Jay-Z Speaks Financial Truth in New Song With Kanye West


Jay-Z and Kanye WestJay-Z and Kanye West: Richer than you and Lil Wayne. 

In a shocking turn of events, Jay-Z has used the microphone to proclaim his financial superiority over the rest of his hip-hop peers. The assertion comes in a new song with Kanye West entitled “H.A.M.,” which stands for “Hard As a (Mofo)” and is the first single from the duo’s upcoming collaboration album, Watch the Throne.

On the track, released on Kanye’s Facebook page early Tuesday morning, Jay-Z complains that his competitors merely fantasize about what he does on a daily basis — including, but not limited to, schmoozing with Warren Buffet and Steve Forbes. He also cites this writer’s $450 million valuation of his personal net worth, rounding up slightly to “half a billie,” before taking a shot at a fellow Hip-Hop Cash King or two: “Really, you got baby money.”

The line is a double entendre meant both as a general reference to the small amount of money that other rappers have in comparison to Jay-Z, and as a specific reference to the wealth of rapper Dwayne “Lil Wayne” Carter, also known as “Weezy Baby,” and fellow New Orleans rapper and record executive Brian “Birdman” Williams, also known as “Baby.”

The latter recently claimed the former had more money than Jay-Z, which is, well, simply not true. Jay-Z earned $63 million dollars last year, tops on our list of hip-hop’s top earners, while Lil Wayne banked $20 million. Birdman did not make the list.

Perhaps the best line on Jay-Z’s new track is a verifiable and, one might say progressive, boast: “(You) ain’t got my lady’s money!”

Indeed, Beyoncé took in a whopping $87 million by our last annual count, more than any rapper — and more than Jay-Z and Lil Wayne combined.

By ZACK O’MALLEY GREENBURG (Forbes)

The Fresh Prince of Streetwear


Jonathan Koon, auto-pimping mogul and designer, wants to be a billionaire by 30

Wearing red Hermès sneakers, a gray smoking jacket-cardigan hybrid of his own design, and five pounds of pure gold draped around his neck, Jonathan Koon walks around his Midtown Manhattan showroom inspecting his new line of high-end denim. Nearly a dozen pairs of hand-washed, uniquely distressed and abraded jeans from his spring 2011 collection are laid out on a coffee table. Koon picks up one pair and turns a pocket inside out to reveal his signature sartorial touch—an ancient Chinese poem, “Bringing in the Wine,” by the scholar Li Bai, inscribed in the fabric. “It basically says, ‘If there’s a chance to be happy, or a chance to drink, drink and be happy to your heart’s desire,’ ” Koon translates.

It also describes Koon’s philosophy. The precocious auto accessories mogul and ghetto-fabulous branding guru wants to be the Mark Zuckerberg of Asian streetwear couture. With the Jan. 3 launch of his Private Stock clothing line, Koon, 27, is hoping Americans will go as gaga for his Hong Kong-inspired jeans as they once did for Italy’s Diesel brand. Maurizio Marchiori, Diesel’s former U.S. marketing chief, is already a believer. “Jon has great potential,” says Marchiori, who mentored Koon through the design process. “This guy’s not a designer, he’s a visionary.”

While Koon may dress like a rapper and talk like a quant, he’s already thinking like a mogul. “We’ll be the next big denim company,” he says. “A billion-dollar company.” The first generation Chinese American has invested $2 million of his own money in Private Stock, which he’s soft-launching with 11 denim styles (priced between $110 and $325) and roughly the same number of polos and button downs along with lightweight jackets, bracelets, and watches—all befitting a modern adaptation of West Side Story set in the streets of Hong Kong. Certain limited-edition styles will be sold for up to $1,195 per pair.

Unlike many aspiring fashion designers, Koon is already a multimillionaire, having made a fortune tricking out cars. While attending Manhattan’s prestigious Stuyvesant High School, he and a friend launched Extreme Performance Motorsports with $10,000 of their personal savings. They opened wholesale accounts with Asian auto distributors and started importing custom body kits, aftermarket wheels and rims, floor mats, stereo systems, and all manner of specialized accessories that—in the age before MTV’s Pimp My Ride—helped usher in the blinged-out car craze. “It was almost like a virus that spread,” says Koon. “We struck a fair amount of success very quickly.” Koon says he made a million dollars within a year.

