[Enjoy The Abridged Audio Version of This Hip-Hoppreneur ™ Commentary at:
Last week’s commentary, “360 Deals and ‘Dumb’ Artists” (http://www.cedricmuhammad.com/360-deals-and-%E2%80%98dumb%E2%80%99-artists-hip-hoppreneur-%E2%84%A2-commentary-october-28-2009/) stirred up quite a reaction. I’m pleased to know that I’ve made a contribution to an important discussion. Until business models are flushed out in terms of their implications not only for artists and labels in the music industry, but also for what they reveal about larger demographic, technological and economic shifts, the potential for Hip-Hop music to evolve beyond artistic and cultural expression and into a real vehicle for economic institution building and community development will remain stalled and frustrated.
The feedback the commentary provoked revolved around the view that 360 deals are not bad for every artist, and should not be painted with a broad brush. Most who responded wanted to make sure I had an appreciation for the fact that the ability of an artist to benefit from the 360 arrangement depended upon their popularity, music catalogue, team and visibility in the game. I do concur.
But those additional elements are determined by other realities.
Some of which most artists are ignorant.
You see there is a caste system in the industry.
And this reality opens the door for some frank talk about the emergence of the 360 and why it is poised to put managers out of business, or out of their own misery, depending upon your perspective.
Now when I say ‘caste system’ I don’t have the country of India in mind, but only a system of rigid division and separation characterized by a custom of social barriers.
Yes, there are real social barriers in the music industry and the success and failure of artists is dependent upon their ability and that of their team infrastructure of managers, agents, lawyers, and publicists to navigate it.
On one end of the caste system we have the unsigned talent; in the middle of this power pyramid we have the independent artist; and at the top of the social system is the elite artist signed to a major record label.
Each of the three have their own forms of power and spheres of influence that make them valuable in the marketplace.
The unsigned talent has freedom, purity, and unlimited upside and potential.
The independent artist has greater creative control and a larger share of the revenue they generate.
The elite major label artist has social mobility at the higher levels of the industry and access to corporate machinery and a professional network.
Each of the three also have major vulnerabilities.
The unsigned talent initially has a prescribed minimum market value they must accept in contracts and deals if they are to enter the industry as a signed artist.
The independent artist rarely has the professional infrastructure and business process necessary to achieve success beyond a critical ‘underground’ (“I keeps it real”) commercial mass. Some rationalize their lack of achievement by saying they don’t care about ‘going gold or platinum,’ but privately they lament over the inefficiencies in their business organizations and the barriers that hinder them. In addition, their ‘independent’ status, ‘hoodonomics and love for progressive politics or revolutionary rhetoric often limits their social mobility and alienates them from key music industry power centers and decision-makers in the industry who are afraid of upsetting special interests.
The elite major record label artist, having been thoroughly mainstreamed, is ‘boxed in’ to standard contractual deals, a stereotypical marketing image, and conservative or risk-averse business opportunities. And at times, their penchant for networking toward the top of the industry power pyramid, although a necessary and sound business practice, when unbridled (i.e. getting business done is more important than dating a model), opens them up to charges of excessive materialism.
The strongest position an artist can be in, nowadays, especially in the era of the 360 deal is that of the emerging independent artist. This person is not established to the point where their image has hardened but not so new that they haven’t demonstrated the ability to market and sell their own music, and generate not just buzz but some level of mainstream visibility (through earned media, social and viral communities, and either radio play or video rotation on mainstream outlets).
But the emergence of this kind of new independent artist becomes more difficult everyday as the 360 deal threatens to place the vast majority of artists at the bottom of the music industry power pyramid, cutting them off from key power centers and the ladder of mobility.
The individuals best suited to turn the tide are the managers (aka ‘the 20Percenters’), who understand the caste system and have more mobility than the artist, in the name of business. They are best positioned to establish the right relationships that new artists are now being denied (except they go through a label), and only they have the right mix of know how, skill sets and networks to construct a new ladder and business infrastructure outside of the industry, if need be, to counter the majors’ grip on market share.
But no one individual, and no group of entrepreneurs and managers (independent or elite) in the business has thus far been successful in resisting the pull of major labels and their comparative advantages (the ability to manufacture ‘mainstream’ fame; a mass network of in-house professional talent; horizontal and vertical integration connecting them with other businesses and industries) long enough to compete with them, systematically.
