NW$: 7 Reasons Hip Hop Has NO Billionaires!

When it was announced that Apple was acquiring Beats for $3 Billion, the hip hop blogosphere exploded with talks of Dre being hip hop’s first billionaire. Being the nerd that I am and having followed the acquisitions of tech companies like Instagram and Whatsapp, I understood that there were finer financial intricacies at play than cutting a check for 25% (Dre’s stake in Beats) of $3.2 Billion (The initial Beats sale price to Apple). After the dust settled and the acquisition was complete, Dre’s  post-Apple net worth was estimated to be in the neighborhood of $780 Million; leapfrogging him over Hov and Diddy, but still putting him more than $200 Million shy of the billion dollar mark.

As inspiration often strikes me, it was a heated debate between two grown @$$ men in the barbershop arguing about another man’s pockets that prompted me to tackle the idea of why Hip Hop has no billionaires. Before I dive into this topic though, I would like to start by clarifying that the phrase “Hip Hop’s first billionaire" doesn’t imply someone that has made a billion dollars from hip hop but instead someone who found success in hip hop and graduated to greater business endeavours. With no further delay, let's get to the list.

7. Hip Hop is a hustle - In hip hop we promote a culture of hustling instead of business building. We prefer to juug and focus on the quick lick than build lasting success. You can ultimately hustle up a million dollars, but hitting that billion dollar mark takes a little more than finessing. It requires solid business foundations.

6. Hip Hop devalues its most important asset - The true wealth of the music industry has always been in intellectual property; not record sales, tours, etc. It’s the legal monopoly over your masters and brand. Hip hop has devalued the worth of its masters with the constant release of mixtapes and free music. We have moved to a paradigm of “Let me get hot so I can get this show money.” Publishing and the administration of your IP (intellectual property) will bring you in money long after the shows stop. As technology evolves, so do licensing opportunities.  

5. Rappers have poor brand value - Another part of intellectual property I mentioned in the last paragraph is Brand. There are few strong brands being built in hip hop. Today’s rappers derive their value from external sources, be it luxury cars, liquors or clothing lines. They freely promote other people’s businesses to build brand value by association. That’s part of the reason you can go into walmart and buy a Van Halen or AC/DC t-shirt and not find a single one for a hip hop group.

4. Lack of Diversification in Investing - We don’t invest outside of Barbecue and Barbershops. OK...not literally, but there are a set of investments that rappers deem “safe”. Rappers start labels, studios, restaurants, nightclubs, real estate and businesses that they’ve seen other rappers succeed with. Hip hop doesn’t invest its money into new sectors such as technology or commodities. All of the hip hop cash kings have seen substantial boosts in their net worth from areas not considered traditional investments for hip hop (Rocawear, Beats by Dre, Ciroc, etc).

3. Market Share Scavengers - At some point these exact situations have happened in hip hop… Someone asks, “He made how much off an energy drink???” and 100 rappers launch energy drinks! Someone asks, “He made how much off headphones???” and 50 Rappers launch headphones. Someone asks, “They made how much off their liquor endorsement???” and 1,000 Rappers launch or endorse liquor brands. Rather than seeking out new and profitable investment opportunities, hip hop has a culture of financial “Biting”. Rappers emulate another rapper's successful moves, often after the market leader has been determined and the window of opportunity has closed.

2. We’d Rather Look Good Losing Than Look Bad Winning! - Hip hop has developed a culture of excess spawned from poverty. Juvenile said it best on 400 Degreez… “Actin’ like a n---- that aint neva had s---.” Most rappers never achieve success in the music industry because they’d rather spend their budgets looking successful than being successful. The ones that do hit upon success, squander the opportunity to build generational wealth because they spend money flexin’ and keeping up appearances, often returning back to “poverty”.

1. Racism - Ummmm… Up until recently, Hip Hop has been a predominantly black dominated genre of music. Take into account that of the nearly 1200 billionaires on the planet, only 9 are black, and outside of Oprah Winfrey, none are American or have built their fortunes on entertainment. One does not merely build a billion dollar net worth through hard work. Wealth at this level is the result of opportunity and strategic partnerships. But what happens when those opportunities and partnerships are denied or not offered to you because of your ethnicity or cultural background? Well… You spaz out on your friend Sway. Consider for a second that it was in fact destined for Kanye to transition into fashion becoming the next Ralph Lauren and hip-hop’s first billionaire, but the possibility was snuffed out by an industry that doesn’t respect blacks or hip hop culture. Nike will gladly let Ye design a shoe and use his brand to sell it for exorbitant prices, but it doesn’t deem him valuable enough to let him sit at the table and get a royalty on those sales.

Of all the reasons I’ve outlined above, the only one we can’t do anything about is racism. The other six speak solely to the values of hip hop culture. I hope to not just see hip hop’s first billionaire some day but to see the first of many. I hope to see more hustlers evolve into businessmen and place a greater value on finances than flossing. I hope to see more entrepreneurs in the urban market broaden their horizons to investment opportunities beyond hip hop and urban culture, or at least capitalize on opportunities that cater to our culture in new ways. Consider for a second that RapGenius.com (a website whose sole purpose was explaining the lyrics of rap music) just raised $40 Million in investment capital, giving it a rumored valuation around $400 Million, but I haven’t heard of a single rapper that's invested into the company. Another great example is IDLM, the company behind Datpiff.com. I know plenty of artists that spend thousands of dollars posting and promoting mixtapes on their website, but not a single one that owns stock in this publicly traded company. So while there is much conversation about whether Dre, Hov or Diddy will be Hip Hop’s first Billionaire, let's continue to lay a foundation so that whomever it is, is not also the last.

