Trapital - deals of the decade

deals of the decade

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Hey! Did you hear Pusha T’s diss track with Arby’s targeting McDonald’s?

According to Push, he wasn’t properly compensated by the fast food chain for coming up with the “I’m Lovin It” jingle from 2003. This is his revenge. Push called out McDonald’s like it’s a record label exec who didn’t pay their artists on time. Anybody can get it.

Before long, startups will offer equity to artists in exchange for diss tracks targeting their competitor. It’s probably already happening! I feel like we’re a few months away from a web3-related diss track.

Today’s memo starts our countdown on the 10 most revolutionary hip-hop business deals of all time. I’ll be joined by my friend Zack O’Malley Greenburg. He’s the former Forbes senior editor who started the Hip-Hop Cash List, authored Empire State of Mind, 3 Kings, A-List Angels, and more.

On the Trapital Podcast, I interviewed 300 Entertainment CEO Kevin Liles! I had a great conversation with him. This week’s memo is packed, so let’s get into it.

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New pod: Kevin Liles, 300 Ent

I had a great, great chat with Kevin Liles. His track record speaks for itself. He was Def Jam President during the late 90s and early 2000s, was an EVP at Warner Music Group, and is currently CEO and co-founder of 300 Entertainment, which was recently acquired by Warner for $400 million.

We talk about his decision to sell the label, Gunna’s big year, Megan Thee Stallion, Young Thug’s new role as chief innovation officer, hip-hop personalities like DJ Akademiks, and a whole lot more.

Listen to the Trapital Podcast here:

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Hip-Hop’s Most Revolutionary Deals: 10 - 8

Let’s start the countdown! Zack O’Malley Greenburg and I went back and forth on our rankings, asked you for your opinions, and we’re ready to share. Today you’ll read deals 10, 9 and 8. You should sign up for Zack’s free newsletter to read 7, 6, and 5 later this week!

10 (tie). Hip-Hop’s Louisiana Purchase

In the 90s, hip-hop media was obsessed with the east coast and west coast beef and its larger-than-life figures. But that didn’t stop two New Orleans-based hip-hop record labels– No Limit and Cash Money– from making landmark deals to take their sound to the next level.

No Limit Records founder Percy “Master P” Miller was already on his way. He had leveled up from selling music at swap meets to earning millions from his music independently. Master P famously turned down a $1 million deal from Interscope’s Jimmy Iovine. Instead, he took advice from Michael Jackson’s attorney and used his leverage to sign a distribution deal with Priority Records, which included an 85% No Limit - 15% Priority profit split. Plus, No Limit received a $375,000 advance from every album and maintained ownership of its masters.

Master P took advantage of the moment with an incredible run in 1998. That year, the label released 23 albums, sold 15 million copies, and earned over $150 million. “Make Em Say Uhhh!” was one of the year’s biggest hits. The colonel of the motherfuckin’ tank had arrived. “Marketing was the key to my success… A lot of people look out the window and say ‘ I want to be like this company,’ but I focused on being the best in my space,” Master P told me in a 2021 interview.

Similarly, Cash Money Records founders Bryan “Birdman” Williams and Ronald “Slim” Williams knew they had something special with the Hot Boys and wanted to level up. In 1998, Cash Money (with the help of attorney Wendy Day) signed a $30 million distribution deal with Universal Music Group, which included an 80% Cash Money - 20% UMG profit split, and Cash Money kept its ownership of its masters. That deal paved the way for the Hot Boys, Lil Wayne’s solo career, Drake, Nicki Minaj, Young Money, and many more.

Birdman is known for his take-no-prisoners approach to deal making. It served him well with major record label negotiations, but he kept that same energy with his signed artists and earned a notorious reputation for it.

Cash Money and No Limit’s deals have even greater significance today. Music catalogs and copyrights are some of the most sought after assets. These guys knew the value of their music decades before Wall Street caught on.

