A RISKY BUSINESS
Reprinted from NEWSWEEK
Magazine July 18, 1994 issue; pages 56-57
Entertainment: Rappers talk tough about life in the 'hood but when it comes to
money, many are babes in the woods. Some top stars never get top dollar.
CHERYL JAMES AND SANDY DENTON knew very little about the music business when
they landed their recording contract that transformed a couple of Sears
customer-service reps into rap's most successful girl group: Salt 'N' Pepa. How
little? In 1985, when their manager said sign on the dotted line, they did: a
1~year contract with Next Plateau Records for 50 cents per album sold (half the
going rate) with no option to renegotiate even if they were to become, say, a
top 40 hit machine. Three platinum albums later, they made about $100,000 a year
each, while their manager and record company raked in millions. "I always
knew something wasn't right with it, but I didn't know what," says Denton
of their ironclad deal. "We were intimidated by this white business-man
telling us it was the right thing to do." Adds James: "We never even
thought of a lawyer."
Few young black hip-hop performers do, until it's too late. Dr. Dre (Andre
Young), producer of his own top-selling album "The Chronic" as well as
Snoop Doggy Dogg's huge hit "Doggystyle," says he plans to file a $20
million lawsuit next month against Ruthless Records for living up to their name
and underpaying royalties while he was with the proto-"gangsta" group
N.WA. The suit will claim Ruthless took advantage of Dre's lack of business
knowledge and that he received only $90,000 a year in royalties for producing
N.W.A.’s three platinum albums (more than a million sold of each). In April,
Bobby Brown filed a $10 million suit against his former business managers,
Jeffrey Turner and Brian Irvine, claming they "took advantage of his
naivete about the business." After making $27 million from 1989 to 1993,
Brown says he's nearly broke and owes $3 million to the IRS because of his
managers shoddy accounting. (Being married to Whitney Houston may have lessened
this financial blow.) Similar actions have been going on for years. After
KRS~One (Kris Parker) released his debut album, "Criminal Minded," on
B-Boy Records in 1987, he sued the now-defunct label for back royalties and to
get out of a lengthy contract, citing lack of legal representation when he
agreed to the deal. 'As successful as that album was," says Parker, "I
never got a cent" The suit was settled out of court.
Labels ripping off managers ripping off artists has long been the food chain in
the music
industry, from Little Richard to Billy Joel. But rappers may be even more likely
to get eaten
alive. Tough, aggressive survivors, they escape the projects of Chicago or the
streets of South-Central LA only to be suckered by record-industry
"suits" armed with Mont Blanc pens and 60-page contracts. They
unwittingly sign away royalties, publishing rights and contractual freedom in
exchange for BMWs (the current signing inducement of choice) and a few grand in
fast cash. “These kids are not business savvy nor for the most part are their
famlies," says Matt Robinson, vice president of A&R at Capitol Records.
A white kid in a grunge band is more likely to have an uncle who's a lawyer. KRS-One
was homeless on the streets of New York when he signed his deal. Rap music
generated $800 million for the recording industry last year but is still taken
less seriously than white-dominated genres like metal or alter-native rock. Says
Robinson: "Because the record companies don't see any long term future for
rap, they fail to nurture these kids the way they should"
Rap acts are routinely signed for half the $300,000 advance that the average new
white alternative band can expect for their first album. Traditionally the
performer gets an 8 to 12 percent royalty on the retail price of his record and
the option to renegotiate. "'That's not what I see when these kids come to
me to get their contracts changed," says Steven Barnes, a top black
entertainment lawyer. "'The royalty is usually significantly lower than
that, with other problems as well." Rap duo Kid 'N Play got 1 percent of
their first album; R Kelly was 18 years old and living in a Chicago housing
project when he signed an eight-year deal that he thought was for two. “It was
hell to get out of," says Kelly.
Black performers have lived this hell before. Motown's Jackie Wilson and Mary
Wells both came to fame in the '60s from impoverished Detroit neighborhoods and
both died broke, exploited by the label they helped make famous. Is racism to
blame? In part, but it's more complicated than that. After all, Motown founder
Berry Gordy was black. And many of the bad deals signed today are the result of
abuses not only by white-owned record conglomerates but the black-owned
production companies and managers who recruit new artists from the street and
then serve as the middlemen. "Gang-banged by your manager fella/ Getting
money out of your ass like a mother fucking Ready Teller," rhymes Ice Cube
(O'shea Jackson) on his album "Death Certificate." (Ice Cube has said
that he had to hang his platinum records at his mother's house because he
couldn't afford his own.) Dr Dre's video "Dre Day" includes a scathing
depiction of a white record company owner and his black partner. "If I knew
how to handle business, I'd have gone into it"' says Dre. "I feel, as
an artist, I shouldn't have to worry constantly about the business side."
The record and production companies don't see it that way. They argue that
signing an unknown is a financial risk and that adult performers are legally
responsible for deals they put their signature to. Ruthless Records attorney
Mike Bourbeau says the company paid Dr Dre more than $1 million for his work
with N.W.A. Salt 'N' Pepa's manager, Hurby Azor, says that he deserves 50
percent of their money, twice the normal cut, for discovering them, but he also
adds, "They should have paid more attention to what was going on with their
business."
It's an emotional issue, filled with had blood and nasty ironies. “These kids
aren't thinking beyond today and the new car and the house, because those are
things they haven't had," says Gladys Knight, who, as an early Motown star,
watched these same riches-to-rags stories unravel 30 years ago. “They don't
realize that if they don't get what they deserve in the beginning, it's going to
be hard to pay the bills in 10 years when the hits stop coming," As this
rueful history repeats itself, it seems apt that one of the songs named in Dre's
deposition is titled "Poor, Broke and Lonely."
RICK MARIN with
ALLISON SAMUELS in New York
JULY 18, 1994 NEWSWEEK
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