---
@KelbyCannick

[** Correction Nasir "Nas"" Jones, became an investor in RapGenius.com about 9 months ago through his Venture firm. S/O to @FABNewYork for the putting me on track. **]

As always, this article is just food for thought. Share YOUR comments and opinions below. The best comments will be highlighted in the next issue the magazine. Here are a couple of questions to get your thoughts flowing:

  • Do you disagree with any of the points made?
  • Is there a reason you feel is missing from the list?
  • How long do you think it will be before we see hip hop's first Billionaire and who do you think it will be?

If you enjoyed this article...

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Comments

Of all that you mentioned, they are not only valid, they aren't unique to hip hop. I can offer you thousands of corollary examples from the business world. Cisco systems buys Flip, tried to milk it, and devalued it to the point that they just dissolved it. In soft drinks, they are constantly chasing each other. Starbucks and San Franscisco coffee get into coffee sales in grocery stores, parent companies of Coke and Pepsi are soon chasing them.

This doesn't undermine what you're saying. No, I see that it makes what you are talking about all that more important. Understanding the business of business is critical. It's a barrier we run into in the world of film. Filmmakers have developed an attitude that not knowing how Hollywood works is akin to not playing by Hollywood's rules. Instead, Hollywood has taken advantage of filmmakers. By giving up space by not siezing it Hollywood moved into snatch up that real estate.

Where we should and can focus our energies, is in educating kids in elementary school about business. There are fun games, camps, etc., than can start teaching kids the critical thinking skills needed. Starting a business for fun to having kids run the school supply store, we can put them on a path of empowerment. We especially need to this for our young girls.

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Thoroughly appreciate your comments. You offer some great insights and yes many of the points are not unique to hip hop, maybe disproportionately exaggerated, but not at all unique. Thats the underlying reason I started this Magazine. People mistake us for a hip hop magazine but we're actually a business magazine for people who do hip hop.

The good news is, the conversation is shifting toward entrepreneurship and business development for youth. I have actually started a program in LA that is doing just that. Check it out if you have the time! www.tcpyouth.org :)

Wow. Great thoughts. I especially agree with your last suggestions--educating kids in school about business! Unfortunately, teachers and schools don't have the leeway to do so. I am most certainly an advocate for allowing kids to explore and giving them hands on experience. When they feel accomplished and supported, I feel that they will be empowered to do more.

I love it when people see the BIG picture! Lately I have been empowering adults with some powerful financial education so they can pass it down to their children. Education starts at home wouldn't you agree?

What do you do for a living? Are you pretty financially literate? I like learning from others as well.

www.thedebtfreecouple.com

I AGREE WITH YOU ON THIS!

One thing about music especially hip hop. Hip Hop has become THAT GENRE that so many want to emulate. Being so diverse due to the different regions North East New York style, the Midwest, Southern, West Coast. It allows for the Katy Perry to feature a Juicy J in a hot Pop Track, Lil john to comeback with a turn down for what track with a techno EDM Dance feel, Nelly Featuring Tim McGraw ect.. i think you get the ideal. Many artist or most artist if you look at the ones not in the 500mill+ range does understand branding . those featuring artist i just name still aren't cutting there own checks as well as cutting checks for other people. Due to the structure of the music industry, having your own label with distribution and marketing will most likely never happen with the market saturation these days, just like artist "bite" lyrics, samples and everything else they "bite" investments strategy. Im not trying to rewrite your article i promise. But thinking forward most of the american billionaires became tycoons of industry (Rockefeller Mars Oprah Winfrey, Bill Gates, Mark Zuckerburg, Ect...) . essentially buying up or crushing competitors and amassing the wealth that they created or they were investors that invested wisely(e.i. Warren buffet , Charles Koch, George Soros ect). The way artist in Hip Hop crush their competitors is always in such a emotional and playground such fashion(sex, cars, money, clothes flow, swag), the real businessmen of the world are not even on the play ground they are still in class crushing you on a spread sheet (investments, income, assets, liability, strategy). Racism plays a part I only due to the lack of Diversification you stated in your reasons. The of the three people you mention 1 is an artist 1 is a producer and 1 is a promoter of sorts. They made there money and pivoted on it to maximize sustainability and longevity which is smart and not like the rest of pool of hip hop artist.
.In most music other with rock and roll, jazz, even some country or folk, many artist will glorify some type of dependency on a substance or alcohol. That being said many of the other genres were not even hustlers or savvy in business thats why many of them still are touring to maintain well into there old age.
Hip Hop has such influence the artist should find new way to invest that create sustainability but cant always follow the path of the hip hop heads before them, new uncharted water has to be explored