Birdman said that Cash Money’s masters still generate at least $20 million annually. Meanwhile, Master P’s mentality lives on with today’s generation. They pulled off hip-hop’s Louisiana Purchase and haven’t looked back since.

9. The Mother of Hip-Hop Signs The Genre’s First Deal

Sylvia Robinson was a Billboard-charting singer with 1957’s “Love Is Strange.” She was an uncredited producer for Ike & Tina Turner. She wrote a song for Al Green (which he turned down). She and her husband owned a New Jersey nightclub. She touched every part of the music landscape.

But her breakout success came in 1979. Hip-hop was growing, but the industry executives weren't convinced that the genre would translate to vinyl sales. Sylvia saw that as an opportunity to drive around Englewood, NJ, look for rappers, and get them in the studio. She and her son found Big Bank Hank, Wonder Mike, and Master Gee, brought them together, and started Sugar Hill Records.

Sugar Hill Gang’s first single, “Rapper’s Delight,” came out in September 1979, the first hip-hop track on wax. Sylvia sent it to record labels, urged them to play it, and the song took off—quickly cracking the Top 40 and generating $3.5 million for Sugar Hill Records.

“Rapper’s Delight” was often hated on due to its amateur lyrics, but no one questioned Sylvia when she followed up with 1982’s “The Message” by Grandmaster Flash and the Furious Five. The song was a glimpse into the reality of Black life in inner-cities, which became a common theme in hip-hop for years. Hip-hop was on the map.

Sugar Hill Records was soon surpassed by more popular record labels like Def Jam and Priority, but Sylvia’s influence paved the way for the others that followed. She passed away in 2011 at the age of 75. We’re still waiting on that Sylvia Robinson biopic to tell her life story.

8. One Part Vodka, Two Parts Diddy

In 2006, Ciroc was a vodka brand that struggled to sell 40,000 cases per year. Its brand ambassadors weren’t that effective. Diageo, Ciroc’s parent company, wasn’t sure if its grape-based vodka would ever take off.

But that was before it linked up with Ciroc Obama.

Sean “Diddy” Combs agreed to a 50 - 50 profit split with Diageo to promote its emerging liquor brand. Puff had a track record of selling his lifestyle to consumers. He did it with music at Uptown and Bad Boy Records. He did it in fashion with Sean John. And now he was ready to do the same in spirits.

Puff put the brand to work immediately. He named Ciroc the official vodka of New Year’s Eve. He featured the brand in lavish commercials with beautiful people living their best life in Vegas. Diddy and longtime business partner Shawn Prez also started The Ciroc Boys, a street team of well-known brand ambassadors to push the product. This was at a time when dark liquor was arguably more popular in hip-hop and Black culture than light liquor was.

Ciroc sales jumped to 100,000 cases in 2007 and steadily climbed in the late 2000s. By 2015, annual sales had reached over 2 million per year. It's the second-largest premium brand, only trailing Grey Goose. It also inspired other rappers to follow suit. Rick Ross, a former Ciroc Boy, partnered with Belaire after seeing what Puff did with Ciroc. Drake followed with Virginia Black whiskey. Wiz Khalifa is up next with a gin called McQueen And The Violet Fog.

In my collaborator Zack O’Malley Greenburg’s book 3 Kings, he wrote that Diddy doesn’t own equity in Ciroc but he would share evenly in the proceeds if Ciroc was ever sold. A spirits industry expert estimates that Ciroc is easily worth $2 billion based on Diageo’s current valuation. It’s an impressive figure that highlights the work Diddy put into the brand.

Sign up for his free Zogblog newsletter to hear the next few deals in our rankings as we continue counting down the ten most revolutionary hip-hop business deals of all time.

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coming soon from Trapital

Podcast: Brittany Luse and Eric Eddings, hosts of For Colored Nerds podcast. We talked about their podcast journey with Gimlet and Spotify with ‘The Nod’, ownership in podcasting, trends in Black culture, and the one and only Tyler Perry. Drops on Friday!

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