The CEO$ of Hip-Hop And the Billion-Dollar Rap Jackpot

Ebony, Jan, 2001 by Kevin Chappell

SHHH. Listen. It's quiet. Well, not completely quiet, but relatively peaceful nonetheless. No drive-bys, arrests or assaults. No drug charges, no bicoastal gun play, no emotional protests by outraged women, parents or politicians. In fact, the world of hip-hop has been so low key that you would never have known that the music is as hot as ever, that one out of every 10 records sold in America is hip-hop, that 80 percent of the hip-hop buyers are now White, or that hip-hop passed country music last year to become the third-largest music category behind pop and R&B.

But like the silence that falls over mama's house after a big Sunday dinner, maybe that's what happens when it's all good in the 'hood.

When there's enough pie to go around, why disturb the peace with petty infighting and nonsensical turf wars? When you re a part of an industry that grossed $3 billion in 2000--and that's hip-hop music alone--why argue or player-hate. When you're part of a cultural jackpot that has taken over America--and the world--with everything from movies and concerts to clothes and Internet ventures, to toys and advertising, why create unnecessary controversy?

For the first time in its 25-year history, rap music participants seem to be somewhat content--and the world seems content with it. The music is now being celebrated in museums, studied at universities, honored at awards shows, listened to in every suburb in America, and imitated by teenagers as far away as Germany, Japan and Africa.

Led by CEOs like Russell Simmons, Scan (Puffy) Combs, and Percy (Master P) Miller, hip-hop music is quietly becoming the world's music of choice. Born on the streets of New York City, rap is more corporate than ever, even as it continues to have strong street support and a foundation based on underground ingenuity.

There are other rap CEOs, including Jermaine Dupri of So So Def Records, Damon Dash of Roc-A-Fella Records and Tomica Woods-Wright of Ruthless Records, but the three CEOs leading hip-hop into its age of maturity are Simmons, Combs and Miller.

Considered the godfather of hip-hop, Russell Simmons, who started out as a concert promoter some 20 years ago, says his company, Rush Communications, is having its best year ever. Def Jam records grossed more than $300 million in 2000, while his clothing company, Phat Farm, has gone from $60 million in 1999 to $150 million in 2000, selling everything from shirts to handbags.

Then there's his advertising agency, dRush, which represents the likes of Coca-Cola and HBO among other clients. In just three years, the gross billings of the company total more than $100 million. "Everything feeds off everything else," he says. "We're coming off our best year ever."

With 12 acts on his roster, several movie and television projects, as well as several Internet ventures, Puff Daddy also says times are good at Bad Boy Entertainment. The 31-year-old music executive who rose from a record company intern to CEO by being tenacious about what he does produced nearly half a billion dollars in music by himself in the '90s. Meanwhile, his Sean John clothing line grossed an estimated $70 million for the 1999-2000 fashion season.

As he continues on his goal of making Bad Boy one of the biggest multimedia companies in the world, he credits the fans for making hip-hop what it is today. "It's the people's music," he says. "They believe in it. No matter what they heard about it being fleeting, about it being violent, about it being negative, they always held onto it as being their own music."

One of the most creative CEOs in the music industry, No Limit Records founder Master P has made his fortune by understanding the hip-hop market and being able to effectively market to it. Opening a small record store in 1993 with a $10,000 malpractice settlement following the death of his grandfather, Master P's unparalleled success has come as much from his ability to juggle his money, and squeeze the most out of a dollar, than anything else. If you buy one of his CDs, chances are you'll hear snippets of songs from his other artists tagged onto the end. Watch a No Limit film and you'll also see trailers promoting concerts, his clothing line or other products.

"The first thing is you have to be able to do is catch the consumer's eye," says P, who was raised in housing projects in uptown New Orleans and last year was No. 28 on Fortune's list of richest Americans under 40 and 10th in 1998 on Forbes' list of highest-paid entertainers. "I come from a heritage of people who wear gold teeth, who love jewelry. Even my grandmother's got gold teeth. That's why my product has got to be sparkling. I come from a heritage where you got to look your best. That's where the No Limit packaging comes from. You got to be top quality. People want the best. So when you give them the best, then you've lured them in. You've won their heart. That's what you call guaranteed customers, loyal customers. That's why my business can always stay on top, why I can always sell platinum records. My consumers know I'm gonna give them what they need."