The Big Payback Presents: The 25 Biggest Business Moves in Hip-Hop History

Famed singer/songwriter/producer Sylvia Robinson wasn’t first person to conceive of putting the “raps” of New York City’s burgeoning MC-and-DJ culture onto a record; that distinction likely goes to Bill Curtis of The Fatback Band, who in the summer of 1979 recorded MC Timothy Washington on a song called “King Tim III (Personality Jock).” But it was Robinson’s record—a 15-minute rap marathon by three unknown New Jersey MCs over a sound-a-like version of Chic’s “Good Times”—that marked the true debut of hip-hop in pop culture. “Rapper’s Delight” by the Sugar Hill Gang quickly became the best selling 12-inch single of its time (Sugar Hill Records claims two million copies were sold domestically and eight million copies worldwide), and transformed Sylvia Robinson’s (and her husband and partner Joe’s) nascent Sugar Hill Records into a successful, Black-owned independent label.



The Sugar Hill Gang and their patrons were reviled by the established hip-hop crews of the Bronx and Harlem, who resented that a pre-fabricated rap trio with no history or reputation was suddenly the ubiquitous face of the culture. But the Robinsons, flush with cash, quickly snapped up more authentic rap crews like the Treacherous Three and Grandmaster Flash and the Furious Five, buying the assets of smaller, less savvy players like Bobby Robinson’s Enjoy Records. In the early ’80s, Sugar Hill Records ruled rap almost completely and was on track to become the Motown for a new generation of young Americans.



So why didn’t it happen? It’s a tangled tale, but no story is more telling than that of a young concert promoter named Cedric Walker, who flew to New York on his own dime to propose a hip-hop concert tour to Sugar Hill. Sylvia Robinson cursed Walker and threw him out of her office. Walker retreated and offered the same opportunity to a small-time artist manager named Russell Simmons. That tour became the New York City Fresh Fest, featuring a new crop of hip-hop performers who weren’t signed to Sugar Hill. Within a few years, Sugar Hill would lose its dominant position to smaller, white-owned dance labels like Profile and Tommy Boy, and to the biracial partnership of Russell Simmons and Rick Rubin at Def Jam.

At first, major record labels had no idea what to do with rap music, so they didn’t do much of anything. To most corporate music executives, the “rapping record” thing had all the makings of a fad; in the wake of the disco crash, few had the stomach to tempt another one. The upscale Black staffs of the majors’ so-called “Black Music” departments viewed rap as a vile, unwanted visitor from the ghetto.



And so, even with the success of “Rapper’s Delight” in 1979, the lightning-fast singles sales of rap 12-inches in the early ’80s, and the platinum success of Run-DMC’s album in 1984, the six major labels turned their backs on the burgeoning and profitable hip-hop culture—with the exception of Kurtis Blow, who had a gold single for Mercury Records with “The Breaks” in 1980. Fittingly, it would be Blow and Run-DMC’s manager, Russell Simmons, who landed the first legitimate major label partnership with a rap-oriented independent in 1985 for the label he co-owned with Rick Rubin, Def Jam Recordings.



Al Teller, the general manager of Columbia Records, started to become curious about the rap music scene around the same time that a new A&R executive named Steve Ralbovsky—an acquaintance of Simmons’—came to work for the company. Teller asked Ralbovsky what he thought of doing a distribution deal with Tommy Boy Records. Ralbovsky told Teller that he had a better idea, and brought Simmons in for a meeting. Columbia gave Def Jam Recordings a six-figure production deal, one that immediately paid off with the success of L.L. Cool J.’s debut album Radio, and became hugely profitable with the Beastie Boys’ Licensed to Ill in 1986. More importantly, the Def Jam deal presaged the entrance of other major labels into indie partnerships, with Columbia rival Warner Bros. purchasing Tommy Boy Records in 1985, and giving Cold Chillin’ a distribution deal a couple of years later.

Once upon a time, the relationship between hip-hop culture and the world of consumer products was one-sided and unrequited. The early DJs and MCs, b-boys and b-girls were zealous consumers and fans, but largely invisible to the corporate brands they religiously used. In the world of hip-hop, brands could be an especially important emblem of identity. No rap act exemplified that self-branding impulse more than Run-DMC, who made Adidas sneakers and sweat suits a part of their official costume.



