Financial services company Square announced Thursday (March 4) it is acquiring a majority stake in Tidal, the music streaming service led by Jay-Z and a handful of artists stakeholders including Usher, Madonna and Beyoncé, for $297 million in a mix of cash and stock.
Those artist owners will maintain their stake in the company, but the new interim head of Tidal (once the acquisition closes) will be Jesse Dorogusker, a longtime Square executive and a former engineer at Apple. During his time at Apple, Dorogusker led the accessories division, spearheading the development of the Lightning connector, which is utilized to power the main port for iPhones and iPads. As Square’s hardware lead, Dorogusker led the development of the Square Reader, the tiny, ubiquitous card reader present in coffee shops across the globe.
Billboard sat down with Dorogusker to discuss the acquisition, Tidal’s focus moving forward (“we’re not trying to win the ear,” he says), and how the company will work in concert with Square to expand its audience.
Why Tidal and why now?
Dorogusker: We see a fit and an opportunity at the intersection of music and the economy. And we see a shared purpose that Tidal has in its original founding, and so did Square. I’ve been at the company for close to nine and a half years, and from the beginning we started by finding and fixing the real needs of small businesses, individuals and entrepreneurs. We started with a flower seller, we started with a coffee shop and built a giant financial system that underpins surprisingly big businesses, and layers of software and services on top of that over time. We see that artists are entrepreneurs, and they also are at a crossroads of music and technology and the economy. That’s the conversation that Jack [Dorsey, Square’s CEO] and Jay-Z had to kick this off at the beginning. We see a lot of common purpose between the two companies.
How will Tidal be integrated into Square?
We expect to run Tidal as an independent business. For years, we have been working on ways to foster multiple brands inside our company, which we have done successfully with Square and now with Cash App. I was one of the architects of how we configure all of that so we get the best of independent business and the shared resources and expertise that we have as a company. We’re going to bring in Tidal alongside the other two, keep the brand, invest in the brand, keep the streaming service, keep the management team, keep all the employees and continue on that journey with them.
Square is purchasing a majority stake in Tidal, what does that mean for the current artist stakeholders?
Square purchased a significant majority stake that makes sure that we have the means to run the business, operational control, and Jay-Z and the other founding artists, all of whom started Tidal with him in those early days also stay with a stake that is meaningful. It keeps them in the boat, keeps them involved and we love to have their advice and involvement.
How will you work with those artists stakeholders moving forward?
We’re really looking to them for advice and insight. One of the ways to get to innovation is to deeply know the customer. These artists have lived it, they started with no career and created tremendous careers. They’ve been their own CEOs and developed their own business and struggled through the industry. What we’re trying to do is serve a really big set of artists, bigger than you can even imagine, creating new opportunities for the long tail of working artists, new artists, emerging artists. It isn’t necessarily about just serving the superstars, but really kind of opening the aperture and serving more customers just the way Square did with serving businesses.
The streaming music ecosystem is obviously crowded and very competitive — how do you look at differentiating the Tidal brand in comparison to companies like Spotify and Amazon who have also introduced high-fidelity tiers?
We really like the core values that Tidal has shown by focusing on high-quality audio, having the biggest catalog of master quality audio, even among its peers in the industry. What we can do is build on that with a set of tools — sometimes simple tools, sometimes complex financial systems — that really help artists be more successful, not only in the studio but really looking at their entire career.
Tidal has been a niche service for some time — is the goal to scale it up quickly? How do you look at the future of Tidal?
We think the streaming service is an important part of it, and it is growing and will continue to grow. We love that and we intend to continue to invest in that business, but we’re especially interested in creating new adjacent opportunities in service of the whole artist experience and their experience with their fans in addition to the streaming service. That could be more about creating new markets like Square did in the early days, we were serving customers that were largely underserved and created a market. We see millions of entrepreneurs, artists, musicians in the world who are underserved.
Tidal is currently the subject of a data fraud investigation in Norway, and it has been accused of being late on payments to rights holders multiple times. Was that a major concern going into this deal?
We feel really good about the diligence we did. We asked a lot of questions. We get to the bottom of what we need to. Certainly not going to comment on any investigations that are ongoing, but we feel good about it. Both sides feel really good about signing this deal.
Square hasn’t worked closely with music labels in this capacity, is there any existing relationship with major and independent labels?
We’re going to benefit from the management team that’s coming across. The leadership team on the business and marketing side, the engineering and product development side, and even editorial content, they’re all coming across. These are people who have been working with labels, concert promoters everybody day-to-day, and not just the major labels, but hundreds of labels beyond that. All of those existing relationships continue and I’m looking forward to jumping into it. I think the opportunity to get with not just Jay and the artists, but also Jack Dorsey, will be a new thing to add to that conversation and I can’t wait to do that.
We’ve seen podcasting become an increasingly important focus for streaming services and Tidal was early on it, do you see that continuing to be a priority for the company?
The core of the company is music, a music obsession, and a focus on the musician. To the extent that artists are doing podcasts in service of their business, great, but we’re not looking at audio generally. We’re not trying to win the ear; we’re trying to be committed to music and musicians, and make sure that Tidal continues to be a great place for music, music culture, and artists.
Similarly, Tidal has invested in video over the years. How do you look at that music video catalog moving forward?
We feel really great about the music video catalog we have, and those are just other expressions of what the artist is trying to accomplish, whether it’s the behind-the-scenes stuff we’ve done or some of the live performances and even proprietary content that Tidal has had. But again, in service of the artists, what they’re trying to do, the story they’re trying to tell, not a kind of a generic expansion into video.
What will Jay-Z’s involvement be in the day-to-day operations at Tidal?
We expect Jay to be involved in the company and in Square. Jay Z is joining Square’s board where I expect he will not only have opinions and insights and contributions on Tidal, but across all of Square’s businesses, drawing on his experience as a businessman, as an entrepreneur as a philanthropist. We’re really going to value that opinion from him, and I’m sure I will hear from him in those board meetings as I am always there. And of course, looking for the artist’s perspective — him included, the other shareholders included — we’ll have regular opportunities to talk to them, show them what we’re building and get their feedback, and get involved with other artists as they seek that.
What’s your biggest challenge in leading Tidal forward?
I always think the challenge in product development is to focus and execute well. Where I’ve led as a product development person is in design and experiences because if you can really simplify it, if you can really make a great experience, you can talk to more people. It’s just really simple. If you can simplify a problem, if you can take out a step, if you can save people some time, you can create more integration, you can attract more people, which is what we’re trying to do with this collaboration between Square and Tidal.