Pot Of Gold: 10 Lucrative Hip Hop Business Deals
In anticipation of St. Patrick's Day, HipHopDX highlights 10 profitable business deals that led artists to the proverbial pot of gold.
Aside from the artwork to Lil Flip’s ill-fated 2000 album, The Leprechaun, Hip Hop doesn’t put much stock into St. Patrick’s Day. Granted, the holiday most associated with the patron saint of Ireland, provides a good reason to partake in some Guinness and dust off those House of Pain albums. So while you won’t find any extensive coverage Lil’ Flip, leprechauns or four-leaf clovers, it’s hard to find any genre—Hip Hop or otherwise—that doesn’t appreciate a good pot of gold.
As such, HipHopDX is highlighting a list of some of Hip Hop’s most lucrative business deals. From Master P’s groundbreaking deal with Priority to Jay Z partnering with the likes of Live Nation, Creative Arts Agency and Samsung, here are 10 deals that helped some of Hip Hop’s most well-known contributors hit the jackpot.
Jay Z’s 2008 Deal With Live Nation
Upon its introduction, the 360-deal—which essentially allows a record label to participate in the income of all of an artist’s work (i.e. merchandise) as well as traditional revenue streams—was the subject of ridicule for many business savvy emcees. But a 360 deal that includes 775,434 Live Nation shares, plus an option on an additional 500,000 at the exercise price of $13.73 each isn’t the average 360 deal. Such were the details of Jay Z’s 2008 pact with Live Nation, which was valued at over $150 million. According to a report by Billboard magazine, up until 2013 Live Nation contributed $5 million overhead to Jay Z’s Roc Nation imprint as well as an additional $25 million to finance any Hov’s external acquisitions and investments. And just for shits and giggles, the deal gave Jay an additional $10 million for Blueprint 3.
Cash Money Records Nets A $30 Million Deal With Universal
After launching Cash Money Records in 1991, brothers Ronald “Slim” Williams and Bryan “Baby” Williams made a name for themselves as a regional label with acts such as UNLV and the duo B.G.’z—then comprised of B.G. and a prepubescent Lil Wayne. Dino Delvalle who served as A&R at Universal at the time, was on a getaway in New Orleans when he heard about a local label that was outselling the likes of DMX. After winning over Baby on strength of taking the time to visit Louisiana, Delvalle told AlLindstrom.com he helped facilitate Cash Money’s pressing and distribution deal with Universal that was reportedly valued at $30 million. The deal, confirmed in May of 1998, included a $3 million advance and gave Cash Money 85% of its royalties, 50% of its publishing and ownership of all masters.
50 Cent’s Early Investment In Glaceau Vitamin Water
When Glaceau, the makers of Vitamin Water were in their earliest stages, they knew they needed the help of a brand ambassador to take their name to the next level. And contrary to popular belief, Glaceau did not seek out 50 Cent specifically; he was already a fan. Spearheaded by his super-agent Chris Lighty, the deal was said to have netted 50 somewhere around a 10% stake in the company and his own “Formula 50” flavor. When it was first initiated in 2004, Glaceau was still a privately run company, and 50 was a shareholder. But in 2007, Coca-Cola purchased Glaceau for $4.1 billion. According to The Washington Post, 50 reportedly took home somewhere between $60 million and $100 million.
MC Hammer Signs With British Knights For An Unnamed Amount
Prior to Master P, Jay Z, Rick Ross and nearly a dozen other Rap artists, MC Hammer reportedly broke the bank. On June 18, 1990 New York-based British Knights, which dealt primarily in athletic shoes, held a press conference to announce signing the Oakland, California rapper to an exclusive endorsement deal. At the time, British Knights was valued at over $138 million. Terms of the deal were not publicly disclosed, but the VP of British Knights’ parent company, Jack Schwartz Shoes Inc., insinuated it was a pretty big deal.
“This has far transcended anything the company has ever done,” Larry Schwartz told Footwear News. “Let’s just say the amount is commensurate with what anyone would pay a superstar.”
Judging from the fact Hammer spent a pre-SoundScan record of 21 weeks with the #1 album in America [Please Hammer Don’t Hurt ‘Em sold 10 million copies domestically], and had what Forbes estimated as a net worth of $33 million, British Knights probably compensated him well.
Master P Agrees To A Distribution Only Deal with Priority
After receiving a $10,000 check as part of a malpractice settlement involving the death of his grandfather, Percy “Master P” Miller had a decision to make. He and his wife, Sonya, opened a local record store, and P used an additional $1,000 to record the album, The Ghetto’s Tryin’ To Kill Me. Suffice it to say, Miller recouped on his initial investment, as he sold 100,000 copies of his independent album. P negotiated a distribution-only deal with Priority that sacrificed the cash infusion associated with typical boutique deals in order to maintain equity in his product while keeping 85 cents on each dollar earned. According to Billboard magazine, No Limit Records produced 23 albums in 1998, and 15 of them either went gold or platinum, as the label generated over $200 million.
