Jay-Z is on a roll.
The hip-hop legend recently sold a 50% stake in his champagne brand Armand de Brignac (“Ace of Spades”) to lux giant LVMH for $600m+ (netting him $320m).
And, then yesterday, he sold a majority stake in Tidal — his high-fidelity music streaming platform — to fintech firm Square for $297m.
Jay-Z, who bought Tidal in 2015 for $56m, will get a seat on Square’s board as part of the deal.
Rumors of the deal first started last year
Here’s what we wrote about a potential deal back in December:
At first glance, Square’s 2-pillar businesses — seller services for merchants (e.g., the dongle) and the Cash App for consumers — seem tangentially related to music streaming.
There is a strategic play, though, according to Dan Runcie (author of Trapital, a must-read newsletter on the business of hip-hop).
Here are 2 reasons:
- Customer acquisition: Adding a content play like Tidal to the fold is comparable to Amazon offering Prime Video. As Jeff Bezos said, “When we win a Golden Globe, it helps us sell more shoes.”
Further, Cash App is already very popular in the hip-hop community, often used for its viral bitcoin/cash giveaways. The app’s cultural relevance gives Cash App the industry’s lowest customer acquisition costs.
- Give creators seller tools: Tidal already provides a way for creators to make music and podcasts. Square could graft on additional commerce tools, like it does for its existing merchants.One potential road map: SoundCloud, which offers creator tools (e.g., insights, promotional tools, payment splitting) on a subscription basis.
Jay-Z’s net worth is now $1.4B…
… based on estimates from Forbes, including:
- $95m music catalog
- $140m Roc Nation (full-service media agency)
- $150m stake in Tidal
- $320m stake in Ace of Spades
- $425m in investments (e.g., Uber, Square, SpaceX, Oatly)
Jay-Z’s secret sauce: sticking to “what you know.”
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