So when Run-DMC recorded and released the heart-on-their-sleeves single “My Adidas” in 1986, they did so out of enthusiasm for the brand, with no thought to compensation. But the song was too much of an advertisement for Adidas for the company to miss. A former European soccer star named Angelo Anastasio ran a lonely outpost for Adidas in Los Angeles, an outreach office to the world of sports and entertainment in a time before that kind of thing became de rigeur for sportswear companies.



Anastasio already knew about Run-DMC when Russell Simmons and Lyor Cohen invited him to see the group perform “My Adidas” at Madison Square Garden in New York. The sight of tens of thousands of rap fans holding their Adidas aloft moved Anastasio to tears—and to urge his superiors to bestow Run-DMC with a million-dollar endorsement deal, the first of its kind in hip-hop. The Adidas deal marked the end of hip-hop’s corporate invisibility, and a growing realization of the power of hip-hop as a marketing tool for corporate brands. It would be a harbinger of even more lucrative deals to come.

By the end of the ’80s, major labels still hadn’t figured out how to produce and promote rap music on their own. The only successful way into the market for most majors was to partner with an independent: as Columbia did with Def Jam, as Warner did with Tommy Boy, as Atlantic did with First Priority, and so on. The indie labels had the maps to navigate the backwaters of the rap world; the majors didn’t, and most of the attempts by their own, clueless executives to sign and market rap artists were dismal failures.



Then one major label executive got wise. In 1989, Elektra Records chief Bob Krasnow hired a 22-year-old talent scout by the name of Dante Ross away from Tommy Boy Records, where he had overseen the recording of De La Soul’s debut album and helped sign rap acts Queen Latifah and Digital Underground. Ross would build a powerful, respected roster of rap acts for Elektra including Brand Nubian, Leaders of the New School (featuring a soon-to-go-solo Busta Rhymes), and Ol’ Dirty Bastard.



More importantly, Ross’s hiring marked the first time that a major label placed a knowledgeable person from the hip-hop scene among its executive ranks. The departure of Dante Ross from Tommy Boy marked the start of the exodus of both artistic and executive talent from indie labels as major labels began to outbid and, eventually, outsmart them. By the mid-’90s, the eclipse of the original rap indies was all but complete.

Over the decades, hip-hop artists and rap-loving entrepreneurs endured a long hazing period in the rough-and-tumble music industry, learning their business lessons the hard way until they learned to drive a harder bargain. One of the little-known oddities from those early naive years was the saga of Rhythm Method Enterprises. The company was initially formed as a four-way partnership between Public Enemy producer Hank Shocklee, P.E. frontman Chuck D, lawyer Ron Skoler, and Skoler’s mentor, an older music businessman named Ed Chalpin. Shocklee and Chuck D. intended for Rhythm Method to be the foundation of their production and management empire, and for Skoler and Chalpin to provide legal support and business expertise. Rhythm Method signed a number of clients, including Kings of Pressure and True Mathematics, and most notably Kool DJ Red Alert’s Native Tongues acts the Jungle Brothers and A Tribe Called Quest.



But the Rhythm Method situation turned out to be a nightmare for nearly everyone involved. Chuck D. signed away an unheard-of 75 percent of Public Enemy’s royalties to Rhythm Method, entitling Skoler and Chalpin to a huge chunk of Public Enemy’s already-slender royalties from Def Jam. When Shocklee and Chuck D. tried to renegotiate the splits with their partners, Skoler agreed, but Chalpin wouldn’t budge. Public Enemy retained counsel and entered litigation that would last for years.



Public Enemy’s lawyers called the Rhythm Method deal “one of the worst music business swindles of all time,” casting Skoler and Chalpin as master manipulators of neophyte artists. In truth, it was Shocklee who insisted on the lopsided split. As the legal battle dragged on, Skoler bailed out, selling his shares to Chalpin, who made his controversial reputation in the ’60s making cheap sound-a-like records to siphon sales from contemporary hit records, and for reportedly signing Jimi Hendrix for a $1 advance against a one percent royalty. Chalpin could be a formidable foe in a legal conflict, and guarded his rights zealously. As a result, Ed Chalpin—a guy with almost no creative or cultural currency in the hip-hop world—eventually ended up with an ongoing “override” (a perpetual percentage of the royalties) on Public Enemy’s future releases, and also A Tribe Called Quest. Chalpin also secured a huge chunk of the Jungle Brothers million-dollar-plus signing to Warner Bros.