Excellent article on many levels. You hit the major points that I feel staggers us as a people ( NOT JUST HIP HOP) and that is Racism, not understanding group/community economics and trying to keep up with the "Joneses". These are just issues that spill over into Hip Hop by default since it is an industry that is made up heavily of black people. More specific to the HIP HOP community, as you well know from the open mic scene in Atlanta number 7 is iron clad. One could argue that not only Hip Hop hop, but Urban music in general including R&B is comprised of many artist not owning their own masters. I think even in Rock & Pop that happens unless you are lucky enough to be a Macklemore or some other Indie lighting strike that made it without much help from a "major".
A few other points you hit should almost be as expected as a twerk contest flyer from a strip club. Market Share Scavengers: I mean when EVERY beat sounds like a trap track, and every Rapper uses autotune and a "speed up then pause, then adlib, then pause Migos flow" on a song, copying is the new hot it seems. So again, that is just the Hip Hip world of no real ORIGINALITY ( been that way since about 2000 ) manifesting itself in business.
Hip Hip collectively may be worth Billions, but there has rarely been a Hip Hop artist who's actual catalog of music has been worth as much, which leads back the the BRAND always being bigger then the artist and music. I say that to say frankly, I don't ever expect to see a Hip Hip ARTIST worth BILLIONS until that ARTIST turns into a BUSINESSMAN. Hov and 50 are the only RAPPERS who even got remotely close ( Dre is NOT a Rapper he is a PRODUCER and so is Diddy) so it stands to reason that being an ARTIST and having that mind frame rarely manifest into business mogul. They both had to to have the ability to transform into business men, and that is a whole other skill set that MOST RAPPERS do not possess. Even Kanye, who's "fashion" is questionable to me off top since he wore a damn SKIRT ( don't give me that KILT shit) is far more ARTIST then BUSINESSMAN. That is pretty evident.
This was a great article, but I wouldn't bet one single solid dollar on your dream of a HIP HIP Billionaire coming to life in our lifetime... our any other. The sad truth is, in order to make that Billion you have to go OUTSIDE of Hip Hop. Even if Hip Hop got you famous enough for people to take notice of what you do or provides you with a few million to invest in something, you will never make it off of HIP HOP. That's my assessment of it all. But I guess, you know I DON'T HAVE ALL THE ANSWERS BLIZM!!! "

Great article with great points...if one is going to enter this "industry" let's not fake it 'til you make it...being positive or progressive in "Hip Hop" is not a vow of poverty in order to foster the image of authenticity...there are many brothers and sisters who are keeping the integrity of Hip Hop while they struggle to make their "ends" meet...It certainly aint about the "fiat" paper credits (money) but the safeguarding of the legacy by mastering the art of financing our own liberation. We have never been poor or destitute as the caretakers of the land and the artistry of its backdrop... It is akin to us not making money or a basic "living" off of cotton, collard greens, corn or any field commodity after picking it for free for 200 years...Let us support the brothers and sisters who are holding it up for the people and the ancestors no matter how modest or humble they are--The wealth belongs to the righteous!

Interesting article; a few thoughts...

1. Hip hop isn't a hustle.

Yes, I'm splitting hairs, but bear with me... Hip hop is an art form (comprised of four elements: rapping, DJ'ing, breaking, and graffiti art.) Granted, it has been widely exploited by hustlers who place quick cash over artistic integrity, but that doesn't make the art form itself a hustle. I understand the point that the author is trying to make, but mischaracterization of hip hop--and the resulting loss in market value--is part of the problem that the author seeks to address.

2. Add "Hip hop has an image problem" to the list.

This ties in with my earlier point; if the market sees hip hop as a hustle, run by a group of people who engage in risky and/or embarrassing behavior that corporations wish to distance themselves from, businesses will be less likely to engage artists as peers. Instead, they will throw "scraps" to artists while keeping the most lucrative opportunities for those who aren't likely to require a press conference and a public relations consultant.

3. Item #1 might need not be rated so high on the list.

It's just an opinion, but I'm convinced that if the industry addressed items 2-7 on this list, racism would have LESS of an effect on the number of hip hop billionaires. Today, the upside of profit is offset by risks that are difficult to to disassociate with in the industry. If those risks were eliminated, the business considerations would be a lot more simple: black, or green ($). Even racists have a hard time turning down big money.

Finally, the "Dre's still not a billionaire" message hit the press on Day 1 of the Apple/Beats announcement, but it was buried in a place most of us don't look...namely, Forbes Magazine ("Why Jimmy Iovine And Dr. Dre Aren't Billionaires Just Yet", May 28, 2014). Still, it's nice to see someone point the fact out to a broader audience and then speak to some hard truths the situation...well done.

Thank you for schooling this ignorant author. There is no excuse in this age of information for someone to knowingly write something so profoundly oblivious to the facts.

Great article...with Dee being a business man and around other smart business men, I can see them getting discounted apple shares which would definitely increase his networth pass $780mill. But OWNERSHIP...WE do not like owning nothing with value. So quick to sell for a quick buck...Money is suppose to be used to make more money. So i am hoping he keep building something positive and a legacy. We shall see if his wealth continue to grow...but it won't be from Hip Hop and luckily for us reading and leaving comments...billion is value that do not determine the true value of a individual. rather be wealthy in knowledge and spirit.

You have some valid points. Dr. Claud Anderson made some great points too.
http://atlantablackstar.com/2014/07/24/dr-anderson-gives-one-of-the-most-truthful-analysis-on-why-black-people-struggle/
1. We have to stay out of the correctional system (prisions, jails, home confinement, ect)
2. We need to participate in group economics and group politics
3. We need to control our policitians to control the laws and correctional system
4. We need more corportations and media outlets

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WOW!!! I've been posting this video everyday on my facebook page for the past two weeks. lol

I disagree with one argument that you made. The author of the article stated that Hip Hop artists don't invest in things that aren't Hip Hop related, or the "norm" for Hip Hop, and investing IN A PRISON would definitely change that. It's unfortunate to say this, BUT the prison system is a VERY lucrative BUSINESS. No matter what I say, or you rebut to my comment, PEOPLE, not just Blacks, will continue to go to prison, and it will continue to make loads of money for some people. It's just a fact. We can stay out of the prison system by INVESTING in the prison system. It doesn't mean to go out and be some sort of capital punishment nut, or picket for stiffer laws, it just means that I am going to sit back and collect this check in the mail every quarter so that I am able to even reinvest that into something more humane...or another prison somewhere else. It sucks to make money off of the suffering of others, but it happens everyday for these huge corporations that are making huge bank off of the common, hard working man/woman. The tech bubble has burst, and people shuffling has become the biggest business in the world. More so than the drug trade this day and age. I'm not saying to start kidnapping people and shipping them overseas, but I am saying let the gov't do all the work, and you just collect a check. It's just the real.

