It wasn’t always this good. Rap and hip-hop have come a long way. In the ’80s, the industry saw the inception of the distribution deal, recalls Brett Wright, co-CEO and chief creative officer of Vibe magazine, which chronicles all things cool. Def Jam, the brain child of Russell Simmons and Rick Rubin, was one of the the first hip-hop labels. “Def Jam was the first big success,” says Wright. Its success and that of others got industry attention. “The majors saw it as a big opportunity and began investing more money,” he adds. Before long, there were multimillion dollar successes like Andre Harrell’s Uptown Records, Death Row and Tommy Boy Records.
By the early to mid-’90s, the production deals turned into joint ventures — major labels partnering on a more equitable level with smaller ones, such as the Motown deal with Universal (VIVEF), the Def Jam deal with Island Records, among others, says Wright. “The big companies developed big artists like Mary J. Blige and Jermaine Dupri,” he adds.
The joint-venture business model helped the upstarts overcome barriers to entry with radio promotion, sales and distribution muscle, says Wright.
But the days when rappers made the majority of their money from concerts, and record, T-shirt and poster sales are long gone. “In the ’90s,” says Wright, “the hottest artists could make $10,000-$20,000 a show, sell thousands in merchandise and sell records at the store, and there were publishing royalties. Now the record sales have become a much smaller piece, if you’re not in the 1% to 2% of the big name artists.”