Why Rappers Aren't Millionaires....
 

I picked this up from somewhere....

Who is the incredible bonehead who said rappers are millionaires? Wrong, wrong, wrong, wrong, wrong!! Because fans expect their favorite artists to be richer than Bill Gates, this puts an incredible amount of pressure on the artists to appear wealthy. And it's not just the fans; I can't tell you how many times I've been out with rappers along with people who work in the industry, who expect the artists to pick up the dinner check or buy bottles of Moet. I've even seen people cop an attitude if the artist doesn't pay for everything. This is small minded and ignorant because the artist is ALWAYS the last to get paid.

Once an artist releases a record, the pressure is on to portray a successful image to their friends, families, fans, and people around the way. People expect the artists to be well dressed, drive an expensive car, etc. Think about it. Don't you expect the artists "to look like artists?"

Sadly, when an artist gets signed to a label deal, especially a rap artist, he or she receives somewhere between 10 and 15 points. What that means is 10% to 15% of the retail sales price, after the record label recoups the money it puts out (the advance, the sample clearances, the producers, usually half the cost of the video, any cash outlays for the artists, half the radio promotions, etc.). The artist has to sell a huge amount of units to make any money back. Here's an example of a relatively fair record deal for a new rap artist with some clout in the industry and a terrific negotiating attorney:

ROYALTY RATE: 12% "All in deal" We're going to assume that there are 3 artists in the group, and that they split everything equally. We're also going to assume that they produce their own tracks themselves. Suggested retail list price: $14.98 less 15% packaging deduction (usually 20%) $ 12.73 gets paid on 85% of records sold ("free goods/breakage") $ 10.82 So the artists' 12% is equal to about $1.30 per CD sold.

Let's assume that they are a hit and their record goes gold (although it is rare that a first record blows up like this). Bear in mind that in the year 2000, only 45 rap records sold more than 500,000 units out of almost 1,000 releases. Of these 45 records, less than 10 were by new artists.

GOLD RECORD = 500,000 units sold x $ 1.30 = $650,000. Looks like a nice chunk of loot, huh? Watch this. Now the label recoups what they've spent. Half of the independent promotion, half of the video cost, some tour support, all those limo rides, all those out of town trips for the artist and their friends, the advance, etc. $650,000 -$ 50,000 half the indie promotion -$ 75,000 half the video -$ 25,000 tour support, trips, etc. -$200,000 recording costs -$ 70,000 advance -------- $230,000

Still sounds OK? Watch... Now, a third of the $650,000 stays "in reserve" (accounting for returned items from retail stores) for a year or so, depending on the length specified in the recording contract. So the monies are actually subtracted from $429,000 (the other $221,000 is in reserves for a year and a half the way accounting statements are figured). Now, there's also the artists' manager, who is entitled to 20% of all of the entertainment income, which would be 20% of $650,000, or $130,000 (although many managers do not commission the recording costs). Remember, the artist is the last to get paid, so even the manager gets paid before the artist.

So the three artists actually receive $33,333 each for their gold album, and in a year and a half when the reserves are liquidated, IF they've recouped, they will each receive another $73,666. Again, IF they've recouped. Guess who keeps track of all of this accounting? The label. Most contracts are "cross-collateralized," which means if the artist does not recoup everything on the first album, the money will be paid back out of the second album. Also, if the money is not recouped on the second album, repayment can come out of the "in reserve" funds from the first album, if the funds have not already been liquidated. This is why almost all artists go into their next album "in the red." From artists like DMX to Slick Rick, they are always in a debt position with their record label even though the label is making millions of dollars per release. For example, on the Gold album example we're illustrating here, at a wholesale price of $11.41 per CD, 500,000 units would bring the label a gross amount of $5,705,000.

Even after the reserves are paid, each artist only actually made 21 cents per unit based on this example. The label made substantially more. This example doesn't include any additional production costs for an outside producer to come in and do a re-mix, and you know how often that happens.

So each artist in this group has received a total of about $107,000 from record sales. After legal expenses and costs of new clothing to wear on stage while touring, etc, each artist has probably made a total of $90,000 before paying taxes which probably took another 28% to 33%, plus accountant fees. Let's look at the time line now. Let's assume the artists had no jobs when they started this. They spent 4 months putting their demo tape together and getting the tracks just right. They spent another 8 months to a year getting to know who all of the players are in the rap music industry and shopping their demo tape. After signing to a label, it took another 8 months to make an album and to get through all of the label's bureaucracy. When the first single dropped, the group went into promotion mode and traveled all over promoting the single at radio, retail, concerts, and publications. This was another six months. The record label decided to push three singles from the album so it was another year before they got back into the studio to make album number two. This scenario has been a total of 36 months. Each member of the group made $64,800 (after taxes) for a three year investment of time, which averages out to $21,600 per year. In corporate America, that works out to be about $10 per hour. Think about this next time you see your favorite artist drive by in that new Escalade-- I do.

Saw that on MTV special

so wack rappers who are signed to huge corperations and get a lot of promotion and make high budjet videos get fucked over.

so what? serves 'em right for not growing a pair of balls and NOT having a chain, a car and a huge house right away.

