Hip-hop economy: from New York to Nepal, hip-hop has become America's leading cultural export. Across the globe, it's changing how businesses are marketing their products - Special Report Part 1 of a Series - Company Profile

Black Enterprise, May, 2002 by Alan Hughes

ON A RAIN-SOAKED MARCH AFTERNOON, RAP ARTIST Jay-Z and his partner. Damon Dash are taking care of business. They cruise down the slick Manhattan streets--Jay-Z in his sleek. black Mercedes and Dash in a huge Land Rover with entourage in tow--to their next appointment. This time, they're preparing for what will turn out to be a two-hour photo shoot. Jay-Z inspects more than 15 styles of shoes before selecting the right footwear (he never wears the same pair twice), while Dash, an amateur boxer still pumped up from 12 rounds of sparring, uses his weapons of choice--a two-way pager and cell phone--to keep track of pending business deals.

This is how they roll. In any given hour of any day, the duo could be found in the studio producing the next hottest CD, shooting a music video, reviewing the latest gear from their successful line of urban apparel, or screening one of their "thug life" movies, chock-full of rap acts from their music label. To manipulate these complementary activities, they pay attention to the smallest of details--even shoes for a photo session--and seek out the next lucrative opportunity. It's all part of a strategic plan to effectively use one project to cross-promote their image and cluster of brands.

That's how Jay-Z, Dash and Kareem "Biggs" Burke created Roc-A-Fella, Enterprises, a $300 million empire that used hip-hop to emerge as a major business force. Roc-A-Fella's music and films may depict the hard knock life, but its operation is top flight. And, in the process, it's generating paper--loads of it. "We didn't like the way the music biz was treating us," says Dash, CEO of Roc-A-Fella Records, the label he formed with Jay-Z (a.k.a. Shawn Carter), 10 years ago. "I'm not going to let me anyone tell what to do. It's our music and we're going to do it our way."

Over the years, Roc-A-Fella expanded on that philosophy. Today, visit their Website and you can find--and purchase--an array of products through "Roc-A-Fella Center." Such efforts have generated $100 million for their record label, another $150 million for Roc-A-Wear apparel, and $50 million for projects such as films. And coming soon: Roc-A-Fella Sports.

The products and images created by Roc-A-Fella's Dash and Jay-Z, as well as their brethren Snoop Dogg, Busta Rhymes, and Master P have created the Hip-Hop Economy, an economic force transforming commerce across the globe. Think that's hype? Well, think again. Every hip-hop CD sold, every dollar made from urban gear, every buck generated from television shows, radio programs, films, and even video games with a bit of "flava" contribute to this $5 billion burgeoning sector.

Over the next four issues, BE will explore hip-hop's impact on the music, fashion, sports, and film industries. In this part, we reveal its power in shaping advertising campaigns and directing consumer purchases.

Hip-hop is the culture of America's urban youth. It's a way of dressing, speaking, and behaving, all with an in-your-face attitude. It evolved from rap music, a sound born in the inner city, characterized by syncopated beats and dynamic lyrics. In some cases, the music portrays the darker side of urban life, glorifying violence, materialism, illegal activities, and misogyny. On the flip side, it's also a form of expression embraced by youth culture.

The origins of hip-hop music can be traced to DJ Kool Herc's turntable wizardry in the mid-1970s, but the culture formed as break dancing, graffiti art, and deejaying converged. Popular in urban America, hip-hop remained an underground phenomenon until the Sugarhill Gang's "Rapper's Delight" became the first song in this genre to hit the pop charts in 1979, peaking at No. 36 on the Billboard charts. Despite its popularity and the success of Old School acts such as Grandmaster Flash & the Furious Five, Kurtis Blow, and Run-DMC, critics argued hip-hop music would be just another fad. Roughly 25 years later, it has become more than a music genre. It's a culture that is embraced by youth worldwide. It's no longer a black thing; whites purchase roughly 60% of hip-hop records.

In fact, hip-hop music sales made up 89.2 million, or 11.7%, of the 762.8 million albums sold in the U.S. in 2001--ranking it the third bestseller behind rhythm &blues and alternative music, according to SoundScan, a White Plains, New York-based firm that monitors U.S. album sales. At an average of $12 per CD, that's more than a billion dollars in hip-hop music sales alone. The Hip-Hop Economy slumped in 2001 when the U.S. slid into recession, but sales were more robust in 2000, totaling 101.5 million of the 785.1 million albums sold in 2000 for a total of $1.2 billion. When these revenues are combined with clothing, film, and television revenues, the market grows exponentially.

This sector goes beyond American shores. Its influences can be found in clubs, clothing, and the attitude of youth from Germany to Japan. "It's always been big overseas," says Kim Osorio, music editor for The Source, a publication that's considered hip-hop's bible. "If you go to Japan, the influence hip-hop has on the culture is crazy. It's different, though. They're still break dancing."