Michael Jordan also has a billion.

We can spend a million dollars on a party and not a dime on the intention of creating other millionaires in the black community. All together Hov, Diddy, Russell, and Dre could make a HUGE difference as an economic power base for not just black business but business and finance in general. Can one of them hold a candle to Reginald Lewis or Oprah. If they pooled their wealth in terms of building an empire that reaches into next century as Carnegie racism becomes a non issue.

Kudos to the editor I am a 20 + year vet in the business and it couldn't of been relayed any better...keep up the good work my brother!

I absolutely do not accept his premises as factual. There is a sever lack of research and an abundance of generalizations. The article title itself implies that hip-hop is not reaping the gains that other genres are, which is absolutely false. The wealth of the music industry is not concentrated in one genre. In fact, some of the richest musicians of all time are hip-hop artists. Also, as far as investments go, there are rappers that have invested in sports teams, talent agencies, fashion industry, mobile apps, and so many more. He assumes that because the most famous investments are similar, that all others must also be in the same investment arena. He states that releasing free music diminishes the artists’ brand, when in fact it builds it. It allows more people to hear your music, and shows that your talent doesn’t have to be encapsulated in plastic-wrapped cases with a price tag.
The brand value is strong in hip-hop; RUN-DMC has one of the most powerful brands in music. Eminem led a movement of young suburban kids falling in love with hip hop, even shaving and dying their hair to be like him. From haircuts to the language of hip-hop, the brand is of the most powerful of any industry. Simply because that brand doesn’t belong to an individual doesn’t mean that brand doesn’t exist and resonates over time. He states rappers would rather look successful rather than be successful, but like most entertainment figures, most rappers are given fashion items to encourage fans to buy those items as well. The assumption that every rappers goal is to reach a billion dollars also greatly flaws this argument. Some rappers, such as KRS-one, has a purpose of informing the masses, not getting rich. Also, many rappers attempt to maintain a level of street credibility to avoid “selling out.” These rapper avoid signing major deals or promotions or endorsement, meaning their goal is, clearly, not to make as much money as possible. I would like to challenge the writer to name the musicians that avoided these flaws that rappers and did make it to the billionaire status. He seems to be addressing a very specific group of hip-hop artists, but using the blanket of all rappers and hip-hop moguls.
For these reasons, I do not feel that the conclusion is warranted. For the reasons I stated above, there is a lot of assuming and grouping when there are several examples through history that disprove each argument. While each argument does apply to many of those that experience brief success in the industry, those that have survived have created a formula to either avoid these points or have found ways to make them work in their advantage. Furthermore, each of these reasons stated, aside from racism, plays heavily into the entertainment industry as a whole. Rock stars are legendary for spending money frivolously, hence the term “rock-star lifestyle.” The term “rock-star” engulfs everything stated in this article. Fast money, fast cars, big houses, expensive drugs, and fall from fame and wealth is the story of the average rise and fall of any big name in the entertainment business. So to isolate rappers, and to use this to identify why they are behind financially in the industry is an extremely fallacious argument.

NO!

Hip hop music genre it can't be racist , anybody can rap and about anything they want the anger you have because its being controlled people trying to keep our people in a trance state. Rapper who make it from a struggle are uplifted because they fan base starts from what you calk the ghetto and hip hop was made by black people who overcame so Dont be mad popular rappers are hood and so is their message. Other races Dont get our approval of style if they tried to come change the topic it would come off corny . there are other rappers common Lupe who are demanded but they rap like 2pac, on topic that point the finger at the source of black proggraming from the rich people who has say so (fake jews )of what black actors (oringinal hebrew ppl) & rappers can only be slaves pimps hustlers gangbangers school skipper homosexuals ignorant etc...those are the role & subjects that they are aloud to produce anything else besides keeping em drunk & high and not uniting is forbibbing.

Point: theres positive black rap out there but that's not what promoted. And hip hop always existed people sung blues rock n roll pop gospel and told stories rap was a black voice & style of tung and his attitude and the way he dress that made hip hop so if another race tries to imatate that will just be acting or talking black anything else is not hip hop you can try to sound different when you rap but you will still be copying the style of music from the hip hop beat structure. It can't be took by another race because it wouldn't sound like hip hop and only way another race can take it if their from the hood, ghetto and if that's the case their rapping on the same struggle as we are and is consider black by the blacks.....still this whole 7 point article was stupid

NO!

Hip hop is a music genre it can't be racist , anybody can rap and about anything they want the anger you have because its being controlled people trying to keep our people in a trance state. Rapper who make it from a struggle are uplifted because they fan base starts from what you call the ghetto and hip hop was made by black people who overcame so Dont be mad popular rappers are hood and so is their message. Other races Dont get our approval of style if they tried to come change the topic it would come off corny . there are other rappers common Lupe who are demanded but they rap like 2pac, on topic that point the finger at the source of black proggraming from the rich people who has say so (fake jews )of what black actors (oringinal hebrew ppl) & rappers can only be slaves pimps hustlers gangbangers school skipper homosexuals ignorant etc...those are the role & subjects that they are aloud to produce anything else besides keeping em drunk & high and not uniting is forbibbing.

