What in the wide world of sports does Square want with Tidal? That’s the question most of the tech world was asking after Square, the fintech giant led by Twitter CEO Jack Dorsey, announced it was buying a majority stake in Tidal, Jay-Z’s high-profile but struggling streaming music service.
The mammoth $297 million deal, which includes Jay-Z taking a seat on Square’s board, naturally led to a flurry of speculation. “Why would a music streaming company and a financial services company join forces,” Dorsey himself asked on his own Twitter feed.
Dorsey’s answer—something about how “new ideas are found at the intersection”—did little to clear the waters, although the New York Times reports that Square will “offer financial tools to help Tidal’s artists collect revenue and manage their finances. That the deal also will “allow artist-partners to keep their ownership in the music company,” as TechCrunch notes, is good news, too. Jay-Z partnered with a number of other high-profile recording artists, including Jack White, Madonna, and Alicia Keys, to acquire Tidal in 2015. That said, it’s debatable that the company ever delivered on Keys’ pledge to “be a place for connections between artists and fans.”
Whether there’s any upside to Square taking on Tidal is a debate for investors. For streaming music fans, there’s a far more relevant question: What does the Square-Tidal deal mean for the future of streaming high-res tunes on Tidal?
Before we look into the crystal ball, let’s look to the past and present of Tidal, which (here we go with the tidal metaphors) has been treading water in recent years, well behind the likes of Amazon Music, Apple Music, and the 800-pound gorilla of streaming music, Spotify.
Being the privately held company that it is (or was, at any rate), Tidal hasn’t released subscriber numbers, but estimates range anywhere from 1 to 5 million, a puny figure compared to a whopping 150 million paid subscribers for Spotify. (Tidal charges individuals $10 a month for “standard” music quality and $20/month for its high-resolution tier.)
Meanwhile, Tidal is said to have lost as much as $52.2 million as recently as 2019, after taking in about $166 million for the year. (Gulp.)
”So what?,” you might ask. Well, if you’re a Tidal fan who loves streaming 24-bit music, those numbers look mighty worrisome. The only other streaming services offering high-resolution streaming are Amazon Music HD and Qobuz, but neither of those services match Tidal’s support for the MQA audio format. Tidal and Qobuz are also the only services compatible with the music-curation software/service Roon.
With Tidal losing that much money while languishing far behind the streaming music leaders, you’d have to wonder whether the service would be around for much longer. Indeed, rumors of Jay-Z looking to offload Tidal have been swirling for months.
If nothing else, Square’s hefty stake in Tidal buys the company some much-needed security, while installing Jay-Z on Square’s board signals confidence in Tidal’s overall direction. (Of course, the deal also lets Jay-Z off the hook for Tidal’s mounting losses.)
Could Square eventually sour on the deal? Sure, but with Square’s stake in the business, Tidal’s future—or its immediate future, anyway—looks somewhat more secure than it did yesterday.