Why Rappers Aren't Millionaires

[D'Lush]

Why Rappers Aren't Millionaires...from http://daved.com

Why Rappers Aren't Millionaires By Wendy Day

{this insightful article first appeared on Blackelectorate.com}

Who is the incredible bonehead who said rappers are millionaires?
Wrong, wrong, wrong, wrong, wrong!! Because fans expect their
favorite artists to be richer than Bill Gates, this puts an incredible
amount of pressure on the artists to appear wealthy. And it's not
just the fans; I can't tell you how many times I've been out with
rappers along with people who work in the industry, who expect the
artists to pick up the dinner check or buy bottles of Moet. I've even
seen people cop an attitude if the artist doesn't pay for everything.
This is small minded and ignorant because the artist is ALWAYS the
last to get paid.

Once an artist releases a record, the pressure is on to portray a
successful image to their friends, families, fans, and people around
the way. People expect the artists to be well dressed, drive an
expensive car, etc. Think about it. Don't you expect the artists "to
look like artists?"

Sadly, when an artist gets signed to a label deal, especially a rap
artist, he or she receives somewhere between 10 and 15 points. What
that means is 10% to 15% of the retail sales price, after the record
label recoups the money it puts out (the advance, the sample
clearances, the producers, usually half the cost of the video, any
cash outlays for the artists, half the radio promotions, etc.). The
artist has to sell a huge amount of units to make any money back.
Here's an example of a relatively fair record deal for a new rap
artist with some clout in the industry and a terrific negotiating
attorney:

ROYALTY RATE: 12% "All in deal" We're going to assume that there are 3
artists in the group, and that they split everything equally. We're
also going to assume that they produce their own tracks themselves.
Suggested retail list price: $14.98 less 15% packaging deduction
(usually 20%) $ 12.73 gets paid on 85% of records sold ("free
goods/breakage") $ 10.82 So the artists' 12% is equal to about $1.30
per CD sold.

Let's assume that they are a hit and their record goes gold (although
it is rare that a first record blows up like this). Bear in mind that
in the year 2000, only 45 rap records sold more than 500,000 units out
of almost 1,000 releases. Of these 45 records, less than 10 were by
new artists.

GOLD RECORD = 500,000 units sold x $ 1.30 = $650,000. Looks like a
nice chunk of loot, huh? Watch this. Now the label recoups what
they've spent. Half of the independent promotion, half of the video
cost, some tour support, all those limo rides, all those out of town
trips for the artist and their friends, the advance, etc. $650,000 -$
50,000 half the indie promotion -$ 75,000 half the video -$ 25,000
tour support, trips, etc. -$200,000 recording costs -$ 70,000 advance
--------
$230,000

Still sounds OK? Watch... Now, a third of the $650,000 stays "in
reserve" (accounting for returned items from retail stores) for a year
or so, depending on the length specified in the recording contract.
So the monies are actually subtracted from $429,000 (the other
$221,000 is in reserves for a year and a half the way accounting
statements are figured). Now, there's also the artists' manager, who
is entitled to 20% of all of the entertainment income, which would be
20% of $650,000, or $130,000 (although many managers do not commission
the recording costs). Remember, the artist is the last to get paid,
so even the manager gets paid before the artist.

So the three artists actually receive $33,333 each for their gold
album, and in a year and a half when the reserves are liquidated, IF
they've recouped, they will each receive another $73,666. Again, IF
they've recouped. Guess who keeps track of all of this accounting?
The label. Most contracts are "cross-collateralized," which means if
the artist does not recoup everything on the first album, the money
will be paid back out of the second album. Also, if the money is not
recouped on the second album, repayment can come out of the "in
reserve" funds from the first album, if the funds have not already
been liquidated. This is why almost all artists go into their next
album "in the red." From artists like DMX to Slick Rick, they are
always in a debt position with their record label even though the
label is making millions of dollars per release. For example, on the
Gold album example we're illustrating here, at a wholesale price of
$11.41 per CD, 500,000 units would bring the label a gross amount of
$5,705,000.

