Why would Square buy streaming music service Tidal?

Celebrity sightings are an American pastime.

One of the better ones in recent months: Hip-hop megastar Jay-Z has been spotted with Square/Twitter CEO Jack Dorsey and Jack Dorsey’s beard.

Now, Square is in talks to acquire Jay-Z’s streaming service Tidal

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.So, in the coming weeks, keep an eye out for more Jack Dorsey’s beard and Jay-Z sightings.