After shuttering the business while attending Georgetown University, Koon struck gold again, in 2004, by patenting Dubz, a hugely successful air freshener designed like a spinning car rim. He subsequently launched Sparkz (a lighting accessory), Klipz (a cell phone holder), and Ionik (an air ionizer), which helped establish his brand among record label executives and rappers. In 2008 hip-hop star Young Jeezy made Koon the exclusive partner in his apparel line, 8732. The clothing company now falls under the umbrella of Tykoon Brand Holdings, which is based in his native Queens, N.Y. The 27-person, privately held company, Koon claims, is worth $80 million.

Soon after joining 8732, Koon’s obsession with car parts was replaced by a fixation on street fashion. He traveled through Europe and Asia to scrutinize local styles and learned how to distress jeans at a denim washing house in Japan. Koon’s curiosity soon led him to start creating one-off trousers for what he describes as “big-time pop stars in Hong Kong and Tokyo,” though he declines to divulge their identities—”I don’t wanna name-drop,” he demurs.

Koon also caught the attention of Italian luxury goods designer Domenico Vacca. The two teamed up to create the Domenico Vacca Denim Collection, which landed in the designer’s boutiques last May and now falls under the Tykoon umbrella. “It looks like an unlikely partnership, but each is bringing something to the table,” says David Lipke, who covers menswear and denim for Women’s Wear Daily. “Domenico Vacca has a base of loyal clients that like his approach to somewhat fashion-forward gentleman’s tailoring, and Jon Koon brings a youthful attitude and some expertise in sportswear manufacturing.”

Breaking into the premium denim market on his own, though, will be a tougher challenge. It’s a highly competitive field, says Lipke, since it’s an attractive starting point for upstart designers and entrepreneurs. “There are a multitude of brands in the denim category, and the ones that thrive have dedicated, astute people behind them who live and breathe denim,” he says. Newer companies such as Hudson, J Brand, and AG Adriano Goldschmied were built from scratch and have come to saturate the marketplace. It’s a constant battle to stay on top of the trends that can quickly swing sales each season.

Bearing the harsh reality of the dungaree trade in mind, Koon is planning a slow expansion. He’s sinking an additional $3 million in Private Stock’s fall 2011 collection, which will expand to 40 bottoms, including 16 variations of jeans, plus an array of cashmere, bamboo, and poplin coats, shirts, and knitwear. In the meantime, his spring collection will make its debut in about 75 boutiques in the U.S. with the hope of eventually landing in trend-setting department stores. “The company, especially in this market, needs to grow organically,” says Marchiori. “It will be a long process, but if [Koon] follows his intuition and makes something that is really different and new, he will be able to do it.”

While that process might undermine Koon’s ultimate goal of becoming a billionaire by the age of 30, he’s still preparing himself with the trappings of moguldom. In a stunt that would make even The Donald proud, Koon had his business cards custom made from 18-karat gold. Why this marriage of stationery and bling? Says Koon: “So that nobody would ever forget me.”

By: Joe Pompeo (Business Week)

Daymond John talks about turning Fubu into FB Legacy


Daymond John talks about transforming Fubu into FB Legacy and speaks on his process of rebranding and how to make it effective.

Click here to watch the video

The Business of Hip-Hop, and How It Grew


Dan Charnas’ The Big Payback details the genre’s origins and evolution into a branding and marketing phenomenon

After the end of the 2000 fiscal year, Loud Records co-owner Rich Isaacson discussed his label’s finances over lunch with Mel Ilberman, the chairman of its parent company, Sony Music International. Although the previous 12 months had seen Loud artists such as Wu-Tang Clan, Big Pun, and Xzibit haul in gold and platinum albums, an exasperated Ilberman confronted Isaacson: Never before had he seen a company spend $100 million without making any money.