The result, as we mentioned last week is label-dependence (where managers rely upon the record labels of their artists for everything from office space, part-time staff, even FedEx accounts).
As an incubator, this can be an effective start-up strategy but when years pass and the dependency hasn’t been broken, it amounts to sheer laziness, then onward to a deep form of economic slavery. Some say the 360 deal embodies this final stage of exploitation.
But I’m not so sure.
An attempt to perhaps balance label-dependency and business incubation, was the joint venture between Warner Music Group and legendary artist manager, Chris Lighty, a couple of years ago. This arrangement in a company called Brand Asset Group (http://brandassetgroup.com/) – like the success of Steve Rifkind’s SRC urban marketing company in the late 90s – is another untold factor contributing to the hurricane-like emergence of the 360.
Here is the official press release announcing the venture:
Here is how The Wall Street Journal described the deal back in June 13, 2007 in an article entitled, “A New Spin For Corporate Music Deals:”
“A new joint venture of Warner Music Group Corp. and one of the most prominent managers in the music business is aiming to generate new revenue by linking musicians and corporate America.
Brand Asset Group, as the newly formed venture with Chris Lighty, the manager of rapper 50 Cent, is called, aims to address one of the biggest complaints among record labels: Their inability to capitalize on lucrative revenue streams such as merchandise sales and image licensing that typically benefit artists and their managers.
For years, labels have been vowing to vault out of the narrow CD and download business and into the ‘brand’ business. Executives have watched in growing frustration as their artists cash in on endorsements, sneaker and clothing deals and the like. Labels have spent millions marketing artists and building their brands, but have benefited from only one dwindling revenue stream.
‘The music industry is growing,’ Warner Chairman Edgar Bronfman Jr. told an investor conference last week. ‘The record industry is not growing.’ He went on to say that his company is trying to expand into ‘many, many other businesses’ beyond the sale and licensing of music.
…Artist managers have traditionally been wary of signing such far-reaching deals with record labels. But with falling record sales hurting the bottom lines of labels and artists alike, managers are warming to the idea of broader business relationships with record companies. Jim Guerinot, a manager whose clients include Gwen Stefani and Nine Inch Nails, says he wouldn’t rule out a licensing relationship with a record label – ‘as long as they don’t assume that because of the existing relationship we’re going to give them an unfair deal.’
For his part, Mr. Lighty argues that artists and their representatives should be willing to give up a portion of their earnings because he believes he can generate more business opportunities for them than they would be able to on their own.”
Now, despite an initial negative reaction of my own to this news, and a chorus of complaints I received from ‘independent’-oriented artists, their teams and supporters, I continue to defend Chris Lighty from the charge of being a sell-out.
First, he may have been using Warner as an incubator.
And second, because for years – as a consumer, manager, consultant and observer of the industry I have watched ‘independent’ and ‘elite’ artists and managers who had the capacity, skill set, wealth and access to a larger power brokering network (investors, political leaders, spiritual leaders, and grassroots leaders) necessary to form concert promotion companies, marketing companies, and even control distribution, intentionally not do so.
Now, I don’t know Chris Lighty and have only spoken with him for a minute, while we were both on an elevator together in 2001 at the Hip-Hop Summit Action Network so I don’t know his vision for economic development in or outside of the industry.
However, what I do know far more about is the scared-to-death mentality of not just one but an entire industry of managers, artists, lawyers, agents and talented-as-can-be label staff professionals who would rather go broke, it seems, than unite with one another to control more of the market share or industry infrastructure in order to make more money for their artists or increase leverage at the negotiating table.
If there were a concert promotion company, merchandise company, and marketing company (much less a slew of viable professionally run independent record labels) owned by top managers and artists, there would either be no 360 deals, or they certainly would not be a mandatory clause in an entry-level contract.
The ‘outside’ competition to the majors coming from entrepreneurs in these other fields would prevent this from happening.
But a hidden hand – coming from outside of the micro music industry and often working through the multi-national conglomerates that own it – with resources to control who gets the psychic income of fame (scandal-free media coverage, high level political access, and first crack at non-music industry business opportunities) has subtly and not so subtly made it clear to elite artists and their team that doing for self is incompatible with upward social mobility, in their world.
Thus, the fear of loss of status and mainstreaming controls many and limits the effectiveness of those who aren’t afraid.
