Issue #14: Hip Hop’s Financial Future
"Hip-hop was supposed to be a gift for us"
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Hope everyone had a lovely Labor Day Weekend!
In the spirit of Labor and #HipHop50, I am sharing some reporting I have had the pleasure of working on for some time, which is the ecosystem of the financial viability of music for hip hop’s legacy artists. It is a thorny and timely conversation, given the anniversary and recent news developments around copyrights and estates that have circulated in the press. This had originally been intended to be published in a major publication, but digital media is constantly in flux these days, so if you would like to support my reporting and share it, that would be appreciated.
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Onto the essay.
When Biggie rapped “You never thought that hip-hop would take it this far,” on “Juicy” back in 1994, he was talking about all the money that rap was already making. What started out as a Bronx teen counterculture in the ‘70s had in just a couple decades grown to allow its most successful practitioners to live out that song’s rag-to-riches fantasy for real: lavish mansions, ostentatious music videos, jaw-dropping jewelry, and a massive presence in the fashion industry that reverberates to this day . Now that we’re 50 years deep into a genre that was once maligned by mainstream tastemakers to be a short-lived fad or trend, a feat in and of itself, hip-hop has rapidly accelerated into a dominant capitalist enterprise in popular music—with all of the structural failings that come along with that boom.
For Sheri Sher of the Mercedes Ladies—the first all-female MC and DJ crew in the Bronx—celebrating hip-hop’s golden anniversary is bittersweet. The Mercedes Ladies were part of the first wave of hip hop, rocking park jams and block parties on Boston Road and enjoying a close relationship with founding figure Grandmaster Flash. But while they signed a record deal to Def Jam, their early songs were either given away to other artists or unpaid appearances on tracks. (In 2008, she wrote Mercedes Ladies, a novel loosely based on her experience in the industry.) As hip-hop began to go mainstream she and the rest of her crew found themselves on the outside looking in.
“The Bronx was the place nobody wanted to come to when they came to New York,” she said. “ [Hip-hop] was supposed to be a gift for us that was getting ready to be something fantastic that was supposed to be for us to create generational wealth in our hood, in our family, and other generations to come. It didn’t turn out that way.” While rap’s superstars may have more global reach than ever, topping charts around the world and headlining the planet’s biggest music festivals, the infrastructure to support the acts who helped originate the art form remains nebulous at best.
Tragically, Biggie died just a few years after releasing “Juicy,” but the video for his second posthumous single, “Mo Money Mo Problems,” represents for many the kickoff of hip-hop’s so-called “shiny suit era” (named after the costumes Diddy and Mase wear in it). The year 1997 had more hip hop albums going platinum than ever before. Combs’ No Way Out album, published a few months after Notorious B.I.G.’s murder, sold over 500K records in the first week, featured the first ever rap song to debut at number one on the Billboard Hot 100 (“I’ll Be Missing You”), and was followed up with a star-studded tour that grossed $16 million during an era when large-scale rap tours were still assessed as a liability. Not all that glittered was gold, however. The explosion of rap in the 90s and beyond is not a profit-making era that was redeemed across the industry. While certain titans of the art form such as Dr. Dre, Diddy, and Jay Z thrived in the record label structure at the turn of the new millennium, securing their own imprints or distribution for their own artist-owned labels to help them take maximal advantage of the resources of the majors, many artists suffered under seemingly advantageous record deals. These kinds of complications made things difficult for artists further downstream.
“As a new artists, we've all heard gut-wrenching stories about those who came before us,” Dray and Skoob of the duo Das EFX says. “A lot of the confusion comes when you have too many hands in the cookie jar.” An act might be signed to a label that’s being distributed by a parent company, such as Warner Brothers/Elektra/Atlantic, that itself is divided into multiple parts, a conundrum that many artists have detailed on wax. “Contract all fucked up, I guess that means you all fucked up” Pusha T rapped on Exodus 23:1. “You signed to one nigga that signed to another nigga/That's signed to three niggas, now that's bad luck.” Many artists of that era and prior have never received a royalty statement. “Now there's money going in so many directions it's tough to keep up,” they share.