Isaacson, understandably, was taken aback. This was, after all, how Loud operated: The company had recently lavished $1 million on a promotional video for a single Mobb Deep track. Surely Sony must have known that the label and its previous partner, Bertelsmann Music Group, had parted due to years of inadequate profit margins? Apparently not. Sony shuttered Loud shortly thereafter.

This episode, described in Dan Charnas’ The Big Payback: The History of the Business of Hip-Hop, typifies the music business in general and hip-hop in particular. This new genre wasn’t exactly built on solid financial ground. The first successful rap record, Sugarhill Gang’s 1979 Rapper’s Delight, was facilitated by a $5,000 loan from Morris “Mo” Levy, a grizzled music business veteran with close ties to the Gambino crime family. Yet over the intervening decades, hip-hop invaded the suburban zeitgeist and launched its own full-blown ancillary industry replete with clothing lines, fragrances, liquors, travel agencies, and antique-looking chalices known as “pimp cups.”

Is there financial wisdom to be gleaned from this multibillion-dollar enterprise? Perhaps. Charnas, a former talent scout and a writer for The Source magazine, has written a book that presents itself as a business manual of sorts, “focusing on successful marketing strategies” and providing a “primer on hip-hop’s bold and compelling paradigm for business success.” Unfortunately, as Charnas reveals in his 600-page-plus tome, the paradigm was actually based on the old business practice of winging it, then cashing out.

During its three tumultuous decades, hip-hop’s top executives often appeared to be improvising as adroitly as their platinum-certified rappers. For years the so-called rap game was a virtual gold rush that attracted all manner of colorful entrepreneurs and left countless artists nursing serious financial grievances. The moguls who came to dominate the industry in the mid-’90s—Sean “Diddy” Combs, Russell Simmons, and Damon Dash—were all gifted self-promoters who, as portrayed in The Big Payback, were more or less extemporizing in a marketplace created by a young, capricious demographic.

This formula didn’t guarantee big bucks for record companies. In the early ’90s, Charnas writes, Sony was exasperated at the “endemic disorganization” through which its Def Jam imprint, under Simmons’ stewardship, had accrued some $17 million in debt. If only they’d realized that record sales were becoming a secondary revenue stream. With the creation of the clothing line Phat Farm in 1992, Simmons became the first rap entrepreneur to look beyond mere music and attempt to market the ghetto-quixotic lifestyle preached in hip-hop’s lyrics. Five years after he and his partner Lyor Cohen had unloaded their stakes in Def Jam for $135 million, Simmons cashed out of Phat Farm, in 2004, for nearly $140 million.

The message hidden within The Big Payback is that while hip-hop may be a volatile industry, few of its business strategies are unique. After Simmons’ initial success, virtually every major rap figure tried to establish a presence in the rag trade. Combs’ Sean John label and Jay-Z’s Rocawear line were among the most prominent companies to follow in Simmons’ footsteps. (Combs recently signed an exclusive distribution deal with Macy’s (M), while Rocawear was sold for $219 million in 2007.) Rapper 50 Cent also launched a successful clothing line, G-Unit, before entering a 2004 partnership with Vitamin Water parent company Glacéau. 50 Cent’s unimpeachable street credibility—he was shot nine times at close range in 2000—helped sell millions of bottles of his signature drink, Formula 50. In 2007, Coca-Cola (KO) purchased Glacéau for $4.1 billion, and “Fitty” walked away with, Charnas writes, upwards of $60 million.

Of course, others weren’t as lucky. Jay-Z’s former wingman Damon Dash steered Roc-A-Fella Records on a self-immolating expansion drive that included magazines, movies, and a vodka brand. Despite Dash declaring himself the Tiger Woods of business, banks foreclosed on his two New York condos in 2009.

While The Big Payback is no business primer, it does contain hope for aspiring music moguls. Despite record sales’ free fall, most of hip-hop’s ruling class is enjoying some well-earned rest after making millions on all the lifestyle extensions they launched. Looking on the bright side, there’s now ample room for a new cohort of inventive mavericks to take over.

