This is a superstar
economy, in which A-listers live large while minor leaguers
struggle. Hedge fund managers like John Paulson may rack up
big returns, CEOs like Lloyd Blankfein of Goldman, Sachs
bag huge compensation packages, and all-star baseball
players like Alex Rodriguez ink nine-figure contracts. But
few of them can match the combination of fame, public
acclaim and monetary value that Shawn Corey Carter has
racked up.
Who?
Amid the carnage of the music industry in the past decade,
Jay-Z has managed to parlay artistic success into financial
fortune valued at up to $450 million, according to Forbes. Jay-Z's many business
successes (and few failures) are described in a new book
by Forbes
writer
Zack O'Malley Greenburg, entitled
Empire State of Mind: How Jay-Z Went from
Street Corner to Corner
Office.
In 2010 alone, he earned $63 million, more than all but
seven CEOs of public companies, writes Greenburg. While the
money came primarily from touring, Jay-Z has a business
interests ranging from music to nightclubs, from
restaurants to apparel, from sneakers to a chunk of the New
Jersey Nets. As Greenburg and I discuss in the video, the
Brooklyn native, who spent a chunk of his teens selling
drugs before devoting himself full time to rap, has "a
unique ability to set trends and profit from them, almost
to an astronomical level."
Early on, Jay-Z displayed an acumen for business. In 1994,
unable to find a company to produce his debut records,
Jay-Z, Damon Dash and a silent partner founded their own
label, Roc-A-Fella Records. And when a distributor agreed
to take on the album, he negotiated a deal to retain
ownership of the master recordings.
In the late 1990s, he discovered that sales of Iceberg
apparel rose after he began including references to them in
his songs. But when he went to Iceberg and asked for an
endorsement deal, the company demurred. Instead, he started
his own apparel company, Rocawear. In 2006, Rocawwear was
sold to a brand licensing company for $204 million.
There's been much more: a line of sneakers for Reebok,
the 40/40 nightclub chain, an ad for
Hewlett-Packard, and an interest in the hot New York
City gastro pub, The Spotted Pig.
Jay-Z's career and business interests are vivid testimony
to the mainstreaming of hip-hop culture. Deals come his way
in part because he is, simply put, much cooler and
culturally relevant than older guys in suits. It's not
simply that he can attract a crowd, but that he lends a
kind of legitimacy to all sorts of ventures — including the
efforts to build a huge arena/ development to house the New
Jersey Nets in Brooklyn. The New Jersey Nets, as Greenburg
notes, had long been a second-tier team in the NBA, and an
afterthought in New York. Facing political obstacles and
community opposition, Nets owner Bruce Ratner offered Jay-Z
a small ownership stake in exchange for becoming one of the
public faces of the project. Another potential bonus: the
other owners thought Jay-Z could help attract top talent
like LeBron James to the Nets.
That hasn't quite worked out. And, of course, as is the
case with most serial entrepreneurs, Jay-Z has had his
share of business setbacks. He spent a fair amount of time
last decade working on a Jay-Z Jeep, which fell apart due
to issues at Chrysler. A GMC Yukon painted Jay-Z blue never
got beyond the concept car stage. As Greenburg notes, the
singer makes a strong effort not to highlight failures. "He
doesn't want to be seen as anything other than victorious."
Greenburg adds: "Even Jay-Z fails, but that doesn't make
him any less of a businessman."
So what's next? Despite all his operations, music and
performing remain at the core of his business, and of his
brand. And here he faces something of a challenge. In rock
and pop, it's not uncommon for groups and singers to fill
big arenas well into their 60s — the Rolling Stones, Paul
McCartney, even Neil Diamond (who is now 70!). But hip-hop
is a much younger genre, and Jay-Z is already 41. "He's the
first guy who is going to be out there and seeing what the
market is for aging rappers," said Greenburg. "But if he
wants to tour all the time like the Stones do, he could
certainly do that."
Jay-Z has succeeded in part because of a tough-minded
mentality that make him insist that he own a part of any
operations he's involved with. And that explains in part
why he and his team didn't cooperate with this book. When
he signed his book contract, Greenburg went to Jay-Z's
team, sought interviews, and explained the book as a
business success story that "would put him up in the
pantheon with Warren Buffett and Steve jobs." Came the
response: "What's in it for us?" He didn't want to help
with the production of a book that he wouldn't partially
own. Besides, he was working on his own book. When it was
published last November Decoded debuted as #3 on the
New York
Times best-seller list.
A look At How Jay Z became a mogul