Point: rap always existed , blues rock country all was story telling to music rap was from a black voice & style on a black beat so any other race can copy if you want but its still acting black because the attitude behind it there's struggle & pain from poverty & racism. There's positive rap out there and positive rappers but their not promoting positive black leaders just reinactment s of stereotype of our people & decisions we make, but not all of us make those decisions but when it comes to the source secret societies will silence you but who I am I to speak the author of this is just as clueless why yah made ppl think they can pretend to be the original children of yisrael but the first will be last rev 3:9 the fake Hebrew's (arabwhitejews) are going to be in charge until we find our heritage and all learn his & his sons name (yahshua) halleluyah the end is near they can continue to cast a whole movie full of fake white Egyptians if they want but we know the truth ....drake Justin beiber & Iggy I'd not gonna cut it

Shout out richardf @Richard f

Ironically, he starts by stating that Dre didn't make it to a billion from Beats, but follows by saying hip-hop should diversify. Beats is not a music company, it's a tech company. They have made state of the art headphones and continue to develop them. Secondly, they have a music streaming software with features that make Pandora look like FM radio. Finally, hip-hop has no billionaires, because it's an infant industry relative to other industries. People don't realize that software engineering (code writing) has been around since the 1940s. Software. That said, it's hard to say software industry is new. Hip-hop will have it's billionaires soon. It's just a matter of time before the current top dogs (Jay-Z, Diddy, Dre, Eminem) take over the role of the parent companies that they're all signed to. The genre hasn't had time to produce a billionaires, but music has produced them (https://en.wikipedia.org/wiki/Edgar_Bronfman%2C_Jr.).

I'll end by saying, he also doesn't acknowledge the deficit black owned businesses, nevertheless industries, are working from.

Ironically, he starts by stating that Dre didn't make it to a billion from Beats, but follows by saying hip-hop should diversify. Beats is not a music company, it's a tech company. They have made state of the art headphones and continue to develop them. Secondly, they have a music streaming software with features that make Pandora look like FM radio. Finally, hip-hop has no billionaires, because it's an infant industry relative to other industries. People don't realize that software engineering (code writing) has been around since the 1940s. Software. That said, it's hard to say software industry is new. Hip-hop will have it's billionaires soon. It's just a matter of time before the current top dogs (Jay-Z, Diddy, Dre, Eminem) take over the role of the parent companies that they're all signed to. The genre hasn't had time to produce a billionaires, but music has produced them (https://en.wikipedia.org/wiki/Edgar_Bronfman%2C_Jr.).

I'll end by saying, he also doesn't acknowledge the deficit black owned businesses, nevertheless industries, are working from.

Is there any genre of music that has an artist that is a billionaire?

I'm an aspiring 'musician' who's been studying the business side of it since the early 90s. A LOT of what you say is spot on. There is a 'short sighted-ness' associated with hip-hop. Back in the 90s, EVERYONE wanted to start a label (good tax write off I admit, but not a good source of actual income), when the real money 'was' in distribution. I've watched the countless "Mr. Me Too" trends, everyone wanted to start a clothing line because it was 'sexy' and 'hip;, no one wanted to branch into trying to own a place for manufacturing textiles.

That gets to what "I" view as the root of it. It's not so much the absorbent spending, when you are truly wealthy, its not really hurting your bottom line to own a Bentley. It's IMAGE. Artist do what gives them a good image, one that is sexy or cool. Let me sell my liquor, because I can rap about it in the same club that I'm selling it. Let me release a clothing line, because I can get it repped by my crew, and put my own face on a shirt. The business ventures are usually 75% image with 15% what they can get financed via their name and 10% actual passion. If you are going to invest in something with that level of passion - SCREW IMAGE. Look beyond the people you know have money and see who's above them.

I mean real talk - 50 Cent's big financial push - Vitamin Water, wasn't a sexy investment. He was using it, thought it was good stuff, and invested. He was involved with them for a while, but you didn't hear him shouting them out on records. That same business mind is working behind the scenes to make something like 'Power' a LEGIT show, not just some quick Redbox style hood movie. He's doing what it takes to hit that billionaire status. It won't be from music, how many musicians OUTSIDE of hip-hop are billionaires? I just doesn't happen that way.

If a rapper or someone associated with hip-hop wants to become a billionaire, they have to become an owner of a large product, not something as fickle as clothing. They need to find their way into everyone's pocket to the point you don't even KNOW you are giving them money (most folks didn't know LBJ was part owner of Beats via payment for his advertisement, that's what I'm talking about).

How many rappers own PATENTS. How many rappers are associated with manufacturing or distribution of any kind? What rappers make money beyond the first tier of 'this is my product' or 'I am the face of this product so buy it'? The only rapper I know with any patents were Dre (Beats). Patents > IP from music. Instead of advertising for a car company, invest in a group of people to build something special that the car company will want and they will pay you to either own the patent or for fair use of it.

It's just short sighted thinking.