By: Steven Daly (Business Week)

2010 Hip-hop Cash Kings


Four years ago Jay-Z issued a lyrical taunt to his fellow rappers: “What you call money, I pay more in taxes.” Turns out his line was more than just a boast.

Jay-Z pulled in $63 million over the past 12 months, earning him his second straight hip-hop cash crown. His income level places him in the 35% tax bracket, which means he’ll pay Uncle Sam about $22 million this year–a sum greater than the total earnings of any other rap star besides second-ranked Diddy.

“Jay-Z is in a league of his own right now,” says Ryan Schinman, chief of Platinum Rye, the country’s largest buyer of music and talent for corporations. “There are very few artists of any genre, not just hip-hop, who’ve created such brands for themselves.”

The top 20 earners on this year’s Cash Kings list racked up about $300 million in earnings, an average of $15 million per artist. Remarkably, the total is roughly the same as last year, despite a troubled economy and a music industry thrown into flux by new technology.

“There aren’t many artists selling 250,000 albums in the opening week, and that used to happen all the time,” says entertainment attorney Donald David. “The rise of iTunes means people don’t have to buy whole album … and that has changed the business dramatically.”

Jay-Z and Diddy are two artists who’ve taken the changes in stride. In addition to releasing an album and launching a worldwide tour (average gross: more than $1 million per show), Jay-Z co-owns the 40/40 nightclub chain and has a stake in the NBA’s New Jersey Nets. Diddy continues to cash in on Diageo vodka, Ciroc and roles in television and film, including this year’s Get Him to The Greek. He also hawks Diddybeats ear-buds, part of the headphone line established by Dr. Dre, who ranks fifth on our list with $17 million.

Senegalese-American impresario Akon ranks third with $21 million, thanks to his Konvict Clothing label, a lucrative World Cup soccer ad campaign for Pepsi and Kon Live, his Interscope-backed imprint that’s home to Lady Gaga and others. Fourth on the list is Lil Wayne, who managed to pull in $20 million from his new album, Rebirth, and heavy touring before the start of his one-year jail stint in March for weapons charges. Ludacris ranks sixth with $16 million, a total fueled by movie roles and a new cognac line, Conjure.

“There’s a lot of cross-branding and cross-marketing that’s going on these days,” notes Troy Marshall, vice president of promotions at Interscope Records. Along with touring, he says, “those are very important components for artists as far as spreading the message of their music and spreading the message of their brand.”

Kanye West’s earnings fell from $25 million last year to $12 million this year in the wake of his highly publicized outburst during Taylor Swift’s acceptance speech at the 2009 Video Music Awards. With a new album and world tour in the offing, he should be back toward the top of next year’s list along with 50 Cent, who took a break from touring and recording to concentrate on film roles over the past year, earning $8 million, a relatively paltry total for the 2008 Cash King.

Eleventh-ranked Drake is the highest-earning newcomer on the list. He banked $9 million over the past 12 months, thanks to a new record deal, an advertising pact with Sprite and an agreement with Virgin America that plasters his likeness onto the sides of airplanes. Another good decision: recruiting Lil Wayne and Jay-Z to appear on his debut album, Thank Me Later, which sold 447,000 copies in its first week.

Though Jay-Z earned more than Lil Wayne, Drake, Kanye West and 50 Cent combined, he’s not even the richest musician in his own home–that honor goes to his wife, Beyoncé, who raked in $87 million over the past 12 months.

Methodology
The Forbes Hip-Hop Cash Kings list includes male recording artists whose work is primarily classified as hip-hop or rap. Earnings estimates, which include income from record sales, digital downloads, touring, films, TV shows, endorsements, books and other entertainment ventures, are calculated between June 2009 and June 2010. Management, attorney and agent fees are not deducted.

In order to determine our list, we interviewed numerous sources within the music industry, including lawyers, media buyers, record label executives and many of the artists themselves. We also conducted research via Billboard, Pollstar, Nielsen SoundScan and the Recording Industry Association of America, among other sources.

Source: Forbes

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