Samsung Buys A Million Copies Of “Magna Carta… Holy Grail”
In June 2013, during game five of the NBA Finals, an unexpected commercial aired featuring Jay Z, in which he announced his new album, Magna Carta... Holy Grail and his “#NewRules.” Little did anyone know, Jay Z was going to make history and sell a million copies of the album before its retail release.
In a deal estimated to have a total worth of $20 million, Samsung agreed to freely distribute one million free copies of the album. The album was released through an app that only Galaxy users could download on July 4, and a few days later it was available for purchase to the public.
Even though Jay Z technically sold a million copies to Samsung, the Recording Industry Association of America didn’t see it as platinum status just yet. Due to this deal with Samsung, the RIAA felt it was necessary to change the way it certifies releases as gold and platinum. The RIAA released an announcement three days before the album released stating, “Going forward, sales of albums in digital format will become eligible on the release date, while sales of albums in physical format will still become eligible for certification 30 days after the release date.”
— Mr. Carter (@S_C_) June 17, 2013
With this new certification rule in action, the units sold to Samsung would not count towards MCHG going gold or platinum, causing Jay Z to retort by tweeting “If 1 Million records gets SOLD and billboard doesn’t report it, did it happen? Ha. #newrules #magnacartaholygrail Platinum!!! VII IV XIII.”
Mountain Dew Inks Lil Wayne For #DeWeezy Campaign
At its most basic form, Mountain Dew signed Lil Wayne as a brand ambassador of sorts in 2012. Their first order of business was the DEWeezy play on words ad campaign, juxtaposing the two giants inseparably. At the time Forbes.com reported, “The deal is the biggest in Mountain Dew’s history.” And while there was no number-value on the contract, it was estimated to be a multi-million dollar deal. Brokered by the New York-based GLU agency, it reportedly contained options for additional years, as well the possibility of a feature film starring Lil Wayne to be bankrolled by Mountain Dew and Pepsi. The basis of the campaign was to champion artists and athletes, “known for carving their own paths.” After making his arrival on the scene in the early ‘90s, Lil Wayne’s deal with Mountain Dew marked his largest endorsement deal as a major label artist. However, after Wayne appeared on the 2013 Future song “Karate Chop” making a disparaging remark about Emmett Till, Moutain Dew severed ties with Wayne.
Sean Combs Signs A 50-50 Deal With Diageo For Ciroc
In 2007, British beverages firm, Diageo, sought out Diddy to promote their Vodka brand, Ciroc, in the United States. The deal, which was surprisingly lucrative for Combs, was a 50-50 profit-sharing venture between the two parties, as well as a potential $100 Million payday for the Bad Boy Records founder. It was also interpreted as Diddy following suit, after his fellow Hip Hop business moguls Jay Z and 50 Cent had already achieved beverage deals of their own, (Budweiser Select and Glaceau Vitamin Water, respectively). Since then, there have been countless billboards and ad-campaigns for Ciroc that feature Diddy, including a recent star-studded commercial with him and celebrities like Aaron Paul and Frank Vincent partying in Las Vegas. The basis of the deal was to focus on the “art of celebration,” which Diddy has no doubt perfected at this stage of the relationship.
adidas Grants Run DMC A $1 Million Endorsement Deal
Run, Jam Master Jay and D.M.C.’s endorsement of adidas began innocently enough; by all accounts, they sincerely liked Shell toe “Superstar” sneaker [sans laces]. Things quickly changed in 1986 when Lyor Cohen—then Run DMC’s road manager—met Angelo Anastasio, who was in charge of adidas’ marketing. Anastasio noticed an increase in sales of the black and white trimmed Superstar model, and Cohen and Russell Simmons arranged for Run DMC to perform the song for Anastasio in person. This didn’t quite produce the desired result, as Anastasio provided the Queens, New York trio with some free adidas gear and little else. Cohen followed up by inviting Anastasio to Run DMC’s Madison Square Garden show.
“The marketing executive watched from the stage as Run asked thirty thousand fans to thrust their adidas into the air,” writes Dan Charnas in The Big Payback: The History of the Business of Hip Hop. “Anastasio looked at the ocean of adidas and found himself crying.” Shortly thereafter, Run DMC met with the CEO of adidas, Horst Dassler, and signed a $1 million endorsement deal.
Nipsey Hussle Launches $100K “Proud2Pay” Campaign
After being signed to Epic Records from 2009 through 2010, the year 2013 saw Nipsey Hussle shake things up when he launched his Proud2Pay campaign. Taking inspiration from a $100 cheesesteak referenced in Jonah Berger’s Contagious, Nipsey reformatted the roll out of his next project. He released his Crenshaw mixtape, which included a free digital version via Datpiff, a $10 iTunes version and the option to buy $100 physical copy that included tickets to an exclusive concert. It’s reported that with the sale of 1,000 physical mixtapes, Nipsey made $100,000 in one day. The fact that Jay Z bought 100 copies probably didn’t hurt the cause.
“It’s time we acknowledge what we all know: the music is free,” says Nipsey in an interview with Forbes.com. “We shouldn’t force people to buy it, what we should do is create different methods to monetize the connection.”