Wow. What a great article. I enjoyed reading the comments as well. I believe that we will certainly see a hip-hop billionaire in our lifetime. Dre is just 200 million dollars away from the next big concept and idea to make him a billionaire. Warren Buffet became a billionaire when he was in his 60s. Dr Dre is almost 50. Truthfully, Dr Dre is right on time in comparison considering all the roadblocks and prejudice I'm sure he's encountered in his journey. Although I see a lot of buffoonery within the hip hop culture, I also see some pretty impressive, amazing, and innovative financial gurus. It may be one in a million, but I'm personally watching people change their lives and circumstances for generations to come by avoiding the pitfalls that you've mentioned in this article. In many ways, I don't think it would be possible for anybody in hip hop to reach billionaire status if it wasn't for the poor branding, backward hustlin, mixtape pushing/no album having, no risk investing, market share scavenging, immaculately dressed culture killers that infest this industry. I predict a billionaire coming soon -- who will it be?

Nice! Great posts!

Nice information...very thorough...but I do have one question.

If 2014 Forbes magazine article stated that Dr. Dre's net worth is already $550 million...and your information states that "After the dust settled and the acquisition was complete, Dre’s post-Apple net worth was estimated to be in the neighborhood of $780 Million"...would that not put him at Billionaire status?

It drives me crazy when ppl have an opinion on a subject which they know nothing about and are completely ignorant to, plus have the nerve to speak definitively on that subject, I Hate it. There were so many logical fallacies, contradictions, and out of context statements in this article, it is staggering. The only thing one could learn form this article is that too many ppl do not know or understand the contributions, and business of Hip Hop; yet can write very professional looking articles, filled with nonsense. Allow me to debunk every single one of his 7 points, maybe except #7.
7. "Hip Hop is a hustle" - Hip-Hop is not a hustle, no more than any other business, though Hip-Hop artist maybe more experienced in hustling prior to making music. To suggest that Hip-Hop artist are not keen at "business building" is an an example of extraordinary ignorance, or at least in contradiction to your other statements about how businesses like clothing, alcohol, shoes, and energy drinks are heavily endorsed by Hip-Hop artist. What artist promote in their lyrics have nothing to do with what their accountants invest their money in.

6. "Hip Hop devalues its most important asset" - Though it is true that "IP" is at the core of how to value items in the music industry, to then suggest that mixtapes "devalue" Hip-Hop expose that you do not know the purpose of mixtapes. Mixtapes like any sample in any business is an investment to catch more customers, by first spending money to expose your product. Once customers get the sample without paying for it, they are much more likely to purchase your product, that is business 101. So yes, artist do not make money from giving away free mixtapes, but they recuperate that money when they release their album, and go on tour. These are the basic points of the music business and you should get familiar with the way things work before you criticize business practices. Maybe you have not noticed but over the last five year YMCMB have made history in their use of mixtapes to catapult their artist careers. Do you think that Drake & Nicki Manij have not exposed a fantastic new business model, earning over 50 million dollars in this short time? One could easily argue that the millions of dollars they has given them a high rate of return on their investment, and is also unique to the Hip-Hop genre.

5. "Rappers have poor brand value" - Here is another amazing example of you not knowing the first thing about business. In business you usually don't "brand" yourself, you try to tie your name to an already successful brand. So when a Rapper is sponsored by car, liquor, or clothing companies, they are increasing their brand, that is the basic relationship of getting a sponsor. Rappers have taking it to a whole new level b/c instead of just waiting to get a sponsor, they are using their celebrity to create business in their own image, and secure a larger part of the profits. So through Hip-Hop, Rapper have created a business model that the whole entertainment world has copied, that is why every little celebrity has a label, a drink, a make-up line or perfume, and some sort of clothing line in their name. Branding has always been important, but Hip-Hop made it more independent and personal to the artist is in control and not the corporation. When is the last time you've seen a Van-Halen energy drink, or a Beatles cologne?

4. "Lack of Diversification in Investing" - I am not even sure it is worth is to comment on this b/c you yourself prove your own point wrong. "Rappers start labels, studios, restaurants, nightclubs, real estate and businesses that they’ve seen other rappers succeed with", that is a diverse list to me. Then you say "Hip hop doesn’t invest its money into new sectors such as technology", but the biggest tech company in the world just bought out a Rappers company and made him the richest Rapper in history. Have you heard of Beats by Dre, or do you not consider that diverse from the other common rap business? Then you say "all of the hip hop cash kings have seen substantial boosts in their net worth from areas not considered traditional investments for hip hop (Rocawear, Beats by Dre, Ciroc, etc)". So what is your point, how is that not diverse, can you name another genre that has market penitration across the board like Hip Hop? Not to mention you forget the amazing musical success Hip Hop has in Hollywood, you can't make an action movie these days without a rap song on the sound track. Ever summer and every album Kanye West's songs are in a major Block Buster, can you name another artist with that track record? Rap music is a deep part of Pop culture now.

3. "Market Share Scavengers" - I suggest you take a business course, or just go hang out at a college and speak with some Business majors. I find it very common for young blacks to take Business course in college, you shouldn't have a hard time finding one to explain some of the basics with you. To say "Rappers emulate another rapper's successful moves", is to suggest that is unique. Do you have any stocks, have you ever talked to a Broker, do you know how they pick what to invest your money in? I can tell you "market trend" is something economist talk about everyday, and investors use the data on what is hot and trending to get their customers to buy in. Most importantly investors don't decided for themselves in most cases, what to invest in. They hire someone who's job it is to know where best to invest, to tell them if they should buy this stock, buy this business, or open a business in this area. There is no such thing as "bitting", everyone follows the trends, that is way our economy works.

