The Business Of Hip-Hop
The 50 Cent Machine
The 50 Cent Machine
Zack O'Malley Greenburg Of Forbes
When it comes to records, 50 Cent knows what it takes to go platinum. But in a mine shaft thousands of feet below the surface of South Africa, he's got metal, not vinyl, on his mind.
Last May, 50 paid a visit to billionaire mining baron Patrice Motsepe in South Africa. Flanked by select members of their respective entourages, the unlikely duo descended into a subterranean trove of platinum, palladium and iridium, growing like moss on the earth's warm innards. A spectacular backdrop for a bling-drenched music video, to be sure.
But 50 was there for other business: to forge a joint venture with Motsepe that could soon bring him an equity stake in the mine--and 50 Cent-branded platinum to the world.
"Things that people wouldn't actually expect me to be involved in," 50 muses a few weeks later, reminiscing on his trip. "I've got a diverse portfolio."
In Pictures: Inside The 50 Cent Machine
Here, in the comfort of a midtown Manhattan office, just miles from the Queens, N.Y., streets where 50 once dealt cocaine, the glowering rapper whose lyrics are often punctuated with gunshots is nowhere to be found. In his place is Curtis Jackson, businessman. Less gangster, more Gordon Gekko, he ticks through the contents of his portfolio: stocks, bonds, real estate, investment pools, all carefully monitored by brokers at Goldman Sachs and Morgan Stanley.
Over the past 12 months, 50 has added $150 million to his substantial coffers. He hawks clothing, sneakers, videogames, movies, ringtones and flavored water. His earnings were nearly twice as much as last year's hip-hop cash king, Shawn "Jay-Z" Carter, and over four times the sum garnered by Sean "Diddy" Combs, who ranked third for the second year in a row. After topping Forbes' inaugural Cash Kings list, the trio released a modified version of 50's "I Get Money" called "The Forbes 1-2-3 Remix."
Diversification is crucial for rappers. Record sales are declining, new media are playing havoc with the music industry, and it seems unlikely that hip-hop acts will ever lure stadiums of deep-pocketed baby boomers with the ease exhibited by geriatric rockers such as the Rolling Stones and the Police.
Perhaps as a hedge, Jay-Z signed a 10-year, $150 million deal with concert promoter Live Nation in April. Kanye West headlined the traditionally rock-focused music festival Lollapalooza in Chicago earlier this month. 50 is looking to secure his own long-term relevance with deals like the one currently in the works with Motsepe.
"The financials of the music business have changed to the point that we have to find ways to make money in other places," says Barry Williams, 50's circumspect brand manager. "I didn't think six years ago when we started trying to sell music that we'd be selling VitaminWater and shoes and clothes. Now we're moving into other directions, and four or five years from now, it's exciting to think about us looking at natural resources and raw materials and other businesses."
50's first mega-deal was completed a year ago. He snagged $100 million when Coca-Cola bought Glacéau, VitaminWater's parent company, for $4.1 billion. The rapper had received a stake in Glacéau as compensation for peddling the "Formula 50" VitaminWater flavor. He'd continued to add to his holdings as the years went on. Although observers praised 50's financial foresight as soon as the deal was announced, he was far from satisfied.
"People were talking about how much money I made, but I was focused on the fact that $4.1 billion was made," says 50. "I think I can do a bigger deal in the future."
Looking one step ahead of the business has always one of 50's trademark traits. He grew up rough in Jamaica, Queens, in the midst of the 1980s crack epidemic. His mother, a drug dealer, was murdered when he was 8; soon after, he began running cocaine for his uncles. He realized he could make more money by charging a markup in the neighborhood of 25%. This precocious business sense earned him plenty of dollars--and three arrests--by age 19. He avoided jail time by agreeing to attend a six-month, military-style boot camp in upstate New York.
