Business and Economics of Hip-Hop

There are a number of ways that hip-hop influences and informs business. Obviously, there are the artists and record labels themselves, which are subject to the written and unwritten laws of business. The streaming providers of music and music videos such as YouTube and Spotify as well as television stations like MTV and BET are all businesses subject to advertisers, shareholders, and other constraints and demands. Hip-hop, simply, is big business affecting in one way or another producers and consumers in a number of industries. Everyone is employing lawyers, security, trainers, and personal assistants. One’s biggest economic expense might actually be one’s entourage.

Hip-hop is a roughly $10 billion industry, a figure that varies constantly but one that nevertheless suggests a major player in the economy on par with electric cars and 3D printing. Many people are benefiting from this industry, and the more artists and consumers understand it, the more all will benefit. Business also has a lot to teach hip-hop. The more successful artists are at managing their money, investing it in their communities, and giving it to charities that sustain people across the world, the more meaningful hip-hop can be.

Jay-Z rapped “I’m not a businessman, I’m a business, man.” This line high- lights just how hip-hop has become a business. It is not that hip-hop artists are businesspeople but rather that they are businesses in and of themselves. This view radically departs from the desire to promote hip-hop artists as astute investors and business strategists, which is still important, and instead recognizes artists as businesses. This challenges the idea that record companies or talent agencies own hip-hop artists, repositioning the artist as a business.

All in all, record labels make decisions like other companies. They invest in artists they think will grow and produce many successful albums. Concert promoters hope to work with bigger and bigger names. Radio stations respond to listener demands and occasionally the pay-for-play scenario, whereby record companies may exert monetary influence over a radio station’s playlist, although this is largely limited now and fiercely argued against by many. Just like one’s favorite author might sign a multibook contract, so too might one’s favorite artist sign a multialbum contract. When artists do not feel that they are getting their fair share in the deal, they might, however, put out bad work just to get out of the contract. Contract negotiations and the conflict between artists and record companies are legendary.

Relatedly, there is always much debate about who owns the masters. Masters are the original recordings of music. It was common that record companies would hold them and be able to use them for future releases such as greatest hits albums and other projects. But artists soon realized that record companies were taking creative licenses with masters and getting quite rich off artists’ work. Record companies were able to re-release songs in any number of ways including new packages, and artists received none of the profit. This allowed record companies to make tons of money and left many artists quite economically impoverished.

It is easy to watch a music video or listen to the lyrics of a song and assume that many artists are living the high life with mansions, jets, multiple cars, and the obligatory diamonds and watches from Jacob the Jeweler. Yet much of this bling, a term used to refer to the shininess of one’s accessories, was borrowed or leased.

Many hip-hop artists never become rich in the classical sense but instead invest heavily in the appearance of wealth so that others might believe they are rich. There has always been this tension between what one’s music discusses and who one actually is. That is not to indicate that all hip-hop artists are flaunting wealth they don’t have but does suggest that it can be difficult to balance what sells and who one is, particularly when a record company is applying pressure on artists to do a certain thing to increase sales.

Bling culture has a strong relationship to questions of leadership. One way to measure success in hip-hop has historically been how much bling one has. Clearly, someone who has two Maseratis is more successful than someone who only has one Honda.

Yet some artists have pushed back against this rampant consumerism. Artists such as KRS-One have been particularly sharp critics of bling culture. In “Classic (Better Than I Ever Been),” KRS- One, who became famous as a member of the early hip-hop group Boogie Down Productions, raps “I got no jewels on my neck. . . . I don’t need them I got your respect.” This indictment of hip-hop’s materialism sounds a loud criticism from a hip-hop pioneer who has always maintained his authenticity and street credibility, eschewing the commercial path in favor of what many regards as a more genuine sound.

It might seem easy to reduce hip-hop to capitalist excess, but in light of the systematic exclusion of people of color from wealth, this interest seems entirely reasonable. When Nicki Minaj rapped “If I’m fake I ain’t notice ’cause my money ain’t,” she put critics on notice that any claims against her authenticity were irrelevant because people were paying to hear what she had to say.

Her position signifies the complex relationship between hip-hop feminism and capitalism. Minaj provides a way to reconcile the tension between hip-hop’s consumerism and focus on monetary gain and other more theoretically positive associations. Her focus on monetary gain seems troubling from class-critical perspectives, yet her assertive and necessary call to be reckoned with as a rapper supports the feminist hip-hop politics of many female rappers. Salt-N-Pepa made a significant feminist argument early, rapping “You’re just as good as any man, believe that, word.”