2. "We’d Rather Look Good Losing Than Look Bad Winning"! - Where do you get the idea that, "Most rappers never achieve success in the music industry" what evidence do you have of that? What do you defiine as successful, and is what you think successful is more important than what the artist thinks success is. For example, if you got off the streets, moved into a good neighbor, bought a house and a few cars, and didn't have to get a 9-5, is that not success? I am sure most rappers atleast get that, with those basic 100K signing bouses which are common, that is more money than they would have had otherwise. So just getting signed to a label is a success, even if your album never comes out. Additionally, the artiest doesn't choose what to spend his budget on, the label does, I am sure by the way you're talking soon that you don't know anything about the music industry. You said "generational wealth because they spend money flexin’ and keeping up appearances, often returning back to “poverty”, name one rapper like that? For every rapper you can name who went back to poverty, I can name 3 who are at least in middle class or better, which is a success by anyone account.

1. "Racism" - I have said so much I will not dwell on this, but it is the only part I agree with. It scares White America what Hop-Hop has done, especially b/c they can't control it. What makes Hip-Hop historically so important is that it gave the average person with lil to no education, a legal system to create wealth of their own. It has created so much wealth that these same pour ppl are now able to enjoy the best in life, and sit at the table to negotiate fair business with corporations they would have never had a chance to before. Sure Kanye is fighting to take the next big step with a big corporation, but nothing in history has ever giving African Americans so much wealth, and with that wealth we can finally get little closer to real equality.

There are some things you need to learn yourself. As far as "success" is concerned; how many are really successful? Just because a rapper is popular, doesn't mean they are successful. The advancements you speak of aren't in any way a means to claim success. That's a loan to get your product out. Why would I sign an artist, put that much money into their pocket to NOT put out any product so I can get a return? Would you pay an employee to sit on their butt and do nothing? An advancement if for studio time, marketing/promo, etc. I used to work for Universal Records at one point and a rapper from here in Texas got signed to the label and they gave him $150k. He took the money and spent it on clothes, cars, a house, and all these other things. After awhile, they asked for his project, he had nothing to give, so he had to pay that money back....that he already spent.

As far as the "mixtape" thing, the bottom is about to fall out for sure any moment now. What's next after that gets run in the ground and people are no longer interested? The point is, you keep giving away yourself for free, over and over. It gets to the point that people will expect to get things for free from you. You don't walk up to Jack In The Box and get a free burger every time people visit. They would go bankrupt. What's the percentage of those who start out doing this rap thing that actually make it? On a mainstream level, there's what....less than 5% who do? Most of these people getting signed are getting "360 deals". You may be hot for a minute and then the next round of people are getting ushered in to move you out of position. A mainstream song is hot for 3 months max, then they don't want to hear it anymore. It's "old" after such a small window in time. Your statements sound like these young cats I hear often who think getting a record deal is as easy as..."I rap, so some label is going to sign me and i'm going to be rich." What about the work you have to put into producing an album? Then the work after to let people know about your project. You need a manager, agent, publicist, attorney, accountant, insurance, etc. Now....the big thing.....PUBLISHING. Pointless to write raps and not own the material. And a lot of them don't own their own publishing. There's a cost to get copyrights for your material. Don't forget that there are fees to pay when you register to SESAC, ASCAP and BMI. What about joining an artists' union? More fees.

Now let's weigh in getting signed versus a distribution deal like Cash Money and No Limit did. I worked for both labels. They both knew they had product that was making great numbers as indie labels. They weren't about to devalue themselves or their artists by getting them to sign to another label. The both said distribution deal or no deal, and stood firm. They put themselves in a better position to make more money off their own product, along w/ having complete creative control. I'd rather rake in 80%-90% than be signed to make less than 10% [roughly].

As far as Van Halen and The Beatles, what do they need a cologne or energy drink for? Take for instance Red Bull and their tag..."gives you wings". Through LICENSING, Red Bull can approach Van Halen to use their classic song "Jump" in their commercials. Off a single song by an iconic group, they are still selling records today and the song came out in 1984. It still gets spins on classic rock stations [air & internet], supermarkets, juke boxes, movies, TV shows, etc and so on. Now factor in all those times the commercial is played on thousands of stations all over the world. Next, look at trademarking, as mentioned in the article. That's more money those groups mentioned are making money off their name...through BRANDING. They are in a position to not need a cologne or energy drink to sell their name. Both groups tour to sold out crowds in huge football stadiums, while the "hottest" rappers don't fill up a basketball arena.

I'm not taking this article to speak for every Hip-Hop artist or rappers out there. However, just round up 10 rappers you know and ask them business questions to see if they ever thought about the things mentioned here.

I came back b/c I didn't address the equality thing. That sounds like you're saying that if so many black people make enough money, it's suddenly going to make us equal. Not true. They still look at you as a "rich ni***r" if you get the money. You don't buy equality, you earn it. Mostly by making people see you as equal. Look at YOUR president. Classified as the most powerful puppet...I mean, man in the world, yet getting threats even from poor white people. All these black multimillionaires and a few billionaires sprinkled here and there, but look at the rate that black men and women are dying at the hands of police. Is that equality? Black folks want to say the "N" word is a term of endearment, but get mad if a white guy uses the very same word. You can't say using that word among yourselves takes away that power, when they see you still get mad when they use it against you.

Dr Dre was worth Well over $200 million before the deal... with an additional $750 (ish) from BEATS... he IS the first Hip-Hop BILLIONAIRE

its the accomplishment that should be acknowledged overall...whether a billionaire or not is quite irrelevant....

