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Hip-Hop Fridays

Any one who has recently viewed the most popular rap videos has noticed the affinity that many Hip-Hop artists have for fine cars and jewelry. If one cannot separate art from reality, they may walk away from the viewing thinking that these same artists own the vehicles and jewelry that they so boldly parade in their videos. But quite often the Mercedes-Benz is rented and the artist has a car half its price in the home garage. And even more frequently, the platinum and diamond jewels that grace the hands, necks and fingers of the artists during their video were rented.

In fact a recent video featuring platinum-selling artists Nas and Puff Daddy featured over $5 million of rented jewelry. No doubt, Nas and Puffy can afford some of the items they wore in the video but the vast majority of artists cannot. But why? Especially when these same artists are selling hundreds of thousands of records and generating profits in the millions for their record labels and distributors.

The closer-to-poverty-than-riches story for many artists begins with the structure of their recording contracts whereby an artist generally is compensated in the neighborhood of 12% of the retail sales price of their recording. But this 12% is payable to the artist only after the record label recoups the cash it laid out for the recording of the project and producers hired to contribute music and after video expenses and cash advances to the artists are recovered. What does this all mean? Not good news, according to Rap Coalition, a non-profit that aims to keep rap artists from being exploited.

In a recent report issued by the organization and its founder Wendy Day an unfortunate picture of a successful rap group's income was painted. According to Ms. Day if a recording is sold for $10.98 the artist doesn't get 12% of the $10.98 off the top, rather they get paid on 85% of the $10.98 minus 15% for packaging expenses deducted. This means that the artists receive 12% of $7.93 or $.96 for each record sold.

Assuming the 3-person group has a gold album, which means they have sold 500,000 records, the group stands to make $480,000 or 500,000 units times $.96. Not bad. But not so fast. The record label now recoups what it spent (on promotion, video expenses, financial support for the group to go out on tour, and limo rides). If all of that adds up to $100,000 the 3-person group is left with $380,000. Not bad still. But not so fast again. The $70,000 advance the group received when it recorded its album is now recouped, leaving the group with $310,000. But the group still hasn't paid its manager who is customarily entitled to 20% of that $310,000 or $62,000. Which means that the group is left with $248,000 to split three ways and this is before the artists' pay their lawyers and accountants. Which means an additional 10% must be deducted before these artists are finally paid. The final result : $223, 200 must be split three ways resulting in $74,400 for each member in the group. By the way, this is all before taxes. And because the artists are independent contractors and not employees of the record label they are responsible for figuring and paying their taxes on time to the government. Kind of difficult to buy a $23,000 watch, $50,000 car and pay $48,000 per year to rent a penthouse under these circumstances, though many artists try.

Cedric Muhammad

Friday, April 7, 2000

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