The message is simple and direct. As women continue to advocate for equal pay, many should be reminded of the direct style effortlessly delivered by early female emcees. Equality is a fight. It is a struggle to be heard in a cacophonous world of male privilege. Salt-N-Pepa is allied in the struggle for women’s empowerment and equal pay because they emphasize the role of fighting for one’s rights rather than sitting by and hoping for change to come.

Supply and demand still rule whereby artists in demand may flood the market with singles of mixtapes until the audience can no longer support the artists either with money or listening time. This means that artists who are popular one day may not be popular the next. Tastes are fickle, just as they are with clothing manufacturers, movie stars, and other products and services. It can be difficult to sustain a brand in a crowded marketplace. An artist must work hard to stay relevant and produce music that others want to purchase.

Many artists are only able to produce one album that their label fully supports and publicizes before executives move on to the next artist or style of music. It can be difficult to get one’s music out at a label with a particularly deep roster, so artists often leave labels and start their own so they can increase their control of distribution and increase the amount of music available for consumers.

Although not a hip-hop example, I am often reminded of Sara Bareilles’s smash hit “Love Song,” which was not a love song in the classic sense but rather a song produced because her record company was forcing her to write a love song. When Bareilles sings that she won’t “write you a love song / cause you asked for it,” she is critiquing the way her record company forced her to write a love song instead of singing about a struggling relationship. Her struggling relationship was with her record company.

Hip-hop artists are under the same pressure to produce more party tracks or more songs that will get radio airplay, so it can be tough for artists such as KRS-One and Common who take on issues of social import to get the airplay that their music deserves even while listeners may eagerly pursue their music.

Problems with earning and keeping money have generated countless news stories of artists who cannot pay their mortgage, tax bills, or child support payments. In some ways this is not surprising, because artists may not actually have that much wealth, most have relatively little education in business, and many people are trying to get a piece of the success pie.

It can be tough to support an extravagant lifestyle while also paying all the people who help artists and providing for one’s family members, many of whom seem to come out of the woodwork once an artist makes it. Just as it is easy to understand how professional athletes might have difficulty managing their wealth, so too are hip-hop artists often poorly positioned to maintain their lives.

Yet, hip-hop is rich in the ethic of hustle. Today’s focus of many business schools on entrepreneurship can in part be explained by hip-hop’s influence. No longer are students of the belief that a good education from a good school will secure them a job and happiness. Likewise, riding the coattails of one’s parents is insufficient to make today’s hip-hop-influenced businessperson happy.

Business schools can and do use hip-hop to teach everything from entrepreneurship to branding, vertical integration, and talent development. In this way, hip-hop has changed business education to be less about winning friends and influencing people and more about engaging a new generation of hungry young talent. Like it or not, today’s young workers are influenced by different cultures than senior managers.

Hip-hop may have taught some workers unhelpful behaviors and perceptions, but it also emphasizes hard work through ideas such as hustle and a willingness to accept change (flow). The movie Hustle & Flow demonstrates both these ideas. Hustling takes many forms.

It expresses an orientation toward the world, that of working hard. It also expresses the idea that one partakes in hustles or side jobs. So, it may seem more common for biologists to also tend bars and sell handmade necklaces, for sales executives to also build and sell banjos, or for restaurant servers to also teach dance lessons and work as personal trainers.

Whereas “hustle” was commonly used to describe what someone did in jail or prison in order to earn money or court favor, the term now refers to a broader range of economic activities. Hip-hop is also a lucrative business for many people. Record executives, concert promoters, lawyers, brand representatives, and artists can often make staggering sums of money.

Hip-hop is an industry that thrives and dives based on markets. When the economy is better, people can afford to download more songs and attend more concerts. The industry is replete with stories of artists and DJs working their way up to record executives, but the picture is not always rosy.

In “Moment of Clarity” Jay-Z pays homage to the “skills” of fellow rappers Talib Kweli and Common. Jay-Z expresses a tremendous amount of respect for the two socially conscious rappers, who are popular in their own right, but argues that he would rather sell many albums and make, by extension, many millions of dollars.

