Square Inc. (NYSE:SQ) is planning to extend its financial services to musicians. The mobile payment company has inked a $297 million deal to acquire majority ownership in Tidal, owned by rapper Jay Z also known as Shawn Carter, and other artists.
Under the terms of the cash and stock deal, Jay Z is to join Square’s board of directors as Square’s head of hardware Jesse Dorogusker takes over as Tidal head. The agreement has been in the works for quite some time on Square CEO, Jack Dorsey, holding talks with Jay Z for the better part of last year and spending a great deal of time in recent months.
For Jay Z and his wife Beyoncé Knowles, the deal is a major payout given that they acquired Tidal for $56 million in 2015. At the time, the two sought to give artists greater power over their music. Square has since promised to let artists keep their ownership in the music company. Dorsey also expects the acquisition to help artists find new ways of supporting their work.
While a big part of the music streaming market is dominated by Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ: AMZN) and Spotify Technology SA (NYSE: SPOT), Tidal is not expected to have a significant material impact on Squares Profit. Dorsey expects Tidal to replicate the success of Cash App and other Square products in the future.
A tie-up between a music company and the Cash App audience could translate to big business when everything is going digital. Jay-Z’s addition to the Square board is not expected to make the company less innovative but could result in fresh perspectives.
Square is not new to investing in products and companies beyond its realms. The payment company did shake up the commerce game with its original card reader. The expansion into the music streaming business comes months after the company confirmed a $50 million investment in Bitcoin.
Expansion into the cryptocurrency business has allowed the payment company to address the growing cryptocurrency community’s needs via its Cash App. Similarly, it won’t come as a surprise, the company bringing music-based NFTs to its growing customer base.