In a battle between multiple foes, once the power moves start, it’s hard to see more than a few moves into the future. Take, for instance, Time Warner’s tangle with political and “gangsta” rap in the ’90s. Ice-T, a well-respected Warner Bros. artist, creates a heavy metal group called Body Count, and releases a song called “Cop Killer” as a revenge fantasy for many of the same brutal police actions that led to the Los Angeles riots of 1992. An enterprising cop in Dallas, acting alone, calls for a boycott of Time Warner because of the song. His fellow officers pick up the challenge and within weeks, a nationwide boycott is a reality.



A huge face-off ensues at the Time Warner yearly board meeting, which ends in a stalemate. But the episode so rattled Ice-T that the artist voluntarily pulled his record from store shelves.
The episode spooked Time Warner, too. Three years later, when protests against their Interscope artists Tupac and Snoop Dogg reached a fever pitch, Time Warner was all too eager to dump Interscope altogether.



The ultimate power move, however, came in the aftermath, when Interscope was quickly snapped up by Universal Music Group for $200 million. Interscope and hip-hop were the true winners in this scenario, which proved that hip-hop was too profitable to be killed by political interests. In the capitalist, corporate world, hip-hop squelched at one company would simply shift to another.

The grand experiment called Music Television may have been innovative, but the people who initially programmed the channel weren’t so enlightened. Modeled after “album-oriented rock” radio, the playlists of MTV throughout the early ’80s were almost exclusively white. Even when Motown rock-funk artist Rick James complained loudly about the station’s blatant racial segregation, MTV executives yielded little and admitted nothing. The musical color barrier was fractured by Michael Jackson’s undeniable Thriller, but black artists continued to be more the exception than the rule on the channel.



Hip-hop, viewed then as a subset of black music, was treated as an occasional oddity. A clever video commissioned by Profile Records for Run-DMC’s “Rock Box” brought the first rap clip to MTV in 1984. But the next breakthrough video wouldn’t come for another year, Run-DMC’s “King of Rock.” The “rap is rock” metaphor seemed to be the only way that hip-hop could make it onto MTV: Run-DMC’s remake of “Walk This Way” in 1986, the Beastie Boys’ “Fight For Your Right To Party” in early 1987.



It was around this time that a young production assistant in MTV’s promotions department began agitating his bosses to let him create a rap video show. Initially ridiculed, Ted Demme’s argument was helped by the ascendance of a new rap video, DJ Jazzy Jeff & The Fresh Prince’s “Parents Just Don’t Understand.” It was a perfect teen record that finally opened MTV executives’ minds and loosened their purse strings.



When Ted Demme and his boss Pete Dougherty finished their pilot in the summer of 1988, MTV programming chief Lee Masters tried to restrain Demme’s unrealistic expectations. The program would likely get low ratings, Masters said. It didn’t. In fact, the Yo! MTV Raps pilot was one of the highest rated shows in the history of the channel. Soon thereafter, MTV greenlit a weekly series hosted by Fab 5 Freddy. When that show shot to the top of MTV’s ratings, they ordered a weekday show, hosted by Dr. Dre and Ed Lover. By the early ’90s, the ascendance of Yo! MTV Raps had completely changed the complexion and musical inflection of the channel. By the time Yo! was cancelled in the mid-’90s, Black artists and Black music were no longer an exception, but an integral part of MTV’s programming.

MTV opened its doors to hip-hop in 1988 with Yo! MTV Raps. Radio took longer. Much longer. In fact, three years later, in 1991, both pop and black radio stations were backing away from rap music with slogans like “No rap, no crap.” The only station in the country that devoted most of its playlist to hip-hop—a weak-signal AM station in Los Angeles called KDAY—went off the air in March of that year. Even as kids across the country watched rap videos by the hour and bought rap albums by the millions, radio programmers couldn’t grasp the power and potential profitability of rap.



Then, in late 1991, one programmer had an epiphany. Rick Cummings was the head of programming for Emmis Broadcasting, which owned two Latin-leaning dance stations in Los Angeles and New York, Power 106 and Hot 97, respectively. When the ratings for those stations began to tank, Cummings ordered focus groups to discover why. When he found out that his young Latina target market in Los Angeles were listening to hip-hop, Cummings didn’t flinch. Instead he plunged Power 106 into rap, aggressively programming music by hardcore rap artists like the Geto Boys and EPMD; and, in an unprecedented move, embraced the name of the genre in his pop station’s slogan.



“Where Hip-Hop Lives” became not only the motto of Power 106, but eventually that of New York sister station Hot 97, which took the credo to its ultimate conclusion. By 1994, both Emmis outlets were the top music stations in the number one and number two markets in the country, and it wasn’t long before the rest of American radio fell to the truth that few but Cummings seemed to grasp: Hip-hop was indeed the new pop.

