Jack Dorsey’s Square is buying a majority stake in Jay-Z’s music streaming service, amidst the company’s increasing interest in the crypto-space.
A Tidal Wave
Square announced today it has agreed to purchase a majority stake in music streaming service, Tidal for $297 million.
Tidal, owned by famous rapper Jay-Z, will see its shareholders (which include Beyonce, Madonna, and Rihanna) continue to own pieces of the business within Square.
Square, which operates a cash payments application, is Twitter’s Jack Dorsey’s own payment app, who said on the acquisition:
We see a real connection to considering artists as entrepreneurs, as CEOs of their own business life, not just the biggest musicians in the worldJack Dorsey – Founder, Twitter, Square
The news has caused waves in the acquisition world, with some questioning the intention behind a payments processor partnering with a streaming service.
Dorsey took to Twitter in response:
It comes down to a simple idea: finding new ways for artists to support their work. New ideas are found at the intersections, and we believe there’s a compelling one between music and the economy.Jack Dorsey – Founder, Twitter, Square
PayPal, Visa, Square?
While this may seem an odd move for a payments company, Square’s other recent purchases are more appropriate.
Cumulatively, Square has spent over $220 million purchasing Bitcoin (BTC) over the past six months, starting with a $50 million purchase (4,709 BTC) in October.
According to Square, its conviction that the top-cryptocurrency is “an instrument of economic empowerment” inspired the purchase.
Indeed, the cryptocurrency space, according to Square, will provide a means for those in that demographic to substantively participate in the global monetary system.
We believe that bitcoin has the potential to be a more ubiquitous currency in the futureAmrita Ahuja – Chief Financial Officer – Square’
Moreover, Square is not the only payments giant to enter the cryptocurrency space.
PayPal also made waves towards the end of last year after it announced users could exchange cryptocurrencies on its platform. Quickly after that, PayPal’s cryptocurrency volume surged to $242 million in less than 24 hours.
Furthermore, PayPal and Square competitor Visa recently announced plans to help banks roll out Bitcoin (BTC) payments and trading services.
Competition for XRP, XLM
The appetite of traditional finance (TradFi) institutions for cryptocurrencies is encouraging. It will be interesting to see what this entails for crypto-born payments systems.
Ripple (XRP) and Stellar Lumens (XLM) now have to compete with some of the biggest, most resourced companies in the world. Accordingly, these companies will likely act as a point of entry for the general public regarding space.
Moreover, with XRP facing legal issues, these TradFi companies may have room to grow in the crypto-payments space.
Nevertheless, the cryptocurrency space welcomes both competition and experimentation. Once the correct balance is struck, both lead to positive development.