The reason for this is that so many artist are wanting to get signed so they sign over the rights to there music before it even comes out. Look at Michael Jackson, fucking wierdo, but he owns the rights to all of his music, so anytime it is used he gets a piece. Rappers have given that power to the label so they only get cuts of the actual sales, but they dont get payed when it is used for a Gap commercial, or TV show intro.

how dey get all tha stuff than?

an eye opener and totally true.

you become a businessman/woman. you negotiate. half these rappers come from the streets(mainstream) and they take the first offer they get........wrong! you look at many different labels and you pick the one that is giving you the best deal, and is committed to putting out quality work over an extended period of time. most record labels sign anybody so they can become a one hit wonder they got there money as you read above they don't care if it turns into your first and last album. also you need to check yourself.....who cares what car you drive right away......stay ghetto until you can afford to be a "baller" fuck the expensive chain and rolex. besides street niggas are gonna feel a rapper whose grimy and broke like them right.........most everyone i talk to says "man i hate all that jewel flossing look at my rims talk." lastly i didn't see the biggest money maker on there........shows.....not a tour paid by the label.....just shows likek before you got signed....but now people know your name thanks to the promotions get a label that gives you a percentage of the gate and that will give you a big chunk of change on a regular basis...........but what do i know i'm not signed and i'm broke as hell..........but i make 10.67 an hour more than your average rapper.....go me!!!!!!!!!!!!!1

word^

most of a rappers income comes from shows on tour.

shits crazy.................imma think of that next time i see an underground rapper like.......sole or pharone monch............................................. .......................................

read this shit before long ass time ago

Yeah alot of people be like "YEAH I JUST GOT SIGNED TO SUCH IN SUCH!!", I just think...that don't mean you made it. Look at 50 cent. let say they gave him 8 points on his album, (and thats damn good for a new artist debut). His shit did 4.5 mil, that means he only walked away with $360,000. Thats not even close to a million...and look at how hard he had to work, and how much free underground work he had to do. I mean I got more underground mix tape shit from 50 cent than actual music in the mainstream (personally I think that shit is better than his album)...

another thing though, the label recoups their advance fromo the album sale. The limo's the hotels, the cars, the videos the house. I would have paid for that shit anyway so I don't really see a negative. The starving artist really doesn't have a choice. What would you do, wait and see if MAYBE there might be a better deal, or get ready for the ride of your life. I mean, they don't specify the non-monetary pay offs; The bitches, yeah, 3 years ago Vivica Fox wouldn't have gave 50 a second look, now they sittin next to each other at the awards, and I bet'chu he hit that! Just from rhymin, same shit we do on this site! Other than that you get a certain "you tha man"-erisms. Signin autographs, gettin free shit...and did I mention tha Bitches?

yea i already knew about these rappers getting jurked and shit, that bull

Thats why rappers have a period before droppin single to single, Touring and promotion. And albums that take a year to year period, are usually on tour, getting rich because money from ticket sales go to them and not labels or whatever,just to pay them back for the money lent.

It's called renting, joe....

All that shit cars, houses, boats, even clothes be rented and they pay to use it that one time and give it back..And the hoes be models, not no chicks on the street.

On a major you ain't really ballin unless you go multi platnium..that shit is played out.....Independant or a joint jenture iwth a major on distrabution is the best way to go...along with owning your masters and publishing.

SO if you ever get sign to a Major Label don't get too happy, handle your B.I. first, cuz you can fuck around and have to OWE that record company instead of making any money at all......

Re: Why Rappers Aren't Millionaires....
 

eminem is a millionaire, ja rule is a millionaire, jay z is a millionaire, fabulous is a millionaire...have you ever seen mtv cribs? thee rappers have fabulous homes.
eminem just sold his house in detroit for over a million dollars.
how the fuck can u sell a house for a million dollars and not be a millionaire?

none of this is true,
cuz if they did know their buisness,
dat good, then they wouldhave their foot in da door, 2 gettin signed and makin money,

sIn, you gotta have talent, that's why they couldn't get their foot in the door. You gotta be reeeaally goood, make good enough music, where a broad spectrum of people HAVE to Have your album.

The article didn't say you couldn't be a millionaire, of course the top dawgs are. You gotta sell milions of records and have a good deal. Most of the time it's the labels house, & car. And as soon as you stop rakin in the dough, they'll take it away. Especially because Mtv cribs is on, it's good publicity.

Has anybody been watching p diddy make the band. Nobody noticed when they went to the radio station they magically had big platinum chains?

50 cent made atleast a million before taxes. Not including the tour shit he's doing. but he's a a unsual case not many people blow up like he did.

Let's break it down normallly gold= break even multi platnum= make money. if this wasn't true canibus wouldn't be able to fund his label. He went gold on both matter of fact he wouldn't be able to leave the label he would be put in record salvery like foxy brown.l

hell yea..me too

they dont get all their money from just rappin, like P. diddy was a producer until Biggie tried 2 get him 2 rap again which he did. if u did a point system on rap cd's that sell, if one cd is 100 pts , the rapper gets like 3 pts out of that 100, and the rest goes to producers and managers and publishing and shit like that, also the big rappers, eminem p diddy 50 cent, they all got their own clothing lines, which they get huge doe from

i still dont feel bad for these get rich quick cash money millionares

They had tons of money...but they spent it all on paying the hoe's to be in their video's, and renting the houses they film in. Idiots. Yay, LETS WASTE CASH!!!!!!

if thats all he walked away with then he got got!!! but personally i think he got a couple mil out tha deal......word is he just bought mike tyson old mansion!!

on the real......peeps should take a lesson outta Master P book.....yea he ain't doing anything musically now....but business wise .......bruh had shit planned!! and got paid!!

lol...which Master P book?