain as Tidal board members after the sale. Following their initial talks, Dorsey and Jay-Z had announced that Jay-Z would be joining Square’s board of directors as well, but whether that happened doesn’t appear to be confirmed. Jay-Z had tweeted, “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. This shared vision makes me even more excited to join the Square board. This partnership will be a game-changer for many. I look forward to all this new chapter has to offer!”
In his own thread, Dorsey tweeted, “Why would a music streaming company and a financial services company join forces?! It comes down to a simple idea: finding new ways for artists to support their work. New ideas are found at the intersections, and we believe there’s a compelling one between music and the economy. Making the economy work for artists is similar to what Square has done for sellers.”
Jay-Z had originally bought Tidal for approximately $56 million and has helped grow the company since then. The platform reported a revenue of $166.9 million for 2019, but that had still been at an operating loss of $55.3 million. To compare Tidal in 2019 to Tidal in 2017, they were valued at around $600 million when Sprint Corporation bought their 33% stake for $200 million.
Tidal was already experiencing a lot of difficulties then too, due to their attempts to pay artists more and promote high-definition audio quality. They went through three different CEOs between 2015-2017 and had reported a $28 million net loss for 2016.
Tidal claims they pay “4x more per stream than the other guys,” which was calculated to be a rate of $0.00876 per stream, although streaming companies don’t actually account on a per-stream basis. Instead, they report according to how the percentage of total streams on the platform relates to percentages of the company’s total revenue.While Tidal doesn’t have a “free tier” like Spotify does and that might also factor into their “4x more” claim, they did just announce a 30-day trial period to promote the streaming service as it changes owners.
Photo credit: Sharon Alagna