A lot of people made fun of Russell Simmons in the early ’90s. His Def Jam partner, Rick Rubin, had bounced for the West Coast, leaving the company without its star talent scout and producer. As Def Jam lost its cutting edge, Simmons seemed distracted—starting side companies like a modeling agency, partying late into the night, and regularly indulging in mind-altering substances.



Few understood what Simmons was trying to do. His so-called “distractions” were in fact expansions. Simmons understood that hip-hop was very much still in a box, and it needed to keep growing if it were to live and thrive. Not all of Simmons’ ideas worked out. The chain of radio stations he envisioned never materialized. His advertising agency fizzled. But a few of his ideas bore fruit.



Russell Simmons’s Def Comedy Jam was designed as a vehicle for black comedians, and a means for young white Americans to overhear the kinds of things that black folks said to each other when they weren’t around. As such, it was the comic, visual equivalent to Def Jam Recordings. Not everyone thought well of Simmons’ ribald, politically incorrect show—Bill Cosby railed against it and Chris Rock declined to perform on it. But Def Comedy Jam quickly became one of HBO’s most successful franchises, and it redeemed the Def Jam name at a time when the brand sorely needed burnishing. The show would mark the turning point in Russell Simmons’ career, and was a prelude to his even greater success as a fashion mogul—although that success would elude him and his Phat Farm label for a number of years.

In the early ’90s, the folks at the Coca-Cola Company didn’t think much of Sprite. The lemon-lime soft-drink was a stepchild brand of sorts, comprising only three percent of the company’s sales, and targeted mostly to moms and kids. So when a young black marketing executive at the company named Darryl Cobbin suggested that he had a strategy to sell Sprite to young adults, Coca-Cola executives laughed at him. The youth market was the province of the almighty colas. “No way,” they said, “was Sprite going to be able to go head-to-head with Coke.” They encouraged Cobbin and Sprite to stay in their respective lanes.



But Cobbin had amassed research that helped make his case. And he had some cultural knowledge that his superiors didn’t: He would harness the power of hip-hop to make Sprite a resurgent brand.To the utter shock of the entire beverage industry, that is exactly what Cobbin did. With a campaign called “Obey Your Thirst,” Cobbin’s hip-hop-laced marketing turned Sprite into a cultural phenomenon, tripled the soda’s sales, and propelled the drink to become the fastest growing brand in the business. Within a few years, Cobbin and Sprite had even wrested the NBA sponsorship from the Coke brand.



The “Obey Your Thirst” campaign proved that hip-hop could help corporate America if they respected the culture. In a way, Sprite and hip-hop were kindred spirits—both underestimated, both told to stay in their lane, both refusing to do so, and both utterly defying the low expectations set for them. “Obey Your Thirst” had a long and successful run, and became the archetype for other smart hip-hop campaigns for corporate brands.

The idea that huge media conglomerate Time Warner could create a rap magazine was preposterous; the fact that Quincy Jones would be its founder and creative guru even moreso. What made the venture somewhat conceivable was the involvement of Quincy Jones’ new friend, Russell Simmons. At first, Simmons tried to convince Jones and Time, Inc. to purchase The Source Why invent a new magazine when the folks at The Source were doing an enviable job?



But Jones wanted his own thing, and soon Time executives were busy picking an editorial team for a magazine they were tentatively calling Volume. Simmons disapproved of Time’s selection for editor-in-chief, a 27-year-old, openly gay dance music fan named Jonathan Van Meter. Simmons felt that Van Meter didn’t know enough about hip-hop to run a hip-hop magazine. Simmons’ very public expressions of displeasure offended the Time Warner executives—who knew too little of Simmons’ pedigree to appreciate his value to the project—and quickly alienated Quincy Jones, who cursed at Simmons in a phone call that ended their partnership. Simmons soon issued a press release confirming his resignation.



Simmons predicted peril for the new magazine—rechristened Vibe just before its launch—while Simmons’ friends at The Source worried that their little magazine wouldn’t survive the arrival of the corporate concoction. But ironies abounded in the unfolding story of VIBE. Jonathan Van Meter ended up creating a welcome counterpoint to the testosterone-fueled hip-hop zealotry of The Source. Vibe emerged as a magazine that opened hip-hop to include R&B as well as rap, the feminine as well as the masculine, lifestyle as well as music.