Even after the reserves are paid, each artist only actually made 21
cents per unit based on this example. The label made substantially
more. This example doesn't include any additional production costs
for an outside producer to come in and do a re-mix, and you know how
often that happens.

So each artist in this group has received a total of about $107,000
from record sales. After legal expenses and costs of new clothing to
wear on stage while touring, etc, each artist has probably made a
total of $90,000 before paying taxes which probably took another 28%
to 33%, plus accountant fees. Let's look at the time line now. Let's
assume the artists had no jobs when they started this. They spent 4
months putting their demo tape together and getting the tracks just
right. They spent another 8 months to a year getting to know who all
of the players are in the rap music industry and shopping their demo
tape. After signing to a label, it took another 8 months to make an
album and to get through all of the label's bureaucracy. When the
first single dropped, the group went into promotion mode and traveled
all over promoting the single at radio, retail, concerts, and
publications. This was another six months. The record label decided
to push three singles from the album so it was another year before
they got back into the studio to make album number two. This scenario
has been a total of 36 months. Each member of the group made $64,800
(after taxes) for a three year investment of time, which averages out
to $21,600 per year. In corporate America, that works out to be about
$10 per hour. Think about this next time you see your favorite artist
drive by in that new Escalade-- I do.

Wendy Day can be contacted via e-mail at rapcoalition@aol.com
Also visit her websites:
www.Industryreport.com
and
www.Rapcoalition.org

[D'Lush]

Oops, wrong forum

[Jason 13th]

My heart bleeds for them

[crackfiend]

Originally posted by D'Lush
Oops, wrong forum

but interesting all the same

[ol dirty c**t]

thats all well sayin it like that, the artist always has the option of rejecting his contract or negotiating for better terms. im sure dmx doesnt get a rate like that on all his albums. if he does then i think its about time he searched for a better deal. of course record companies are gonna love the kind of deal that youve out lined above 10-15% on a track youve written and performed. if your an artist of any decent calibre you can weigh in a more substantial rate.

wot about sponsorship, money earnt for personal appearances, the media attention you get from a gold sellin record can bring you more work which can be better paid when your in demand.

if your a one hit wonder then you may get one deal like this and if you take it then your gonna feel like you aint made much for your time.

$10 an hour for waking up late performing infront of thousands of people shooting videos workin hours u want to work, meeting models. $$$$ that a hard life. i wouldnt wish that on anyone.

i think this article was written by some real jealous person.

[RokkoFB]

not at all.

I can't remember where Wendy Day is from. i know ive read somethin she wrote a while back. she is highly respected in the 'urban' circles.

I thik its wikkid she put this piece out.

[Thomas D]

touring, and most specifically tour t-shirt sales, is where acts make a ton of cash, and thats why alot of them like to go out and tour so much.

tom

[fatall error]

what the $$$$??

yo this is bull$$$$ where the $$$$ did you get this info from?

it's the rappers that come in their videos flashing cahs and ice and in lyrics just melting the ice by talking so much about it so it puts an image in peoples minds that all rappers are millioneres(well the succecfull ones anyway)..

and thats that.


peac

[D'Lush]

WENDY DAY :

Wendy Day founded the not-for-profit Rap Coalition in March of 1992, out of disgust for the way urban artists are unfairly exploited in the music industry. Wanting to shift the balance of power to favor the artists, Wendy dumped her life savings (selling her condo, her stocks and bonds, and her BMW) into starting the advocacy organization to support, educate, protect, and unify hip hop artists and producers--in other words, to keep artists from getting jerked. Since 1992, Rap Coalition has impacted the urban music industry by helping, for free, thousands of artists, DJs, and producers individually, as well as through monthly panel discussions, seminars, demo listening sessions, cipher sessions, showcases, and fair deal negotiations. Rap Coalition breaks unfairly oppressive contracts (pulling artists out of bad deals with record labels, production companies, and managers), teaches the business side of the music industry to thousands of artists and industry hopefuls from around the country, offers health care and dental benefits, coordinates the panels at most of the major urban music conventions, has instituted a mentor program combining up and coming artists with established artists, and helps set up artist-owned record labels.