“It's certainly the case with early hip hop, even into the 90s. I have a lot of artists coming to me from the 90s who have never gotten any money,” says Lita Rosario-Richardson, who leads the entertainment practice at the law firm Shulman Rogers and assisted in recouping back royalties for Big Pun’s estate and Crystal Waters. “One of the reasons why a lot of these artists don't get royalties is because [of] the structure of their agreements,” she explains. Typically a recording contract will see most of the costs of making and marketing a project charged to the artist, who only sees profits once those costs have been paid “back” to the record company. In this model, some artists can wait anywhere from 20 to 50 years before their accounts become payable. “The traditional recording agreement is basically a sharecropping relationship,” Rosario-Richardson says.
It’s an unfortunate experience that rappers like Bun B, half of the influential Texan rap duo UGK alongside the late Pimp C, has spoken about openly: In a Jan 2023 interview, he told Atlanta on-air personality Brian ‘B High’ Hightower that “UGK has never made one dollar in royalties from the selling of our music and we didn’t have our own publishing for about 17 years.” By his estimation, UGK is still at least $2 million dollars in the red. “It’s debt, it’s balling in debt,” he said.
In 2020, the music and entertainment executives Jamila Thomas and Brianna Agyemang coordinated Blackout Tuesday as a formal call to action in the wake of George Floyd’s murder. In doing so, they shined a light on how the music industry treats its legacy rap contracts. Record label BMG, for example, completed an audit which revealed that catalogs from four of the 33 labels BMG had acquired since its founding in 2008 had “significant disparities” in royalty payouts between Black and non-black artists. The company shared that the disparity for the affected artists ranged from 1.1% to 3.4%, a notable discrepancy when evaluating the returns on hit records.
In response, starting in 2021, Sony, Warner Music Group, and Universal Music Group all began to announce goodwill programs for “heritage” artists—signed acts who hadn’t received royalty statements before the year 2000—that would stop trying to collect production costs and allow the artists to be in a profit-making position for the first time. But at the time of our conversation, Rosario-Richardson says that several of her clients in that situation, some of whom “owe” their record companies millions of dollars, have not seen their balances wiped out. “I have letters out to several of the labels now saying, what’s going on?”
It is increasingly urgent that rap establishes a precedent for making a career in hip-hop music viable, particularly as artists transition into middle and old age. The last several years have seen many of the genre’s cultural titans struggle with unmet financial or healthcare needs in dire circumstances. LL Cool J’s Rock the Bells festival brand has been relaunched after regaining ownership of the trademark from event organizers Guerrilla Union, who threw festivals under the brand name in the mid aughts. The stated intention is honoring hip-hop’s OGs under a multimedia apparatus, ranging from an equity share for a handful of legacy acts including Roxanne Shante and DJ Kool Herc to a recently announced first-look deal with Paramount. But they’re not the only ones who could use the money.
Traditionally, the answer has been found in rigorous touring schedules and merchandising, leaving artists at the mercy of Ticketmaster or the occasional high-fee corporate event. Rosario Richardson warns, however that while touring has always been an important part of income, the labor intensity becomes taxing for aging artists. “It’s very difficult to keep up with that and to try to earn money that way,” she says. “What you’re supposed to be earning your money off of is your intellectual property—your copyrights and your royalties.”
There’s are many components that drive up expenses. Sources with knowledge of the touring and music asset economy explain that if artists don't spend some time building a ticket history and can sell a ticket for a couple hundred dollars then they're not going to come out in a positive position after the tour. The key to managing a healthy portfolio for an artist is in assessing the various verticals and evaluating which revenue streams help them generate the most passive income. For some top-tier legacy artists, that may consist of selling their catalog, which may offer them estate planning advantages, such as tax breaks and simplicity in divvying out assets. While not all artists may not have the same capabilities as Dr. Dre and Future to sell their catalogue for eight-to-nine figure payouts, there is still more financial viability in the digital market than one would think, particularly in streaming.
“[I] reject the notion that there isn't any money out there in the streaming world because there actually is – the labels are making a ton of cash,” Rosario-Richardson points out. “One of the problems is the structure of artists contracts not anticipating this.” On recording contracts, the royalty provision is 12-15% for sales, which included physical copies and covered downloads. The advent of streaming presents an argument that those are not sales, but actually third-party income, and under recording contracts, artists are entitled to 50% of third-party income, not their standard royalty rates. There is precedent for this: Eminem actually sued for this provision on streaming and was successful, arguing that “unlike physical sales, where the record company manufactures each disc and has incremental costs, when they license to iTunes, all they do is turn over one master.”
