TIDAL is a music streaming platform famous for artist participation, high bit-rate audio streaming, and is owned by Jay-Z and Beyoncé, a 21st-century power-couple. Despite huge names such as Daft Punk, Kanye West, and Rihanna introduced as owners in 2015, TIDAL’s goal to empower artists has eventually led to shrinking subscriber numbers and overdue payments to record labels. Increased competition from Spotify and other music streaming services, has left TIDAL destined for the streaming graveyard, alongside Quibi, Groove, and Yahoo! Music.

Square’s stock price has been on an incredible run. To ensure survival during the pandemic, many businesses have set-up e-commerce operations to service their customers. The increased adoption of Square’s consumer offering “Cash App”, and Square’s other business offerings, have driven a 200% increase in Square’s share price in 2021 alone. The company’s market cap is not far from Citigroup and represents a real challenger to traditional banks. However, after hearing the news of the TIDAL acquisition the market’s response was far from enthusiastic. Square’s share price dropped by 5 percent in the immediate aftermath of the announcement.

So, why did Square acquire TIDAL? This is the question that many in the industry have been asking over the last weeks. In their press release, Square wrote “TIDAL and Square will be music-obsessed and artist-focused while we explore new artist tools, listener experiences, and access to financial systems that help artists be successful.”

Currently, major streaming services pay artists based on a share of total streams. For example, if Taylor Swift accounts for 10% of total streams, then 10% of the overall artist pay-out will go to Taylor Swift. Regardless of whether you listen to her music or not, 10% of your monthly subscription will go to her. SoundCloud has recently announced a change to its business model that implements “fan-powered” royalties. This takes into account more factors than just streams such as overall listening time. The opportunity that the Square/TIDAL acquisition creates is the ability to unlock new avenues for your money to directly support artists that you listen to.

It’s standard practice in the music industry that artists receive royalties for their work yearly. Square can leverage TIDAL to build a more equitable ecosystem for musicians, particularly through Cash App. In the future, Cash App may allow fans to pay artists for songs, albums, and merchandise directly. Artists may also be encouraged to stream music and sell merchandise through TIDAL and use Square payment terminals at concerts to get paid for their work immediately.

By acquiring TIDAL, Square receives more than just its products, it also receives its relationships. With Jay-Z being brought on as a member of Square’s board, the couple’s network will give the company instant credibility in the music industry. This enables Square deeper access to the industry than any other financial services company, possibly allowing them to strike deals where others have failed.

These relationships will give Square a strong foundation to build a global community of artists and enable them to test and grow their platform as it develops. A better future for musicians may be on the horizon. If TIDAL can be grown as a service, artists could have one company that helps them sell online, stream their music, and support payment at concerts.

It’s unlikely that anyone, including myself, is expecting TIDAL to become the next streaming giant but these ancillary opportunities may unlock growth and secure the platform’s future.

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