While there are some immediate synergies between Square and Tidal, Square CEO Jack Dorsey only hinted at the depth of where fintech is heading and that Square is building the future of finance.
Square got its start selling payment processing services and products to small businesses. It has since expanded its focus to a number of financial and software solutions for businesses and even gone direct to consumers and creators with the Cash App, a neobank that enables deposits, payments, and trading on its platform.
Square’s recent play in the music space raised some eyebrows, but there are easy to understand benefits.
With Tidal, Square found a like-minded business that helps individual creators thrive in an ecosystem stacked in favor of bigger players. But aside from higher level posturing, this is also a solid strategic move with short- and long-term plays. In the short term, Square just acquired thousands of artists (read customers) that can use the Cash App platform and services. In the long term, Square will build new revenue streams on top of Tidal’s streaming services. Think band merchandise, virtual performances, and intimate gatherings.
What Dorsey also did not get into is how this acquisition is evolutionary. Square is positioning itself to become the financial services platform for the creator economy.
Before digital music, record labels such as Sony and Columbia fully held creation and distribution. But now platforms like Tidal and TikTok own distribution and anyone with a Mac and few peripherals can create. There’s been an unbundling of these services as we moved from an analog to a digital world. Fintech will enable this same unbundling. Legacy financial institutions will not be able to compete with Square in the creator space as Square will have much more data and expertise in designing and fulfilling the financial needs of the creator set.
Square’s move fits in perfectly with the arrival of "non-fungible tokens" (NFTs), or digital assets, which are of rising importance to creators and consumers.
NFTs allow individuals to sell their creations, whether digital art or music, directly to consumers while bypassing platforms such as Apple. With NFTs, Apple no longer has a walled garden to contain content, because content is being disaggregated to the individual much like we’re seeing with the rise of the newsletter economy and substack.
The way I see it, the endgame for Tidal will be a mix of NFTs and Square products to support a robust artist community that continues to rapidly grow because incentives benefit the creators rather than the platforms. Technology creates opportunities for big and small, and, in the case of fintech, I believe we’re going to see a collapse of existing structures in support of the small guys.
And this is just music. Fintech is going to revolutionize every industry as finance becomes a feature that better enables other product offerings. If you’re a bank or another legacy financial institution and haven’t started making real changes, the future is here, and I urge you to start building.
