The highly competitive streaming-audio industry could be starting the New Year with some consolidation, a new report suggests. Jack Dorsey — the billionaire CEO of Square and Twitter — is said to be interested in buying TIDAL, the audio service owned by billionaire music legend Jay-Z.
Unnamed sources told Bloomberg that the outspoken Dorsey has been seen with Jay-Z and his singer-wife Beyonce recently, and is reportedly interested in adding a music feature to payment platform Square’s growing stable of services.
Although no official comments have been made from either party in this potential transaction, the report has triggered a torrent of speculation within the global streaming-media industry.
If a deal were to happen, it would come less than five years after Jay-Z bought TIDAL for $56 million and made it into the only artist-owned platform of its type. While TIDAL doesn’t give out subscriber, user or financial data, its website claims to have more than 70 million songs and 250,000 high-quality videos in its catalog, along with original video series and podcasts.
Sound Is Booming
After facing extinction in the early years of file sharing and Napster in the early 2000s, the music industry has completely reinvented itself over the past 20 years. It’s embraced the highly successful streaming model that dominates all things audio (and video).
Add in a drought of live performances due to coronavirus restrictions and health concerns and the market for digital content has exploded this year. Top-ranked Spotify is leading the space, with 286 million monthly active users — half of which pay at least $99 per year for ad-free premium listening — and a $62 billion market value. Most recently, Spotify made news by signing a $100 million deal to bring podcaster Joe Rogan on board.
At the same time, rival Pandora saw its steadily dwindling active user base drop below 60 million last quarter. However, SiriusXM — Pandora’s parent company — has nearly 35 million of its own paid subscribers and just extended 66-year-old Howard Stern’s contract for another five years at an estimated $600 million.
Not to be overlooked in the audio space are three other deep-pocketed players — Apple Music, Google’s YouTube Music and Amazon Music.
Where TIDAL fits into this complicated global goulash of streaming audio and what it might be worth to a cash-rich suitor is anyone’s guess.
Square Music
After Square launched its merchant mobile-payment system and simple, namesake swipe device in 2009, the company added its Cash app in 2017, which most recently made headlines for including bitcoin functionality to its platform.
But Bloomberg reported that Dorsey is looking to build on Square’s existing services and growing popularity with young users by adding additional stand-alone services to complement the products it already offers. Those include online shopping, delivery, loyalty programs, gift cards, money management and loans.
Like Twitter, Square is a publicly traded company and has been listed on the New York Stock Exchange since 2015. However, Square’s $102 billion market value is now more than twice the size of Twitter’s.
But either way, Dorsey’s access to cash and ability to pay for a deal wouldn’t be an issue. In its most recent quarter, Square reported a 140 percent year-over-year increase in revenues to $3 billion, as well as a 59 percent year-on-year gain in gross profits to $794 million.
What is not known is very much about TIDAL since the privately held company has not reported subscribers numbers or other financial results since 2018. According to a UK filing, TIDAL’s holding company, Project Panther BIDCO, lost $37 million and about 100,000 subscribers in the U.S. that year, although its overall revenue grew by 25 percent.
That said, how the acquisition of a fifth- or sixth-ranked streaming platform that may or may not be profitable fits into the business model of a fast-growing payments and financial platform is another area of concern.
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