Thursday, September 20, 2012

In Hip Hop you don’t need to make music to make Money


Get rich or die tryin’” was the title of the 50 Cent album that made him a Global Hip Hop Phenom and propelled him into the Hop Hop Spheres of Stardom. By now it seems fairly obvious that he succeeded. For two reasons.
  1. 50 Cent is still alive
  2. He ranks second on Forbes’ List of Hip Hop Cash Kings 2007-2011 (only Jay-Z managed to make more money in that time-span)

What isn’t that obvious at all is what 50 Cent has done to become rich. Yes, he made an album that sold well. But, if you thought, that the Hip Hop artists got rich by making music, it seems, you're wrong. Music does not keep them rich.

Generating income from music is a very volatile business. Styles and preferences change quickly, while icons of sub-genres remain the same. Just look at Timbaland (no. 5 on the list). In 2007 he was at the top of his game, he had produced albums by Justin Timberlake and Nelly Furtado (whose two albums combined for 7 No. 1 singles between them), and his own cash cow “Timbaland Presents: Shock Value” hit the streets with every top name in the business making an appearance. At the time, Timbaland had the sound. Not just a sound or his own sound. Timbaland had the sound. The sound that everybody wanted to have that year. Everyone wanted to sound like that. 
And it is a great sound. Just listen to practically any track from Nelly Furtado’s “Loose” or Justin’s “FutureSexLoveSounds”, close your eyes, and the sound takes you back in time. But then new years came around and all of a sudden it is 2008. All of a sudden, the Timbaland sound is “so last year”.
Everything he’d done in the early noughties led straight to “Timbaland Presents: Shock Value”. It was the zenith of his career. But that only lasted so lang, and after that he just didn't have the sound anymore. Now people want a different sound and Timbaland has been nowhere near the position he had in 2007.

Artist
Income 07'-11'
Jay-Z $251 Mill.
50 Cent $216 Mill.
P. Diddy $158  Mill.
Kanye West $100  Mill.
Timbaland $81  Mill.
Dr. Dre $80  Mill.
Pharrell Williams $76  Mill.
Snoop Doggy Dogg $73  Mill.
Ludacris $68  Mill.
Lil' Wayne $66  Mill.
Eminem $66  Mill.

The same thing can be said about the remaining artists on the Forbes list. They are not rich because of their ability to release new music (there's a correlation of 0.08 between money made and number of albums released). What sets the Cash kings apart is the fact that they have successful business ventures not directly related to music. Jay-Z is part-owner of the Brooklyn Nets and is the creator of apparel company Rocawear. 50 Cent made half his fortune on the list from selling his stake in a company he founded Glaceau to make a vitamin water drink and has many other interesting companies in the pipeline.

So 50 Cent might have made his initial fortune by making music, but it’s his entrepreneurial spirit and business savy that keeps him in the Top 10 of Hip Hop’s Cash Kings.

Sunday, September 9, 2012

Big boys get no love from Sponsors (NFL edition)

If you’re a young football player hoping to one day play in the NFL and have fame, wealth, girls and lots of lucrative sponsorship deals, your best hope is to be at a position where your ideal playing weight is below 250 pounds. That is the conclusion after analyzing the data from Forbes’ list of The World’s 100 Highest-Paid Athletes in 2012.

The highest salaries in the NFL may go to defensive linemen Haloi Ngata (Baltimore Ravens) and Ndamukong Suh (Detroit Lions), who are both above 250 pounds, but the big boys find it harder to secure sponsorship deals.

To attract top endorsement dollar, you have to be smaller. Eli Manning, 218 pounds of quarterback for the New York Giants, makes $8 mill. a year or 30.1% of his total income from endorsements. At the other end of the spectrum is Charles Johnson, 285 pounds of defensive end for the Carolina Panthers, who only makes $100,000 a year (0.3% of his total income) from endorsements.

To explain, let’s look at the highest paid player pound-for-pound in the NFL. This classification tells us how much money each player is able to generate in salary per pound of body weight. Larry Fitzgerald, WR for the Arizona Cardinals, is the best paid with each pound of body weight generating $161,927 of salary in 2012.


Name
Salary/P
1.
Larry Fitzgerald
161,927
2.
Peyton Manning
140,870
3.
Darelle Revis
136,364
4.
Charles Johnson
120,351
5.
Sam Bradford
119,643
6.
Ndamukong Suh
115,635
7.
Mario Williams
112,671
8.
Haloi Ngata
109,118
9.
Mark Sanchez
103,111
10.
Tom Brady
102,667


Because of their huge pay checks both Suh & Ngata are in the Top 10 of salary per pound of body weight. But they don't receive similar endorsements. Nobody over 250 pounds feature in the Top 10 of endorsement dollars per pound of body weight.

It gets worse: nobody over 250 pounds are able to make seven figures from sponsorship deals. Even though Ndamukong Suh is the player with the best endorsement deals ($500,000 per year) he is forced to settle for fame and wealth (according to this GQ profile of Ndamukon Suh the only girl in his life is his sister, who is also his manager).