Fintech company Square (NYSE:SQ) is buying a majority stake in the streaming music service Tidal.
Tidal, which had been owned and operated by rapper Jay-Z, is being bought by Square as part of an effort to expand the company’s suite of financial tools to musicians and other artists.
Square has agreed to pay $297 million U.S. in a mix of cash and stock to purchase Tidal. Once the deal closes later this year, Tidal will operate independently within Square, according to a company press release. Jay-Z will join Square’s board of directors.
Jay-Z acquired Tidal for $56 million U.S. in 2015 and announced plans to turn it into the first artist-owned streaming service. Musicians have long complained about record labels exploiting them and that frustration hasn’t abated as they’ve transitioned to streaming services.
Spotify Technology has built a multibillion-dollar business using music created by millions of artists, many of who are struggling to make ends meet. Jay-Z recruited more than a dozen of the biggest artists in the world, including Rihanna, Kanye West and Calvin Harris, as co-owners of Tidal.
Tidal got an initial boost from exclusive access to new music from Jay-Z, Beyoncé and Rihanna, among others. But the service struggled to keep up with competing services from Spotify, Apple, Amazon and YouTube, all of which have larger customer bases.
Jack Dorsey, the Chief Executive Officer of Square, has said he wants the company to evolve from a payments company for small businesses into a broader operation with a number of standalone units.
Square already has two of those verticals -- the company’s Cash App for consumers and Square Seller for small businesses. Tidal gives Square a third potential business line. Square said it doesn’t expect Tidal to have a material impact on its sales or profit this year.