This is a common debate: should artists rap to make money even if they do not care about what they are rapping, and does making money mean not rapping about what you care about? Artists balance this in different ways, as do many creative people who work in visual arts, advertising, and marketing.

One might aspire to be the next Pablo Picasso, but it is easier to make money churning out print advertisements for soda. It is difficult to fault those who came from nothing, from a depressed socioeconomic state, for desiring better economic fortunes, particularly when they are from a minority racial or ethnic group and suffer the double disadvantage of being poor and of color. Jay-Z personifies this approach to economic advancement.

As with many industries, hip-hop does not reward everyone equally. Some artists toil under contracts that provide them with little financial compensation. Many artists rent the flashy jewelry and cars featured in music videos, being unable to afford even the smallest luxuries.

For years, unscrupulous record agents conned artists into signing deals that made record companies rich and left artists broke. The “Free the Lox” campaign in the mid-2000s illustrated this point. In it, the hip-hop group the Lox (Jadakiss, Sheek Louch, and Styles P) were in an unfavorable contract with Puff Daddy’s (now known as P. Diddy or Diddy) Bad Boy Entertainment and took to the streets to get out of the contract.

The group distributed t-shirts and pro- moted their cause at concerts and other outings. The pressure eventually forced Bad Boy to cancel the contract, freeing the Lox to sign with Ruff Ryders. This is one example of many. The “entourage” is another important part of the hip-hop business. As with most people who become famous in entertainment, hip-hop artists are barraged by hangers-on.

These are the childhood friends, neighbors, and others who want to partake in an artist’s success. Entourages also consist of security details, hype people (people whose job it is to get the crowd excited at a show), and runners who tend to the artist’s needs.

There are also personal chefs, stylists, personal shoppers, nutritionists, accountants, lawyers, and other professional success gurus. It can be expensive to run a hip-hop artist’s life. An entourage is not cheap, and one should not think that the people around an artist are there for free. Given all of these costs, it is unsurprising that hip-hop artists often have trouble managing their money.

Newspapers and tabloids often contain stories of broke rap artists. Many of these stories are about unpaid taxes, which is in many respects unsurprising. With many business ventures off the books and with tremendous amounts of cash changing hands, accounting can be difficult. Furthermore, many of the people serving artists are unsavory characters, to begin with. Become a hip-hop artist, and rest assured that the one kid you knew in fifth grade who became a lawyer will call you and want to be your lawyer.

Because many hip-hop artists come from areas of the country served by poor educational systems and from families that may have been economically deprived, there often is not a base knowledge of how to manage money. Going from cutting hair one day without health insurance to cashing six-figure checks several times a year is a big shock, and one should not be too quick to judge hip-hop artists who have difficulty with money.

The hip-hop business is not just about record sales. Artists promote brands, perform at concerts, write books, and speak to groups. These other activities can provide more revenue than selling CDs and downloads. A popular artist’s concert fee may range from $20,000 to $100,000 and more.

Depending on the artist’s record deal or even if the artist doesn’t have one (artists without record deals can pocket much more of their concert fee for themselves), the concert circuit can be quite lucrative. More lucrative yet is the summer festival scene, where artists may be able to avoid contractual obligations to perform in solo or feature shows and net more the money.

This is why groups such as Outkast can continue to rake in money while producing relatively little in the way of new music. Loyal fans, like groupies of old, will follow artists from venue to fairground to college to festival with little thought. Hip-hop artists have also ventured into a number of businesses, including restaurants, clothing lines, beverages, and other side projects.

Sometimes these have been successful, and other times they have been quite financially disastrous. Hip-hop artists and community members seem to realize that even though capitalism risks derailing hip-hop’s transgressive nature, that capitalism can provide immediate monetary benefits. The crude capitalism of 50 Cent’s notion “get rich, or die tryin’” has been replaced by a more traditional and legitimate form of economic advancement.

That is, hip-hop artists are buying property, diversifying their investments, and participating in legitimate businesses in order to expand their economic presence. The image of hip-hop artists as unemployed graphic artists or emcees selling drugs exists and certainly describes some community members, but hip-hop has evolved much beyond this.

There is nothing about hip-hop that argues that people should not economically benefit, and as hip-hop matures, so do the economic pursuits of its artists. Hip-hop is very much a mediation of capitalism. Without desiring to be too esoteric, hip-hop both exists in a larger global capitalist structure and often critiques that structure.