Rap Coalition answers to a Board Of Advisors which reads as a veritable Who's Who in the rap music industry, consisting of Chuck D from Public Enemy, Vinnie from Naughty By Nature, David Banner from Crooked Lettaz, Keith Murray, Yungbuk from PsychoDrama, Gipp from Goodie Mob, Sticky Fingaz from Onyx, Too Short, Ras Kass, Do Or Die, Killah Priest, Fiend, Pimp C from UGK, Easy Mo Bee, Shinehead, C-Murder, 8Ball, EA Ski, Canibus, Shorty from Da Lench Mob, Evil Dee from Black Moon, Brotha Lynch Hung, Freddie Foxxx, Bizzy Bone, Cold 187um from Above The Law, Schoolly D, and Kool Kim from UMCs. Prior to his death, Tupac Shakur was the first member of Rap Coalition's Board Of Advisors. Rap Coalition is based in New York with satellite offices in Chicago, Atlanta, Los Angeles, and Houston.

One of Wendy's priorities is to consult with and help build regional and national independent urban record labels so hip hop artists can regain control of their own art form. Consistent with this goal, Ms Day has negotitaed some stellar distribution deals in urban music. She has played a part in Eminem's deal at Aftermath/Interscope, Master P's No Limit deal with Priority Records, Psycho Drama's deal at Suave House, DJ DMD's deal with Elektra, Fiend's deal with Ruff Ryders, UGK's renegotiation with Jive Records. She negotiated the incredible joint venture deal for Twista with Atlantic Records in 1996, which both The Source and Rap Pages magazines called "the best deal in the history of Black music," until she topped her own record with the now famous $30 million dollar deal for Cash Money Records with Universal. She focuses on complete control and ownership for the independent label in all of her deals. Master P was the first artist to keep control and ownership of 100% of his masters for No Limit. Cash Money is the only other label in urban music to own 100% of their masters, contrary to what the press says about Bad Boy, Death Row, Roc-A-Fella, and others. The money Wendy Day earns negotiating these deals goes immediately into Rap Coalition, and is solely what funds the not-for-profit Rap Coalition.

In the Fall of 1998, tired of the lack of professionalism and inconsistencies in managers for urban artists, Wendy Day started Visionary Management to train up and coming managers in urban music. "Most artists appoint their "boys" (friends and family) to positions of power, and then get frustrated when their careers don't go anywhere. I started Visionary Management as a training ground for people who seriously want to get into management and have the skills and ability to manage, but lack the experience and connections," she states emphatically. Visionary Management has consulted Twista, Fiend, Crooked Lettaz, C-Murder, Slick Rick, Ras Kass, reggae producer Dave Kelly and multi-platinum squad: Medicine Men, formerly known as Beats By The Pound. Visionary Management has worked with the managers of Slick Rick, Black Rob, Kane & Abel, Smoothe The Hustler, Canibus, Trigga Tha Gambler, WuTang Clan, and Beats By The Pound. Due to the incredible response to this much needed program, the training program is full for the next three years.

Wendy Day has had numerous monthly columns in underground rap publications (for example, the RAPCOINTELPRO column in Murder Dog and Chuck D's internet website: Rapstation.com)focusing on the business side of music, and has contributed to the following publications: The Source, RapPages, VIBE, Blaze, Down Low, The Connection, 4080, Caught In The Middle, The Fever, Beat Down, Props, Flavor, The Bomb, Ego Trip, Straight From The Lip, The Final Call, One Nut, Insomniac, Rap Sheet, Word Up, BRE, manhunt.com, 88hiphop.com, hiphopnow.com, mp3.com, volume.com, etc.

Wendy Day has been at the leading edge of making change in the way the music industry conducts business and her name is synonomous with fairness and education. She is at the forefront of trends and market shifts in today's urban music industry. The bulk of artists in rap music are coming through her offices, and record labels seek out her opinion on trends, styles, and regions of talent explosion. It is difficult to find an artist today, either established or up and coming, who hasn't been touched by this woman. In the February 2000 Source Magazine, and again in January 2001, she was honored by being inducted into "The Power 30," an annual ranking of the most influential people in urban music, although accolades are not what drives this woman.