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Rap is feeding upon itself and runs the risk of being
destroyed economically. If it is not profitable for major labels to put
out rap records, they will move along to other genres of music to exploit.
Although independent labels appear to be closer to the streets, and
therefore closer to understanding why and how records sell, it’s the
money, connections, and power of the majors that help expand the rap music
genre beyond its current marketplace. If the major labels move on to an
area of music that they view as more profitable, such as Latin music or
gospel, the reach of rap music will shrink as popular culture is blitzed
less and less by rap music on the radio, in stores, and as part of
everyday life. To someone, like myself, who is a strong proponent of
independence in rap (supporting the “do for self” mentality of artists
putting out their own records and owning their own destiny and careers),
who also does a fair share of negotiations with larger labels for artists
in the rap marketplace, the “damned if you do, damned if you don’t” aspect
of this is apparent. If enough money isn’t secured up front in a deal to
make an album and support the artist financially for a year or two, and
additional money to compensate (by hiring outside companies) for areas
where the label is weak, the artist runs the risk of going broke prior to
ever seeing an album in the marketplace. On the other hand, if this money
is obtained up front, the artist goes further into debt (advances are paid
back out of sales before an artist ever sees a royalty) and it takes
longer for the label to make back its money before the artist gets a
royalty check, if the artist ever sees a royalty. There are even labels
that are famous for not paying any royalties, in which case deals have to
be negotiated for huge up front funds knowing that there will be no back
end royalties. Protecting the artist or not protecting the artist both
becomes problematic here.
Major labels supply traditional distribution, and have done so for years.
This makes them quite proficient at it since they’ve had years to work out
the kinks. They also have staffs of thousands of employees who are
assigned specific tasks in the record company pipeline. They are often
financially solvent conglomerates able to wait out even the slowest paying
customers. Due to the large number of artists the label has within any one
genre of music, the financial aspects of support to radio, retail, and
video outlets become more cost effective (it becomes cheaper to
financially support a rap radio station in New York, for example, if there
are fifteen artists who will receive radio play). It’s no secret that a
major label has the opportunity to build fame for an artist more readily
than a small independent label. But because they are bigger with more
employees (meaning certainly more bureaucracy), they are unable to respond
immediately to the needs of the consumers or sudden shifts in trends-- and
they really suck at being able to spot new and up coming trends. They are
often unable to adapt to a changing climate; for example, there are still
many major labels who refuse to work street records on the streets, still
dumping tons of money into radio play unsuccessfully because that’s all
they know, not understanding the difference between the audience for a
Master P record and the audience for a Will Smith record. Yet often, due
to the size of a major label, and backing by major corporations with
shareholders, they can afford to spend more money to build an artist’s
career. And although, money isn’t everything, it helps build artists’
careers through exposure, which leads to sales, and therefore increases
the reach of the entire rap genre. It was with the backing of major labels
that artists were able to secure television appearances, their own TV
shows, soundtracks, film deals, etc, which strengthened the rap genre as a
whole. The popularity of rap music in pop culture led to McDonalds and
Coca Cola commercials featuring rap music. It led to Barney rapping in a
Fruity Pebbles breakfast cereal commercial. It led to people’s
grandparents recognizing the name “Puffy” and hearing on the nightly news
that he has befriended Donald Trump. This increased exposure leads to even
more endorsements, larger publishing deals, and a plethora of
opportunities for the artists and rap music. These are some of the things
that make rap profitable and lead to rappers actually making money instead
of going the route of the old R&B artists and dying broke.
Since 1995, there have been around 500 rap records released each year
except for 1999 where the numbers doubled (1995 saw 469 releases; 1996 saw
482 releases; 1997 saw 497 releases; 1998 saw 477 releases; and 1999 saw
997 releases). Yet only such a small percentage of those releases sell at
Gold or Platinum level (500,000 plus, and 1,000,000 plus, respectively).
In 1998, there were 477 rap records released. Of this amount, only 12 went
platinum and only 14 went Gold. That’s a tiny 5% of all of the rap records
released--very ugly odds. In fact, only 57 sold above 250,000 units. In
1999, there were 997 records released and only 51 sold more than 250,000
units. Of those 51 releases, 11 were releases that sold above 1 million
units (Platinum) and 20 releases that sold above 500,000 units (Gold). And
yet those 31 Gold and Platinum records, out of 997 releases, accounted for
63% of the rap sales volume in 1999. If the “average” rap record costs
$1,000,000 to create, market, and promote (and I could argue that this
figure is low, but it’s the average figure Craig Kallman, President of
Atlantic Records gave me), then just to break even a label must sell
123,000 records. As I look at the records over the past two years that
have gone platinum, I see artists with budgets of far more than one
million dollars. So for the basis of this analysis, the figure of 250,000
records sold was chosen. Hopefully at this point an artist begins to see
some royalties (royalties are paid after an artist pays back all of the
recoupable expenses such as recording costs, half the video costs, half of
the independent promotion costs, etc). If the artist makes money and the
label makes money, then everyone should be happy.