But after Van Meter insisted that Madonna appear on the cover of the hip-hop magazine, he was deposed by the man who had backed him against Simmons’ wishes, Quincy Jones. Meanwhile, VIBE’s success ended up legitimizing the hip-hop market for a new crop of corporate advertisers, and contributed to The Source’s continuing success. In the end, VIBE became the very first viable hip-hop brand launched by a corporation.

Marion “Suge” Knight wasn’t much more than a bodyguard with showbiz aspirations when he befriended N.W.A. Producer Andre “Dr. Dre” Young. But Knight was able in a short amount of time to win the disgruntled Dre’s trust and—through intrigue and intimidation—induce the holder of Dre’s contract, Eazy-E, to sign a form releasing Dre from his obligations to Eazy’s Ruthless Records.



Eazy and his partner/manager Jerry Heller did not go quietly, though, threatening to sue any record company that tried to ink a deal with Dr. Dre and Suge Knight’s new Death Row Records. But one record executive wasn’t scared to wade into the treacherous waters between the hostile parties. Jimmy Iovine, the co-owner of an aggressive new label called Interscope, understood the stakes, and the motivations of the stakeholders.



To Ruthless, Iovine promised a solution that would allow Dre to go free and Ruthless to earn a share despite his departure: an ongoing percentage of Dre’s record royalties. To Priority, which had signed the N.W.A. members to a performance contract, Iovine offered the opportunity to distribute Dre’s first solo album. As a result, Death Row Records first release, The Chronic, was born. The episode was evidence that brute force, on its own, was not enough to succeed in the hip-hop world. Even muscle needed a massage, and Jimmy Iovine’s deft handiwork would end up building both the hip-hop fortunes of Death Row and its parent company Interscope for years to come.

As Suge Knight built Death Row into a West Coast juggernaut, Knight’s fearsome reputation grew. Knight wanted more than hit records. He wanted to dominate the industry, making moves to open a Death Row office in New York in conjunction with hip-hop heavyweight Eric B., and talking of forming a Black-owned national distribution company.



So when Def Jam A&R chief Chris Lighty scooped up a stray artist left to languish on Death Row’s back bench—Dr. Dre’s step-brother ,Warren G—Suge Knight made his displeasure known. Def Jam had infringed on his territory, and Knight wanted to teach Def Jam CEO, Lyor Cohen, a lesson. The confrontation came to a head one night at a De La Soul concert in Los Angeles, when Knight made his way to have a “discussion” with Cohen.



Lighty—himself no stranger to thuggery as an alumnus of a group of young troublemakers called the Violators—placed himself between Knight and Cohen and stood his ground. In the tense faceoff, Lighty’s accomplice brandished a weapon, and Lighty warned Eric B., “You need to tell him about us, because you’ve got to come home.” Knight backed off. And when Knight took revenge by withholding Death Row artist Nate Dogg from a Warren G video shoot, Lighty strode right into Knight’s inner sanctum (Death Row’s offices) and politely made a case for Knight to change his mind.



Lighty did more that day than win Knight’s respect. He set the stage for the triumph of business over bullets. It would, alas, take several more years and the death of two beloved hip-hop icons before the change manifested. But the future of the hip-hop business would ultimately belong to businessmen like Chris Lighty and Lyor Cohen, not to Knight and his ilk.

Sean “Puffy” Combs was always willing to work for what he wanted, but always felt he deserved more than what he got. And so it was with Combs’ first record industry job as an intern and, shortly thereafter, a junior A&R man for Andre Harrell’s Uptown Records. Combs didn’t sign Mary J. Blige and Jodeci, but his break-laced remixes and fashion guidance updated Harrell’s New Jack Swing empire with the sound and look of Hip-Hop Soul.



Combs’ sense of entitlement was a blessing, a curse, and a blessing once more. While he became as much a star as his artists, garnering a 7000-word piece in VIBE, he bucked Harrell’s management decisions and was summarily fired for insubordination. Combs then used his notoriety to dazzle record executives at a number of major labels looking for a slice of the wunderkind’s magic.



Ultimately Combs was able to land a multi-million dollar deal with Clive Davis’s Arista Records on the strength of his salesmanship and his stable of two untested artists—Craig Mack and The Notorious B.I.G. When the two rappers quickly became commercial contenders, Combs’ became the model for a new breed of hip-hop mogul. Rap in the Death Row era had been about street muscle. Hip-hop in the Bad Boy era would be about style and celebrity as much as if not more than substance. An unfortunate development according to Combs’ detractors, but one as American as apple pie.

