Artists Making Deals Outside the Studio Now in its third decade, hip-hop is a multi-million dollar industry. But as rap music swells with corporate contracts and movie deals, how is the average rapper faring financially?
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Artists Making Deals Outside the Studio

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Artists Making Deals Outside the Studio

Artists Making Deals Outside the Studio

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To borrow from the Wu-Tang Clan, cash does seem to rule just about everything in hip-hop today. Ever since Run-DMC rhymed about their Adidas, rappers have been sealing multimillion-dollar deals pushing everything from gym shoes to soda. But when it comes to record sales, the payout hasn't been quite as strong for hip-hop artists.

Last year, rap sold about 59 million albums. Not bad but a big slip from the more than 100 million albums just sold six years earlier. Still from the looks of the music videos and magazine spreads, today's rapper is still cashing in.

Here to help me breakdown the economics of the rap game is hip-hop marketing mogul Steve Stoute. He's the head of Translation Consultation & Brand Imaging. Basically, he's a super matchmaker who brings together artists and big brand names. Stoute's also a former music exec. He once topped urban music for Sony and helped launch Mariah Carey, Will Smith and Nas.

Steve Stoute, welcome.

Mr. STEVE STOUTE (Founder; Chief Creative Officer, Translation Consultation & Brand Imaging): Hey, thank you very much. Thanks for having me.

CHIDEYA: Well, it's great to have you on. So let's get right to the money. How much does or can an average rapper earn in a year?

Mr. STOUTE: I mean, the average rapper earning in a year of conversation seems the one - as the one that keeps evolving and gets sort of, like, trying to - it's like Three-card Monte because when you start talking about publishing and who writes what - live shows performances, and now you have ringtone revenue in play, it's hard to truly determine where the money is.

There was a time - it was period in time where the bulk of the money came from album sales. You just noted that rap music went from a 100 million in album sales six years ago to 59 million this year. I could tell you when it was $100 million of sales - a 100 million albums are selling, you knew that the majority of money was coming from royalties or advances, also their album sales. Now because of the different revenue streams that's coming into play, it's hard to truly quarantine what an average rapper makes.

CHIDEYA: So it sounds like you don't want to give me a dollar figure.

Mr. STOUTE: Well, it sounds like I don't want to tell you anything inaccurate.

CHIDEYA: All right. Well, let's talk about what you do. You have sealed some pretty big deals - Jay-Z and Reebok; Beyonce and Hilfiger; Justin Timberlake and McDonalds. How do you do this kind of matchmaking?

Mr. STOUTE: Well, the matchmaking aspect of it is actually the last part of the - of trying to execute a program to bring relevancy to a brand. There's a large strategic portion that seals up the front-end, like understanding what the brand's issues are, realizing how they are appreciated at retail. They're trying to transform their brand to speak to a younger consumer. And sometimes music and entertainment, which is a touch point of pop culture, becomes a very relevant tool in order to drive that brand's invitation to another generation of consumers.

So how I pulled that off is when you find a very natural fit on why somebody should be with someone else because they share similar values, the artist's values and the brand's values or perceived values are similar, then you have an opportunity to create something that pays dividends for both.

CHIDEYA: There are some - we're just talking to Davey D, and he was talking about the Bay Area scene where you have a lot of people who are fans of local or regional groups. There are some folks who are fans of more intimate hip-hop concerts or acts who say, I don't want to see people break dancing in a soda commercial. When I see that, that turns me off. How do you deal with that reality?

Mr. STOUTE: That - you know what? That reality is something that you have to deal with and accept. I understand that. There's a certain level of authenticity that we try to do at Translation when we merge or put together musicians with brands or culture with brands. We try to stay as authentic as possible and rather than bringing the artist or the culture to the brand, we try to bring the brand to the artist or the culture that it wants to associate with. So we try to stay as relevant as possible.

And I have seen a lot of commercials where there's like fake rapping, like it's a non - the guy can't rap. He's just making words rhyme, and they have him on television doing the commercial and they're calling it rap music or hip-hop. And I understand when you start seeing that that it homogenizes the art form and I could see it turning off a lot of people.

CHIDEYA: Where do you think things are going to go from here? And we only have a minute and a half, but what I'm asking is when you have people like Jay-Z and 50 Cent who are not just music figures but they're also entrepreneurs in their own right, how is that going to change not just hip-hop but business?

Mr. STOUTE: Well, it's funny when rock music was really doing its thing in the '70s, there was this whole taboo about selling out or jumping the shark or whatever the term used about working with corporate America. Hip-hop has built an entrepreneurial spirit. From Russell Simmons to what Jay-Z is doing today, to what I'm doing at Translation, it is an entrepreneurial spirit built. And it wasn't like there was a turnoff from working with corporate America. We just couldn't believe that corporate America would work with us. I think this opens the door. The door stays open.

Today, 50 Cent and Chris Lighty, the manager of 50 Cent, has just started a brand asset group, which is going to merge more musicians with brands. And I think that this is a trend that if managed correctly could be another marketing platform that Fortune 500 companies could rely on in order to stay relevant.

CHIDEYA: Steve, we're going to have to leave it there. Thanks a lot.

Mr. STOUTE: Thank you.

CHIDEYA: Steve Stoute is founder and chief creative officer of Translation Consultation & Brand Imaging. He joined me from our New York studios.

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