The cost are low for labels on streaming, and over the last couple of years, lawyers have been able to negotiate better splits on the streaming side and to cut out maybe some of the distribution fees or added fees that some of the labels were putting into the artist deals. Artists with leverage and a built-in fanbase have a better going-in position to negotiate more creative deal structures that capture more of the income that goes directly to the labels. According to sources, the issue is cutting through all the new music that's uploaded to these platforms daily, so the cost is more spent with marketing.
Many beloved artists transitioning into their later years lack the financial resources or a significant estate to make a decent living at all, let alone the eight-figure paydays that are becoming increasingly common for the rap elite. In 2011, trailblazer DJ Kool Herc was sidelined by prohibitive costs in an exploitative healthcare system. Black Rob died in 2021 after an ongoing health battle and public clashes with his former Bad Boy family, accusing Sean Combs of removing him from Bad Boy’s insurance while dealing with kidney issues in prison, removing his music from the shelves and depriving him of potential sales – in his final days, it was revealed that the Harlem rapper had been struggling with housing and medical expenses despite having multiple hit records . Last year, MC Sha Rock of the Funky 4 Plus 1 – widely regarded as the first female emcee – announced on instagram that they had finally settled their suit with Sugar Hill for back royalty payments for an undisclosed amount after nearly four decades of litigation. Most recently, David "Trugoy the Dove" Jolicoeur tragically passed after a yearslong battle with congestive heart failure that prevented him from touring with De La Soul, mere days before the group’sdiscography made its triumphant return to streaming after a decades-long battle with Tommy Boy records that obstructed their music from being available for streaming or digital purchase.
In other creative industries, such as acting or screenwriting, there are unions whose priority is to advocate for their members’ best interests in a predatory industry; currently, the Writers Guild of America and SAG-AFTRA are on strike to ensure better payment structures and protections in film and television. In 2022, Chuck D, Kurtis Blow, and KRS One launched the Hip-Hop alliance in a key partnership with SAG-AFTRA. Billed as “hip-hop’s first official union, the mission is to “fight for fair wages, fair royalties, strong health and retirement benefits for artists in the Hip Hop and R&B community.” Akin to how the WGA’s strike in 2007 caused dozens of shows to have shortened seasons, get postponed, or get canceled altogether, a robust union for artists would ideally showcase that artists and their fanbases make up the core of the revenue within the music business, and not the executives.
For artists that do have revenue from wages, Rosario-Richardson recommends a few immediate actions. First, get access to your royalty statements, which most labels will give you through a portal of some sort. The second course of action to exercise termination rights granted to you by the Copyright act. In exercising rights of termination, old contracts would be terminated and an artist would be in position to either get their ownership back or to renegotiate their deals for a much better arm's length transaction and possibly even get a large upfront payment. For recordings released after January 1st 1978, artists can opt to file notices of termination to both the label and the copyright office in 35 years, with additional stipulations for windows for filing and notification.
Recently , Combs has made waves in the music world for reassigning his publishing rights back to his songwriters and artists after decades of being roundly critiqued for exploitative publishing deals. The move coincides with Bad Boy’s 30th anniversary this year — and also is coincidentally in striking distance of many artists’ 35 year anniversary, when they would be eligible to reclaim and renegotiate their catalog in their own right without Combs’ control. “The way the industry has structured itself — it's put like a Bad Boy and their artists in between Atlantic or Warner, or Sony, right. So that's a stop gap,” says Rosario-Richardson, who equates the model to sharecropping. “Those people need to stand up for their artists and say, ‘look, we need to do something to make sure our artists are getting paid.’ They need to care. The Jemaine Dupris of the world, the Puffys of the world, even the Jay-Zs of the world and these other people who are getting paid, they need to care that other African American artists can get paid as well.”
Exploitation in Black music is a tale as old as blues, R&B, and rock & roll. As long as artists, lawyers, and appointed industry ambassadors continue to accept established “industry standards”, however, momentum will continue to be incremental. Change will only come if everybody agrees that it is time to challenge precedent. Until then, the exploitative cartel structure of the industry will continue to run not just legacy artists into the ground, but hip-hop’s generations to come.