Returning to Queens, the fledgling rapper scored a $65,000 deal with Columbia Records. But in 2000 his past caught up with him. Days before his first album, Power of the Dollar, was set to hit stores, 50 was shot nine times and left for dead in front of his grandmother's house. Columbia dropped him, and the record was never released, though it has since been heavily bootlegged. Undeterred, he returned to the studio as soon as he recovered from his wounds. He started churning out "mix tapes," which are informally circulated at parties, and soon he had become an underground rap sensation.
The tapes earned him a following--and a big break. In 2002 star rapper Marshall "Eminem" Mathers heard his driver playing one of 50's songs. Eminem was so impressed with the music that he invited 50 to Los Angeles to meet with him and producer Andre "Dr. Dre" Young. Within days, they signed 50 to a million-dollar deal for five albums.
But from the start, 50's career was more about business than music. He spent his first $300,000 registering the "50 Cent" and "G-Unit" trademarks; in 2003 he brought on veteran talent manager Chris Lighty to head up his business entourage. Today, Lighty is part of an informal board of directors for brand 50 Cent. The team helps 50 sort through endorsement offers, brainstorm new ideas and operate his businesses.
At the top of that pyramid is 50 himself. Ask any of his associates what sets him apart, and they'll all tell you it's his fiendish work ethic. In a recent 24-hour span, he started by filming scenes for Streets of Blood from 7 p.m. to 7 a.m. (He will star in the flick, due out next year, alongside Val Kilmer and Sharon Stone.) He then went straight to the mobile recording studio he keeps on set and worked on his new album for four to five hours. After snagging a few hours of sleep, he went right back to the studio.
"I don't think he'll ever stop working," says Laurie Dobbins, chief operating officer of Lighty's company, Violator Management. "He's got the work ethic of a robot. I think he works 24 hours a day."
50 will always be a performer. While he spent the daytime hours of his Africa tour kibitzing with the likes of Motsepe and Nelson Mandela, nights brought concerts--and crowds upwards of 100,000. He watched as his music broke the language barriers between scores of local dialects. He says the rush he gets from performing is the reason he doesn't need drugs. But don't be confused about where his priorities lie.
"Closing a deal," he says, "is a bigger deal."
Last May, 50 paid a visit to billionaire mining baron Patrice Motsepe in South Africa. Flanked by select members of their respective entourages, the unlikely duo descended into a subterranean trove of platinum, palladium and iridium, growing like moss on the earth's warm innards. A spectacular backdrop for a bling-drenched music video, to be sure.
But 50 was there for other business: to forge a joint venture with Motsepe that could soon bring him an equity stake in the mine--and 50 Cent-branded platinum to the world.
"Things that people wouldn't actually expect me to be involved in," 50 muses a few weeks later, reminiscing on his trip. "I've got a diverse portfolio."
In Pictures: Inside The 50 Cent Machine
Here, in the comfort of a midtown Manhattan office, just miles from the Queens, N.Y., streets where 50 once dealt cocaine, the glowering rapper whose lyrics are often punctuated with gunshots is nowhere to be found. In his place is Curtis Jackson, businessman. Less gangster, more Gordon Gekko, he ticks through the contents of his portfolio: stocks, bonds, real estate, investment pools, all carefully monitored by brokers at Goldman Sachs and Morgan Stanley.
Over the past 12 months, 50 has added $150 million to his substantial coffers. He hawks clothing, sneakers, videogames, movies, ringtones and flavored water. His earnings were nearly twice as much as last year's hip-hop cash king, Shawn "Jay-Z" Carter, and over four times the sum garnered by Sean "Diddy" Combs, who ranked third for the second year in a row. After topping Forbes' inaugural Cash Kings list, the trio released a modified version of 50's "I Get Money" called "The Forbes 1-2-3 Remix."
Diversification is crucial for rappers. Record sales are declining, new media are playing havoc with the music industry, and it seems unlikely that hip-hop acts will ever lure stadiums of deep-pocketed baby boomers with the ease exhibited by geriatric rockers such as the Rolling Stones and the Police.
