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RAPONOMICS
by, Wendy Day from Rap Coalition
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.
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