Cousins Robert “Prince Rakeem” Diggs and Gary “The Genius” Grice were two rejected refugees from the rap record business, given a small shot at success on two Time Warner-affiliated labels, and then tossed aside after mediocre showings. What Diggs and Grice did next would forever alter the all-too-familiar dynamic of the rapper-as-victim and record-label-as-predator.



Reborn as the RZA and the GZA, they collected a new slew of MCs and formed The Wu-Tang Clan, releasing their own self-funded single called “Protect Ya Neck.” Soon the heat of the record attracted attention from rap labels major and minor. The difference this time would be in the deal that RZA sought for his crew: He would sign the Wu-Tang as a group only to a label that would assure his right to sign the individual members of the Wu-Tang Clan to their own record deals.



It was an unheard-of concession for record labels, which scrupulously guarded their rights to all “leaving members” of the groups they signed. But one label, Loud, was able to convince their major label partner RCA Records, to allow the anomaly—mostly because no one at RCA thought that the group would ever amount to anything. The upshot of the Wu-Tang/Loud deal would have tremendous repercussions for the industry and for hip-hop, and usher in a new era of the empowered artist.



Within five years, every one of the then six major labels had some stake in the success of the Wu-Tang Clan through the singing of its solo and offshoot artists. For the first time, rappers weren’t asking to be branded by the record labels. The labels themselves were asking to be branded by the mark of “The W.”

Wendy Day made for an unlikely rap fan, and even less a champion of the oppressed hip-hop recording artist. She was white, overweight, and in her 30s. Incongruously, she wore Timberland boots, baggy Cross-Colors outfits, and attended classes on Afrocentricity. Few knew what to make of her. But Day put her own money where her mouth was, spending the half-million dollar fortune she made in marketing and advertising on a non-profit organization called the Rap Coalition, with the expressed goal of rescuing rap groups who had been either swindled or ill-served by their producers and record labels.



Within a few years, Wendy Day realized that if she really wanted to serve hip-hop artists, she would have to do more than break bad deals; she’d have to negotiate better ones. And so, in the mid ’90s, Wendy Day embarked on a quest that would turn a few rappers into self-empowered multi-millionaire entrepreneurs.



She was instrumental in the deal that Master P signed for his label No Limit with Priority Records. She helmed the pact between Creator’s Way and Atlantic Records that The Source called “the best deal in the history of Black music.” She shepherded Eminem into the arms of Dr. Dre. And she was the architect of the stunning distribution deal that Cash Money Records won from Universal Music Group in 1998. The tragedy of Wendy Day’s situation was that she was stiffed on the Cash Money-Universal pact for the first dealmaking fee she ever charged.

Damon Dash’s mother used to tell him, “No one is smarter than you.” It was that mantra that drove Dash to insist on a level of control and a degree of diversification that would surpass that of even Russell Simmons, and propel the career and fortunes of his Roc-A-Fella partner and number one artist, Shawn “Jay-Z” Carter. Dash walked out of meetings with record executives who disrespected or lowballed him. He fired lawyers who failed him. He’d spend his own money rather than settle for being shortchanged by a partner.



Within months of the release of Jay-Z’s first album, Reasonable Doubt, Dash had scored a multi-million dollar joint venture agreement with Def Jam. And even after the deal was done, Dash raged at the slightest slight or the faintest hint of being eclipsed by the larger label.
Spite was Dash’s fuel. When the clothing brand Iceberg Jeans told him that they weren’t interested in awarding Jay-Z an endorsement deal, Dash told them that he would start his own clothing company and put them out of business.The threat didn’t turn out to be so far from the truth.



Rocawear, founded in 1999, became one of a few ascendant “urban” clothing brands in the first decade of the 21st Century. But Dash, typically, wanted more, casting Kevin Bacon and Naomi Campbell to appear in Rocawear ads, pushing Rocawear as a mainstream, global brand.
Dash applied that same sense of entitlement to other consumer products. When he tired of holding bottles of Belvedere in his videos, he created his own brand, Armadale. Weary of seeking the endorsement of corporate brands, he bought them instead, licensing the PRO-Keds mark from Stride Rite in 2004.



As a result, Dash created a new paradigm for hip-hop dominance. Hip-hop was no longer a beggar at the door of corporate America. It was a player, worthy of a seat at the table. Dash probably would have tried to buy the table, too, had his partnership with Jay-Z not unraveled.