Perhaps as a hedge, Jay-Z signed a 10-year, $150 million deal with concert promoter Live Nation in April. Kanye West headlined the traditionally rock-focused music festival Lollapalooza in Chicago earlier this month. 50 is looking to secure his own long-term relevance with deals like the one currently in the works with Motsepe.
"The financials of the music business have changed to the point that we have to find ways to make money in other places," says Barry Williams, 50's circumspect brand manager. "I didn't think six years ago when we started trying to sell music that we'd be selling VitaminWater and shoes and clothes. Now we're moving into other directions, and four or five years from now, it's exciting to think about us looking at natural resources and raw materials and other businesses."
50's first mega-deal was completed a year ago. He snagged $100 million when Coca-Cola bought Glacéau, VitaminWater's parent company, for $4.1 billion. The rapper had received a stake in Glacéau as compensation for peddling the "Formula 50" VitaminWater flavor. He'd continued to add to his holdings as the years went on. Although observers praised 50's financial foresight as soon as the deal was announced, he was far from satisfied.
"People were talking about how much money I made, but I was focused on the fact that $4.1 billion was made," says 50. "I think I can do a bigger deal in the future."
Looking one step ahead of the business has always one of 50's trademark traits. He grew up rough in Jamaica, Queens, in the midst of the 1980s crack epidemic. His mother, a drug dealer, was murdered when he was 8; soon after, he began running cocaine for his uncles. He realized he could make more money by charging a markup in the neighborhood of 25%. This precocious business sense earned him plenty of dollars--and three arrests--by age 19. He avoided jail time by agreeing to attend a six-month, military-style boot camp in upstate New York.
Returning to Queens, the fledgling rapper scored a $65,000 deal with Columbia Records. But in 2000 his past caught up with him. Days before his first album, Power of the Dollar, was set to hit stores, 50 was shot nine times and left for dead in front of his grandmother's house. Columbia dropped him, and the record was never released, though it has since been heavily bootlegged. Undeterred, he returned to the studio as soon as he recovered from his wounds. He started churning out "mix tapes," which are informally circulated at parties, and soon he had become an underground rap sensation.
The tapes earned him a following--and a big break. In 2002 star rapper Marshall "Eminem" Mathers heard his driver playing one of 50's songs. Eminem was so impressed with the music that he invited 50 to Los Angeles to meet with him and producer Andre "Dr. Dre" Young. Within days, they signed 50 to a million-dollar deal for five albums.
But from the start, 50's career was more about business than music. He spent his first $300,000 registering the "50 Cent" and "G-Unit" trademarks; in 2003 he brought on veteran talent manager Chris Lighty to head up his business entourage. Today, Lighty is part of an informal board of directors for brand 50 Cent. The team helps 50 sort through endorsement offers, brainstorm new ideas and operate his businesses.
At the top of that pyramid is 50 himself. Ask any of his associates what sets him apart, and they'll all tell you it's his fiendish work ethic. In a recent 24-hour span, he started by filming scenes for Streets of Blood from 7 p.m. to 7 a.m. (He will star in the flick, due out next year, alongside Val Kilmer and Sharon Stone.) He then went straight to the mobile recording studio he keeps on set and worked on his new album for four to five hours. After snagging a few hours of sleep, he went right back to the studio.
"I don't think he'll ever stop working," says Laurie Dobbins, chief operating officer of Lighty's company, Violator Management. "He's got the work ethic of a robot. I think he works 24 hours a day."
50 will always be a performer. While he spent the daytime hours of his Africa tour kibitzing with the likes of Motsepe and Nelson Mandela, nights brought concerts--and crowds upwards of 100,000. He watched as his music broke the language barriers between scores of local dialects. He says the rush he gets from performing is the reason he doesn't need drugs. But don't be confused about where his priorities lie.
"Closing a deal," he says, "is a bigger deal."
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