As of December 31, 1999, rap releases have jumped from 477 in 1998, to
997in 1999. The majors released a few less records than last year (majors
released 203 rap records in 1998, and 199 in 1999). But they made less
money in sales than they did last year by selling about 3 million units
less (in 1999, 91% of all rap sales dollars went to a major label, even
though they only released 20% of the titles; and in 1998, 91% went to the
majors as they released 43% of the titles). We better hope this trend
upswings. Most people understand that rappers don’t make money from their
record deals, which leaves touring, appearances on other artists’ records,
and endorsements as the only way for an artist to really earn income. Due
to the negative connotation of “violence” at rap shows and the expense of
insuring rap tours, touring has become relegated to the more commercial
rap acts or rap acts who can perform on R&B tours. Shows are becoming less
and less frequent in rap. By appearing on too many other artists’ records,
an artist runs the risk of over exposing himself (or herself). There was a
time in early 1999 when Big Pun was slated to appear on 25 different
songs, and more recently Cash Money appears to be placing their artists on
songs with everyone in an attempt for other labels to cash in on the Cash
Money phenomenon while Cash Money increases their coffers. Aside from
diluting the artist through over exposure, appearances on other records
can also be problematic because legally the record label can take that
appearance money and put it towards recouping the artist--in almost all
cases, the label owns the right to the artist’s performance (even on other
artists’ records). This leaves one last way for artists to earn income
outside of the record deal: endorsements. And the only way for
endorsements to be plentiful is to have rap, as a genre, reach a mass
cross section of popular culture-- and that means the masses who are
actually perceived to spend money. Companies will only utilize rap artists
and rap music to sell products as long as the main stream buying public
reacts to it. And if the mainstream buying public reacts more positively
to Ricky Martin, the Backstreet Boys, N’Sync, and Brittany Spears, then
that is who marketers will employ to hawk their goods, instead of rap
artists.
So the question remains, how do we keep rap from self-destructing
economically? We need to be certain that the artists make money, but we
also need to be certain it is profitable for record labels to release rap
records, especially the ones that are able to influence and affect popular
culture. And they are often their own worst enemies in terms of selling
units and working projects properly to begin with. After making a list of
all rap artists that have sold above 250,000 units per year since 1993, it
is apparent that we in rap music (hip hop is the culture; rap is the
musical form) must find a solution to this problem or all rap will go back
underground, serving a very small portion of the marketplace, making it
very difficult for artists to squeeze out a living doing what they love
most: making music.
There are12 labels (out of 39) who appear on the following chart with
artists selling above 250,000 units consistently. These labels seem to get
it, for the most part, and if their artists are getting paid, well then
it’s victory!
LABELS WITH CONSISTENT SALES ABOVE 250,000 UNITS
based on sales volume according to SoundScan (add 000)
1993 1994 1995 1996 1997 1998 1999 TOTALS
Def Jam 4319 1736 2877 2037 3922 17364 5154 37409
Columbia 2874 1703 1138 7949 7344 1582 2653 25243
Death Row 9432 1635 10476 2234 297 338 24412
No Limit 1019 6032 11150 4135 22336
Interscope 2703 544 811 4355 9827 18240
Bad Boy 2530 11948 690 2676 17844
Jive 3138 553 1428 3402 3328 2188 884 14921
Relativity 5709 1716 1961 1790 514 11690
Universal 1319 1056 810 8378 11563
Elektra 773 1396 2705 3124 2832 10830
Priority 1782 791 2730 1554 1663 1652 286 10458
Loud 1601 1503 1203 2280 1785 1023 9395
This chart is based on figures obtained from
SoundScan as of 12/31/99 and is based on total sales within a calendar
year. The chart does not take into consideration the amount of money spent
on promoting the artist or how many rap records each label released in a
given year (it is only taking into consideration sales volume for the
releases that sell above 250,000 units each year). All releases are based
solely on rap and do not include any R&B releases. This chart also
separates No Limit and Priority even though Priority staff is responsible
for promotion, sales, and distribution of No Limit, because No Limit is
separate in the A&R, marketing, and publicity capacities for all No Limit
artists. It also separates Death Row and Interscope, but not RocAFella and
Def Jam, or RuffHouse and Columbia, even though their respective staffs
helped work some of the projects.
This series will continue in every issue of
Murder Dog and will contain information on pressing, street teams,
distribution, foreign licensing, overseas distribution, artist
development, flow of product, retail and radio, artist imaging and more.
Each issue will also answer two specific questions sent in by our readers.
Although questions can not be answered individually, they should be
directed to Rap Coalition at 111 East 14th Street, #339, New York, NY
10003. And remember, if you don't own your own shit, you're just a
sharecropper.
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