Why would Square buy streaming music service Tidal?

Square’s acquisition of Tidal would supercharge its Cash App, among other benefits.


December 30, 2020

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.

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