In its earliest days, Hip-Hop fetishized clothing brands, whether Lee Jeans or Adidas sneakers. In the ’90s, when corporate brands couldn’t satisfy the Afrocentric aesthetic and nationalist mindset of the hip-hop nation, Black-run companies like Cross Colours and Karl Kani came into existence as the first “urban” clothing lines. Sean “Puffy” Combs, always fashion forward, was one of the first poster boys for Karl Kani, placed in an advertisement by Kani marketing ace Jeff Tweedy.



Years later, when Combs started his own clothing company, he tapped Tweedy to run it.
Sean John was part of a second generation of urban fashion companies—more often than not run by hip-hop artists or people directly from the hip-hop community. Sean John was not the first of this new crop—that distinction went to Phat Farm. Nor was it the first to break into mainstream department stores—Wu Wear won that race, followed closely by Fubu.



But Sean John’s classic look and smart designs quickly propelled it not only to the head of the urban pack, but beyond the urban distinction altogether. Sean John took its place among classic global brands like Ralph Lauren and Calvin Klein when it won the 2004 Council of Fashion Designers of America menswear award—sort of the Academy Awards for the fashion industry. No longer a specialty brand in a niche market, Sean John and hip-hop itself had graduated to a perch atop the entire fashion world.

Bryan Turner and Marc Cerami founded their tiny label, Priority Records, in the mid-’80s on rap compilations and a novelty album of singing California Raisins. But Priority became a true hip-hop player for real when Turner signed Ruthless Records artists’ Eazy-E and N.W.A. “Fuck Tha Police” became a national rallying cry, and Priority the owner of multimillion-selling artists who needed almost no promotion at all. It was a good business plan, to say the least.



Throughout the ’90s, Priority would remain one place to which rap artists and entrepreneurs could turn to distribute their work when the major labels didn’t have the heart or the guts to do so. Ice-T, Dr. Dre, Rap-A-Lot Records, and No Limit, all found a willing partner in Bryan Turner. By the end of the decade, The No Limit-Priority partnership had given Priority a three percent share of the American recorded music market, and one-third of distributor Capitol-EMI’s overall sales. It was a perfect time to cash out. Over the course of two years in the late ’90s, Turner and Cerami pocketed an unprecedented $135 million for their company.

In 1993, Def Jam was still struggling through its dark creative and commercial period, badly in need of a hit record and $17 million in debt to distributor and partner Sony Music. While Russell Simmons kept public perception of the brand positive with his Def Comedy Jam on HBO, Lyor Cohen’s wheeling and dealing landed Def Jam a second lease on life with Polygram, which purchased half of Def Jam in 1994 for $33 million, getting Simmons and Cohen out of hock and their company back in the black.



Cohen assembled a team that, within five years, restored Def Jam to hip-hop supremacy and pushed Def Jam’s yearly billing into the neighborhood of $175 million. The outlandish sales of Def Jam product in 1998—including albums by DMX, Jay-Z, Method Man, Redman, and more—pushed the buyout price of Def Jam northward.



Simmons and Cohen were able to sell the remaining 40 percent of Def Jam in 1999 for $135 million, with the total valuation of the company at $325 million. It was, at the time, the biggest sale of a hip-hop asset in history. Within a few years, Russell Simmons himself would eclipse that feat.

At first, no one believed that Russell Simmons’ Phat Farm clothing line would succeed, not even his own partners, who begged Russell to sell the company or buy them out. Simmons would continue to pump his own money into Phat Farm throughout the ’90s, through his manufacturer’s bankruptcy, late shipments, and rejections by department store chain buyers.



Finally, in the ’00s, Simmons got his financial house in order, and Phat Farm started to make money. The department stores opened their doors. The crown jewel of the clothing company was, ironically not Phat Farm itself, but a sales mark originally designated for an infant clothing offshoot called Baby Phat, that Simmons’ wife, Kimora Lee, transformed into a young women’s line. With the combined success of Phat Farm and Baby Phat, Simmons was able to sell his company to Kellwood in 2004 for $140 million.

Lyor Cohen arrived on Russell Simmons’ doorstep in 1984, thinking he was going to get a piece of Simmons’ Rush Productions in return for moving all the way from Los Angeles to work for him. What Cohen got instead was an virtual internship with little compensation and a crash course in the hip-hop business. Cohen learned how to road manage Run-DMC by absorbing the ins and outs from his first teacher, Jam Master Jay.



