"It is the only big bet at the moment," Mulligan said. "Tidal is not a profitable business," she said.Ī bigger focus on creator services could change that. "The business of music streaming is not sustainable in and of itself," Hu said, pointing to the fact that Tidal lost $52 million on subscription revenues of just $166 million in 2019. "Streaming is fundamentally a terrible margin business," he said. "I said from the beginning that Tidal was about more than just streaming music … Artists deserve better tools to assist them in their creative journey," Jay-Z tweeted.įocusing on services over streams is a smart bet, music industry analyst Mark Mulligan from MIDiA Research said.
"We'll work on entirely new listening experiences to bring fans closer together, simple integrations for merch sales, modern collaboration tools, and new complementary revenue streams." "Square created ecosystems of tools for sellers and individuals, and we'll do the same for artists," Dorsey wrote in a tweet thread. Tidal, Deezer, Napster and other third-tier services together made up just 8% of CD Baby's digital revenue.ĭorsey and Jay-Z both said Thursday that the Tidal link-up went well beyond streaming. CD Baby, which distributed the music of 800,000 independent artists, received 40% of its digital revenue from Spotify, with Apple Music accounting for 18%. Tidal has not released any subscriber numbers for some time, but data shared by digital music wholesaler CD Baby suggests that the service is little more than an also-ran. Square's bet on Tidal is unlikely to shake up the streaming world in the short term. "That's interesting and a bunch of people have tried to do that. "Maybe there's an argument that Square will get in the middle of that to simplify payments so creators get paid more quickly," said David Pakman, partner at Venrock. Square has experience, but it's not the only one that could address this problem. Veteran tech analyst Michael Dortch of DortchOnIT saw the deal as more straightforward: Square can offer valuable services to musicians and artists in what has become a more complex entertainment market, and let them avoid "exploitation and bad treatment" from the major labels, he said.Īrtists often don't get paid for three to six months after a song is streamed, because they have to wait for their label to get paid first. "Their customer acquisition strategy for a long time has been urban. "One of the things Square has captured is the consumer business for a long time," Harris said. It helps, then, that Cash App is part of the cultural lexicon of hip-hop. Financial services are becoming a "lifestyle choice" for a new generation of consumers, he said. Shawn Carter, to its board.īut Square's push into banking is not about "white pillars in front of buildings and marble," as Matt Harris, partner at Bain Capital Ventures, put it. He was famously photographed with Beyoncé, who is married to Jay-Z, last year. Some disagreed: There was chatter that the deal was about Dorsey's habit of hobnobbing with celebrities. Ives compared Dorsey to Tesla's Elon Musk in the boldness of his ambitions. "Dorsey is flexing his muscles and expanding his tentacles into banking, crypto, and now the Jay-Z Tidal deal," Wedbush analyst Daniel Ives told Protocol. (Caviar was another, until Square sold it to DoorDash.) Now Tidal joins the portfolio. Already, he talks about Register and Cash App as two distinct businesses within Square. It also suggests Dorsey wants to diversify Square far beyond its original smartphone-swipe business. And if Square does something with Tidal, which promised to give artists a bigger cut of the money produced by streaming, it will likely be about giving musicians more control over the revenue streams they create. Having its own bank gives Square more purchase in the financial world. If there's a theme around the moves, it's control. On Thursday, Dorsey announced Square was taking a majority stake in Tidal, the music-streaming service backed by Jay-Z, for $297 million. It was a big week for Jack Dorsey, who started by turning heads in Wall Street, and then went Hollywood with an unexpected music-streaming deal.ĭorsey's payments company, Square, announced Monday that it now has an actual bank, Square Financial Services, which just got a charter approved.
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