Examining the Partnership Between Music and Fintech

Square is a payment technology company founded in 2009 by Jack Dorsey (also the founder of Twitter). Square’s initial product was a small device that could attach to cell phones for merchants to accept credit card payments. Since then, Square has launched other hardware devices and software to power offline and online payments. One of Square’s notable products is the peer to peer payments app, Cash App. 

Square has acquired Tidal for almost $300M. Tidal is a global music streaming service that features high quality sound, video and livestream.

So here's the multi-million dollar question: Why would a payment company acquire a music streaming service?

In a tweet, Jack Dorsey stated that “it comes down to a simple idea: finding new ways for artists to support their work.” As artists get paid from earning streaming royalties, performing and selling merchandise, this partnership can go in multiple directions. Here are my ideas:

Streaming Royalties

On Tidal, an artist receives $1 for every 80 streams, which is almost 3 times as much as other streaming services. Square can allow artists to have instant access to their streaming royalties, similar to how Cash App enables users to immediately pay and receive money.

As Square launched a bank this year to offer business loans, deposit accounts and point-of-sale services (previously done by a third-party bank), streaming royalties can be held in an accessible Square account. Square can use the account data it collects from artists to underwrite loans for them, similar to how it currently evaluates loan applications from its small business customers.

Digital Performances 

In 2020, Tidal collaborated with Oculus to create immersive concert experiences in virtual reality. Square could extend this concept by enabling small businesses to stream these concerts. Attendees would pay for entry using Square hardware, and artists would receive a portion of the proceeds. To generate additional revenue for artists, advertisements could be displayed during intermissions of these digital performances.

Payment services could be applicable not only for artists but also for DJs. During the height of COVID-19 DJ D-Nice had 160,000 people listening to his set on Instagram Live from the comfort of their homes. Square can enable users to pay to enter digital parties hosted on Tidal to ensure entertainers, such as DJs, receive payment for their services.

Merchandise

At a live concert, the audience can purchase merchandise branded by the artist. However, during livestream events this option is not seamlessly available. Square can offer users the ability to purchase merchandise before, during or after a digital performance on Tidal. Cash App has an online apparel shop called Cash. The artists’ merchandise can be sold through this app.

The acquisition of Tidal by Square presents intriguing possibilities for both companies. Nonetheless, this move highlights the growing trend of businesses integrating financial services into their operations and fuels the assumption that every company will eventually become a fintech company.

-Kiswana