Good article, but I disagree with the racisim point. I believe what really is the problem is that like country hip-hop is a niche musical industry. And I agree with others above that hip hop has an image problem. Another problem is that there is an over-saturation of rappers who rap literally about the same things, like country. And you don't see hip hop beats in rock songs, you see rock rifts in hip hop songs. So race really isn't the issue. Hip hop generally is geared to disparaged young African Americans, which just the AA people only make up 16% of the US population. And hip hop really only expands into the club/party scene/drug using culture. Lastly, I deny your race claim only for the success of Eminem. One of the most successful rappers of all time and he was white. His success was that his music geared to everyone and had the ability to challenge thought and was continually different from everyone else.

Good piece. You nailed it, esp when you said these niggaz tryna look the part instead of acting the part!

Ok Charles, your paper is most likely the second best I've ever read about our culture, Hip hop culture.
The first is an article by Russell Simmons on Dynasty Cash Money which is undoubtedly one of greatest achievements of this culture.

I totally agree with you but I think you missed a point which is essential for me.
I think you should already know, but the rapper Nas is a business angel and even a VC. He regularly invested in tech startups like Diddy.
Moreover to take the example of Rap Genius Nas is one of the first investors in this platform. :) You can of course check this information Angelist site.

That it was just completed this article history that was almost perfect.
I am French and your article is for me rather succeeded it's pretty rare to clarify :)

This is a great piece. You hit all of the points. Funny we live in Atlanta and this article could've been 7 Reasons why music moguls in Atlanta have failed. LOL!!!

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1 of the most inspiring blogs I've ever read... what I been telling my homies for the longest

Amaaaaazing article!! (It even prompted me to go dust off my old 400 Degreez album.) Without a doubt, all of the mentioned points are key factors that prohibit Hip Hop artists from crossing the Billionaire threshold. From my personal observations, #2 seems to a bit more prominent than the other reasons listed. In the height of this social media world, there is more "frontin" from users than postings that actually portray one's lifestyle. Homes and cars are being purchased primarily for photographic bragging rights, and when it comes to the price it's "the bigger, the better". Even worse than lavish purchases to keep up with The Jones', entertainers have no shame in renting houses, jets, and yachts to make it appear as though they are "ballers" and "high rollers." Some of them will even go as far as "renting" an attractive date for an event; not to mention the money that is blown daily in strip clubs around the world. Also, many parents in entertainment desire for their teens to have the flashiest Sweet 16 parties where they can show off their many lavish gifts, such as luxury vehicles. We all know that 16-year-olds have very minimal driving experience, but such a fact is quite unimportant compared to the satisfaction of "mine was better than yours."
This behavior will ONLY change if values begin to shift from material things. It is not at all uncommon to see members of other ethnicities wearing plain clothes and driving Toyotas, but are very wealthy financially. One's financial freedom should ignite gratitude, not gluttony. It should be used to spend irreplaceable time with loved ones, given back to the community, and/or invested wisely.
As crazy as it may sound, another reason Hip Hop entertainers aren't billionaires is because...well some just don't want to be!! If they've attained millions, many may feel as though they have achieved success and do not look to prosper much further, although maintaining their financial status is quite crucial.
It is obvious that in the near future there will be breaking news of Hip Hop producing its 1st billionaire. Dre? Jay? Diddy? It seems as though when one get's closer the mark, another one shoots ahead and takes back his crown. Guess we'll have to wait to see who will finally be kinged!

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I totally understand your point of view on the hiphop world and truly do belive that People think that an idea is only best if some one else takes that risk first their is so many ideas and investments that we can proceed in while also doing what we love in music .People in the industry need to come together as a unity instead of hating on the next person for what they achieved. We need to think out side the box and take a chance in life to see what it brings .We need to focus on what are next generation is gonna see .You can make money to live day by day or you can make an investment to live good your whole life..I belive you pointed out some good points ...

You hit this one right on the head

I thoroughly enjoyed reading your article. It was very enlightening and I like the points that you made in it. I agree with the majority of your summations; however in regards to artist & making money on their music. We live in an age of streaming . For the most part who buys music now? Mostly middle income to rich spoiled kids with I phones & their parents credit cards stored in it.. SO in this new age branding is a major part in order to succeed in music. Your brand tied with your music translates into revenue. Just wanted to put that out there. Now in regards to hip-hops 1st billionaire well look no further me & my team will be the 1st African American Billionaire company. I am not talking about those that became that by acquisition from another company. (ie BET-Johnson) I mean a real African American owned , led and operated by African Americans. I agree in order to attain that type of wealth you have to step out into other markets & develop strategic partnerships with others to get there. Those who know me and those who observe me have seen me on of path such as that. With the genius of my partner @_Steven_J & myself @mackdrama1017 we are seeking out others who are like minded and/or have certain platforms that we find we can integrate into our overall business strategies. So its fine by me that Diddy, 50cent, Baby, Jay Z or Dr Dre have not gotten it yet. Because we will!! Remember this conversation. Peace

1st - Dr. Dre.
2nd - Jay-Z
3rd - Diddy
4th - Lil Wayne
5th - Drake

are you sure there are mo billionaires among hip-hoppers??once did a research into music industry billionaires for http://www.writemyessayfast.org and pretty sure Dr Dre, Jay-Z and 50 Cent's net worth is pretty high..think it's around 1 billion..

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As crazy as it may sound, another reason Hip Hop entertainers aren't billionaires is because...well some just don't want to be!! http://www.koicreativegroup.com/

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