This means that even as artists try to make money to support their lifestyles and families, many are also calling into question the very economic foundations that benefit them. Of course, students of the modern global business environment will recognize that these voices are already prominent not only in academia and the nonprofit sector but also in a number of businesses and industries.

Recognizing this mediation helps unlock the potential for hip-hop to be much more than another way to make money. There is a tendency to view this sort of fighting within the system as somehow insincere, or at least this is often the response to many critics of capitalism. But I would offer that hip-hop artist who takes seriously their role as cultural critics are adding to necessary discussions about the appropriate role of people of color in business and the dangers of capitalism.

Black Wall Street, made famous because of the antiblack violence that ravaged Greenwood, Oklahoma, a suburb of Tulsa, is one way that hip-hop connects itself to broader questions of business involvement and economic success of the black community. Prior to the 1921 Tulsa Race Riot, Greenwood was the center of black enterprise.

White citizens slaughtered 39 people and injured over 1,000. The damage was so severe that over 10,000 black people were left homeless, and whites caused over $30 million (in today’s dollars) in property damage. Compton hip-hop artist the Game formed Black Wall Street Records in homage to this tragedy.

The Game represents the ways in which hip-hop often pays respect to black history, calling into being a historical sense of the continuity of oppression. The argument is not that the Game has told a better version of history or engaged in a radical rethinking of what it means to be black in a capitalist economy but rather that history helps inform the way black people approach the economy and also explains why many hip-hop artists are rightly critical of the U.S. economy.

Hip-hop does not suggest that poverty is a characteristic or necessity of being black or being a hip-hop artist. Oftentimes hip-hop artists who are successful are derided as not representing the streets or as selling out, but such a message misses the point and fails to recognize how important success can be in a capitalist economy in terms of advancing one’s family or one’s community. Successful hip-hop artists often respond to such criticism by stressing how their success is but another part of the long history of black excellence and economic success.

The great kingdoms of Africa were thriving centers of culture and trade where many people prospered economically. Now, Marvel’s movie Black Panther (2018) represents a further telling of this story whereby Wakanda is vastly technologically superior to other countries. Wakanda represents an Afro-centric worldview by telling a story of African success when white influence was not present.

As such, this narrative challenges what it means to be economically successful and critiques not those who have managed to amass wealth but rather those whites who would keep black people from wealth. Black Panther thus functions as a sort of capitalist critique that imagines a world where Africa’s resources were not senselessly exploited by white colonizers and instead were carefully cultivated by black intellectuals, workers, and a black society that believed in building a loving, technologically advanced world that uplifted black people.

This work helps reposition black people as potential benefactors of capitalism and also emphasizes that black control of the economy can produce significant achievements for black people.

One might cynically critique Black Panther as an appeal to a capitalistic system that produced slavery, racial discrimination, and violence without confronting these evils. The tension in the movie between Wakanda and the outside world might demonstrate this, but the sort of utopian theorizing of Wakanda as being immune from capitalism may be problematic.

That is, an Afro-futurist philosophical orientation may be precisely what is needed to generate hope in a better future world, but it also may distract people from the everyday struggle of the present. Hip-hop is a necessary part of this struggle, of course, and hip-hop’s relationship to Back Panther is underscored by Kendrick Lamar’s curation of Black Panther: The Album.

Bringing Lamar into the studio to produce this work stresses hip-hop’s role in not only theorizing black excellence through Wakanda but also emphasizing that black people can make high-grossing blockbuster films with all the requisite tie-ins. The success of the movie demonstrates, perhaps as meaningfully as any hip-hop project, how integral economic success is to black excellence and how it is by no means anathema to the black community.

In short, Black Panther imagines a world where black people are able to beat white capitalists at their own game, which is a biting critique of the economic system that seems to have substantially disfavored people of color since the creation of the United States. Big L delivered a poignant critique of neoliberalism with his now-classic line “I wasn’t poor, I was po, I couldn’t afford the o-r.”

Big L recasts the question of poverty as not simply a capitalist problem but one that itself is linguistically structured. There were poor people then there were po people, enacting a common black pronunciation of “poor” as a reference to both the long history of urban black poverty and the ways poverty is linguistically constructed. One could be poor, but one never wanted to be po.

It is easy to dismiss such lines as one-off criticism, but they represent astute critiques of the world in which hip-hop artists live. One of the ways hip-hop will need to grow is that people will need to make sure artists are using their money responsibly. Hip-hop artists, like much of the nouveau riche, will need to devote resources to money management and wealth protection.