From there, Cohen would earn his keep for Simmons, landing one of the first merchandising deals for hip-hop groups in an arrangement with Winterland; and one of the first consumer product endorsements with Run DMC’s Adidas pact. He spearheaded a number of concert tours, and by the time that Rick Rubin left Def Jam in 1988, Cohen had indeed proven himself indispensable to Russell Simmons, who had neither the time nor patience to manage a team and build the company.



Cohen’s drive and loyalty made his ascent to the head of Def Jam an inevitability, and his ultimate financial victory predictable. Those same faculties helped Cohen succeed as a major label executive after the sale of Def Jam to the Universal Music Group in 1999. So when, in 2004, Cohen was offered the chance to helm the entire Warner Music Group, it represented a real landmark—not just for Cohen, but for all of hip-hop.



For the first time, a person from the hip-hop community—trained by two rappers and a DJ, not by Ivy League law professors—would be running a major record conglomerate. And when Cohen took the job, bringing his lieutenants with him, he changed the culture of Warner Music Group and remade it in Def Jam’s image. Cohen now effectively runs one quarter of the American music business.

Say what you will about Damon Dash. Note his impetuousness, the temper tantrums, the abuse of partners and underlings, and his extravagance and overspending all you want. None of it can subtract from the reality that it was Dash who envisioned the Roc-A-Fella empire. The Roc may have traded on Jay-Z’s image, but it was Dash who did the legwork. Dash often complained that Jay-Z didn’t seem interested in the business side of things, especially when it came to the clothing company, Rocawear.



So no one was more surprised than Dash when Jay-Z summarily wrested control of Roc-A-Fella and Rocawear from him. Dash pocketed a third of the $10 million Roc-A-Fella sale, but Jay-Z retained control of the brand by assuming the presidency of the Roc’s new owner, Def Jam. And Jay’s alliance with Rocawear partners Norton Cher and Alex Bize forced Dash to take a reported $30 million buyout (which in reality was closer to $12 million). Within a few years, Jay-Z and his partners turned around and sold Rocawear for $219 million. The house that Dame built ultimately became Jay-Z ’s retirement plan.



Jay-Z did indeed take to his new moguldom with relish, channelling a calmer version of Dash in accumulating a number of assets, from a piece of the New Jersey Nets basketball team to a nightclub franchise to a cosmetics line to a landmark joint venture agreement with Live Nation reported to be worth $150 million. Jay-Z is now regarded as the consummate hip-hop businessman and one-man brand. But it was Jay’s deft work with the metaphorical knife that made it all possible, as he severed the ties with his old partner while retaining the assets of their doomed partnership.

In 2000, Rapper 50 Cent was shot on a Queens street and left for dead. Soon thereafter, his career was left for dead when his label, Columbia, dropped him. Other companies wouldn’t sign him for fear of losing their investment to another would-be assassin’s bullets. Only Violator Management CEO Chris Lighty would help. The artist manager nursed 50’s career back to health with strategic mix tape salvos and reassuring meetings with skittish record executives.



Lighty ultimately signed 50 Cent to Eminem and Dr. Dre’s label ventures, assuring his client’s alignment with the most powerful creative and commercial forces in hip-hop. As 50’s single “In The Club” became an iconic hit, Lighty looked for ways to extend his client’s earning potential and increase his assets: a record label, G-Unit; a sneaker line with Reebok; a clothing line with Mark Ecko. But Lighty’s coup de grace was his quick-thinking placement of a bottle of Vitaminwater in a 50 Cent advertisment for Reebok.



Lighty’s old friend from Sprite, Rohan Oza, was Vitaminwater’s new marketing chief. Oza saw the commercial, took it as a strong signal from Lighty, and set up a deal that reversed, again, the traditional order of the artist-corporate relationship. 50 Cent didn’t want an endorsement deal. He wanted to invest. Although the fine points of the 50 Cent-Vitaminwater pact remain shrouded, it is thought that 50 Cent owned a 10 percent stake in parent company Glaceau (excluding the shares owned by the Indian conglomerate, Tata).



It’s clear that 50 Cent got a sizeable payout when Glaceau was sold to Coca-Cola in 2007 for $4.1 billion. While early reports put 50 Cent’s take at $400 million, his real take-home was likely between $60 to $100 million. But 50 Cent’s involvement makes the Glaceau-Coke deal the most auspicious in hip-hop history, not just for the dollar amount, but for the fact that a rapper—armed with nothing but the power of hip-hop—was able to partake in a transaction of such gargantuan proportions.