A week later, the committee was presented with another report discussing Tidal’s history of quarterly losses, expiration of artist contracts, and $127 million in accrued liabilities.
The report also noted the Norwegian criminal probe and a federal lawsuit by performing artists who said Tidal was withholding royalties they were owed. They included Tidal’s difficulties in attracting subscribers in a market dominated by Spotify, with most of the remaining market share captured by Apple and Amazon. The directors agreed to form a transaction committee while Dorsey drafted and submitted a nonbinding letter of intent to purchase Tidal for $554.8 million.Ī management report to the transaction committee in October 2020 raised several red flags. By videoconference from the Hamptons, he raised the issue during a Block board meeting. Nevertheless, Dorsey, who is also the co-founder and former CEO of Twitter, began thinking of acquiring Tidal after summering with his friend Carter in the Hamptons in 2020, according to court documents.
Meanwhile, Tidal became the target of a criminal investigation in Norway for artificially inflating its streaming numbers.
It also churned through five different CEOs by 2020, when Carter personally extended a $50 million loan to the struggling outfit. Rebranded as Tidal, it struggled to attract subscribers, logging multimillion-dollar losses for 10 consecutive quarters by mid-2020. Tidal, which presented itself as an artist-friendly alternative to other music streaming services, was formed when a group of recording artists led by Jay-Z, whose real name is Shawn Carter, acquired Norwegian streaming service Aspiro in 2015 for $56 million.
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