Just as athletes have realized over the last 30 years that money does not last forever and have subsequently gone to great lengths to protect their money, so too will hip-hop artists need to do some financial planning. One of the ways business will grow with hip-hop is that financial services will need to devote more time and expertise to hip-hop.

Financial planners will need to read up on royalties, and hip-hop artists will need to think about diversifying their portfolios. Far from being pejorative, this suggestion is simply to note that financial education will radically improve a financial lot of hip-hop artists. Managers and leaders, who are often not the same, will need to account for the influence of hip-hop on those who work for them and whom they lead. This may require a rethinking of what management and leadership is.

This does not necessarily mean rethinking how business is done, although many managers are doing just that. Let’s consider the five new realities of leadership communication that Boris Groysberg and Michael Slind identify in the June 2012 issue of the Harvard Business Review: economic change (focus on the service industry), organizational change (less hierarchy), global change (diversity), generational change (millennials), and technological change (social media).

Hip-hop impacts each of these areas. The focus on the service industry means that customer service will drive the economy. It also means that consumers will shape the music industry. These consumers will demand not only quality but also quantity of production.

This is why so many artists intersperse their albums with mixtape releases. Likewise, managers may find that their employees gather more value from their side hustles (mixtapes) than their 9–5 work (albums). Many workers may enjoy working as the assistant baseball coach for the high school more than being a staff accountant.

Managers who allow longer and later lunches so that an employee might be able to make it to practice three days per week will find that employee much more motivated to work at the regular job. The flattening of jobs such that 360-degree feedback is the norm and that teams are often made of diverse employees will mean that employees expect to be included in the production of reports and even in the making of company-wide decisions.

Hip-hop flattens as well, with collaborations being heralded. The global nature of business resonates with the global nature of hip-hop. Employees may be as versed in Toronto hip-hop as they are in local transportation funding, and bosses who appreciate this may be willing to accept that a diversity of ideas exists in the workplace.

Without being too reductive, the boss who orders poutine, which is featured as a cultural reference in Canadian hip-hop, for the next company lunch and says to the employee “I know you like Canadian hip-hop, but the best I could do is Canadian poutine” will likely score points as someone who cares about their workers. This also means that people get their ideas from a wider array of sources. Rather than ABC, NBC, and CBS nightly newscasts, workers may be more influenced by what a certain rapper says. Millennials are filling jobs in countless industries.

As a whole, they buy and listen to a lot of hip-hop. This doesn’t mean inviting Chance The Rapper to be the company picnic’s keynote speaker, but it does mean letting employees listen to hip-hop at their desks even if the lyrics might contain a curse word. Likewise, hip-hop has embraced social media. Many younger employees are much more technologically savvy than their employers.

Allowing these employees to take charge of these efforts can dramatically improve a social media presence that consisted mostly of company earnings reports and announcements of new advertisements prior to a more tech-savvy employee’s inclusion. That is, hip-hop can help managers understand and adapt to the changing economy and the changing workforce. Both will improve the bottom line and will also improve employee retention.

Hip-hop does occasionally provide an important narrative to challenge the depressing stories featured on the nightly news. Hip-hop recasts the hood as a place of possibility, experiences, and street smarts as a necessary skill for a successful life.

Horatio Alger success stories are not the universal standard that they once were. The best success narrative might be one’s friend who was able to work as a rapper’s hype man. It might be the person who went to a rival high school and released an extended play record. Hip-hop provides these stories, and they can be as inspiring as any classic novel or short story.

For those people looking for inspiration, Bill Gates or other business moguls may not seem accessible. A rapper from the same neighbor- hood who went to the same public school or whose grandmother lived on the same street might be a much more attractive role model precisely because the rapper seems more like the average person. A common criticism of many forms of education is that they idolize the excellent.

If all students do is try to make as much as Bill Gates, write as crisply as Ernest Hemingway, or speak with the moral force of Martin Luther King Jr., they can feel a sense of failure when they do not achieve those ends. But if teachers reframe learning so that it is about actual people from the city or about people who may not have made billions but did manage to sign a record deal that lets them afford a home and a car, they might ultimately encourage more students to take their studies seriously. In business, this can be an empowering message of success that really embraces success and possibility.

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