Square – the fintech company that he owns – is buying a majority share of Tidal – the music streaming service started by Jay-Z. The price tag is about $300 million.
What on earth is there any synergy between Square and Tidal? Is it to help musicians to collect payments for their concerts, t-shirts, and even the subscription for streaming service. That sounds quite trivial. So, what else can be going on? Or is this just Jack Dorsey giving money to his buddy Jay-Z so that they can hang out together?
This move, however, makes sense if you think about another headline that Jack Dorsey created, which got less attention. He sold his first tweet through NFT (non-fungible tokens) for $2.9 million. This comes in the wake of Beeple story. Jack Dorsey’s fascination on block chain technology is not exactly a top secrete.
Putting it together, it is not hard to imagine that Messrs Dorsey and Jay-Z are working on something big with NFT. So, this is how it can play out. Tidal’s original goal is to offer a high-definition music streaming service. What if they create NFTs for original HD digital media content. Square and Tidal’s join platform will allow artists to produce a limited amount of original digital content. The buyers of the original copies can play them unlimited in their HD quality. They can sell and rent the original copies. For each transaction, the original creator will be compensated.
It will also allow people to create duplicates. After all, they are digital objects! But they can reduce the quality to lower resolution. They can also limit the number of times one can play. Furthermore, each time someone copies, they must pay, and the revenue will be tracked and shared with the original creator. They can limit the number of duplicates from each “original” copies. Jay-Z can flex his muscle to supply a steady stream of original creatives not just in music but all forms of digital arts. This can potentially completely upend the worlds of Spotify, YouTube, TikTok, and many other short-form digital content creation.
When the music record industry sued those who “share” MP3 files for copyright infringement, they essentially punished the biggest supports. Those who shared MP3 files with others were promoting the work of those artists. The only problem was that record labels and musicians weren’t compensated. But, neither were the fans who shared the music. No industry can survive when they turn their biggest supporters into a bunch of potential criminals. In that sense, what I think Square+Tidal is trying to do is the movement in the right direction. Yes, Spotify’s streaming service model is better than the iTunes download model. But, musicians are paid even less under the streaming service model.
Only time will tell if my speculation has any legs to it or if Messrs Dorsey and Jay-Z’s experiment (assuming my speculation is correct) will pan out. But certainly, this shows the existing externality in the digital media market and the opportunity for disruption.
P.S. Soon, I will share my thoughts why those people who want to see Disney taking down Netflix will be disappointed. Not because Disney can’t, but because they don’t want to. And, I will continue my posting on digital transformation as design inquiry.