Dame Dash and I discussed this at BlackElectorate.com in 2002 at the height of Roc-A-Fella’s popularity (http://www.blackelectorate.com/articles.asp?ID=744 ):
Cedric Muhammad: The way I have looked at it from an economist’s point of view, it seems that the pace of the distribution channels, even of the multinational corporations at the center of your business ventures, is really too slow for you.
Dame Dash: Right.
Cedric Muhammad: It seems to me that everything that you are involved with from your music relationship with Def Jam and Universal to the movie business – you are like, really bumping up against Black America’s crisis of not having distribution for its products and services. How do you feel about all of that?
Dame Dash: Well…I mean, you know it is a constant struggle. A little bit of a fight, because our culture doesn’t usually get the correct opportunities and when they are presented, somebody usually f—- it up. Someone is there putting their hands into the cookie jar. Our culture has been exploited so much that we haven’t been able to capitalize on things. So many other people make so much money off of us that I don’t think that they are used to someone trying to capitalize on their own culture, you know what I’m saying? So its full of obstacles. But the s— that bothers me is that I know that I am a strong individual and I fight for what’s mine, but I know that there are alot of people in this who are not like that. Not to say that other people aren’t as strong but they don’t have the kamikaze attitude and as much to fall back on as I do.
That’s why I kind of feel sorry for anybody that can’t take the position that I hold. But I will punish anybody that I feel is doing anything disrespectful to my company. You are a liability not just to me but everybody else.
Cedric Muhammad: Do you think, Dame, that there is more unity required to overcome the distribution issues that you are dealing with in music, movies and alcohol…
Dame Dash: Yeah…
Cedric Muhammad: Who are some of the people that you are looking to link up with and what are the type of business minds that it would require to get over this hump?
Dame Dash: I feel like it is kind of hard because everybody is trying to get in where they fit in, you know what I’m saying? And as established as people may seem, they are still on shaky ice. So they have their own things that they gotta deal with. Like right now, I haven’t gotten the opportunity to address the distribution issue in the music industry because it would take alot of energy and effort. I will probably get back to that when I can. It is important that I do. I am happy that I got to make money my way, but when you get into distribution, it gets a little gangster, you know what I’m saying?
(laughter between both Dame Dash and Cedric Muhammad)
Dame Dash: You’ve got to be really serious about going for distribution and getting it done. And it is hard to put someone in that position.
Look at Dame’s description of his peers – “everybody is trying to get in where they fit in…” and “…as established as people may seem, they are still on shaky ice…” and the ultimate, “Not to say that other people aren’t as strong but they don’t have the kamikaze attitude and as much to fall back on…”
Hmmm. Sounds a lot like the mentality and attitude of most folks I know with a job – whether in government, academia, or corporate America – scared to start a business until they are forced to by a sudden layoff or termination.
Did I mention I wrote a book series for them (http://theEsecret.com/)?
So, no, as an individual, Chris Lighty could never be a sell out in my eyes. He could only be so as part of a larger group that qualifies.
That group would also include the rest of us who seem content with having business models and economic trends dictated to us, with whining as our preferred method of response, rather than group economics and entrepreneurship.
Before pointing fingers at the elites, let’s ask ourselves a few questions.
How long was Chris Lighty or Dame Dash, or any other elite artist or their manager supposed to wait before enough of their peers realized that their unity (and connection with a critical mass of professionals, entrepreneurs, and financiers) directed toward specific business enterprises (concert promotion companies, booking agencies, marketing and public relations firms, music distribution) was the only way to stave off the worst of the 360 deal?
How long was Chris Lighty or Dame Dash supposed to wait for the independent artist to get over his or her ideological beef (‘you ain’t real Hip-Hop!’) with the elite major label star, see the bigger picture and join forces – bringing together the best of both worlds (greater revenue share and creative control meets social mobility and access to a wider network of skilled professionals)?
No, I won’t allow it to be as easy as scapegoating Chris Lighty for what could only be a collective failure.
After 30 years of bad deals in Hip-Hop and an even larger history where the rest of the music industry is concerned, there is more to blame than the leading manager of an elite major record label artist.
If Chris Lighty had attempted to start Brand Asset Group on his own or with a group of peers (and I don’t know that he didn’t) would he really have been able to get it off of the ground (pushing through the fear, jealousy and envy)?
And because he didn’t does that mean no one else – whether ‘unsigned,’ ‘independent’, or ‘elite’ can’t?
It’s time to build not whine.
This era is only built for Hip-Hoppreneurs…
November 4, 2009