“Women’s Wear Daily” Gets To The Heart Of The Music Biz
A profile of the producer/singer/guy-who-wears-wads-of-cash-as jewelry The-Dream (government name: Terius Nash) in Women’s Wear Daily starts off as one might expect: He likes expensive things and is part of the line of producers who have remade urban radio in their own image, stealing some of the spotlight from the singers of their songs. In the middle of the piece, however, writer Jacob Bernstein manages to capture the unsustainable nature of the current urban music business.
According the insiders Bernstein interviewed, the superstar producers driving the urban market at the moment are also likely to be its downfall. Artists like Rihanna are seen as interchangeable, but the payments made to those producers are astounding in an era of rampant music business belt-tightening: they’re often paid $50,000 or more up front, and then receive radio and ringtone residuals, as well as chunks of the money garnered by selling songs to television or film. In contrast to the standard label practice of paying money up front for a song, then owning nearly all of its backend, producers like The-Dream and his partner retain the publishing rights, withholding what can often be the most lucrative long-term source of revenue. Bernstein details the benefits of that arrangement for The-Dream, which include a nearly endless stream of $100,000+-priced vehicles that he paid for in cash. (“I’m going to have, like, 10 cars by the time I’m done,” he tells Bernstein, “and I’ll pay for all of them up front. Credit just gets you f—ed up.”)
Of course, when the music industry perceives that someone’s getting rich before they are, there’s likely to be grumbling.
While hit-makers have been cashing massive checks since the Motown era and earlier, it’s hard to think of a time when the music business has been this strapped for cash. In the most recent fiscal quarter, both Sony/BMG and Warner Music reported losses, according to filings with the Securities and Exchange Commission. And the economics of “urban” music are frequently cited by industry players as being the worst in the business today, with leading rappers and producers demanding far more money than they can guarantee delivering.
“Because of these producers and the massive fees for guest appearances by rappers, the risk-reward ratio in urban music is upside-down,” says Tommy Silverman, the head of Tommy Boy Records, which launched the careers of De La Soul and Queen Latifah. “The cost no longer justifies the investment.”
Another former label head, speaking on the condition of anonymity, says, “All of these labels are spending a fortune, hoping to sell like it’s 1995. It just doesn’t happen. How do you spend $250,000 on one song? It’s crazy.” And being hot one minute doesn’t guarantee success the next. In 2005, producer [Scott] Storch seemed to be on fire, with massive hits for 50 Cent, Chris Brown and Lil’ Kim. In 2006, the labels paid him millions of dollars to produce records for more than 30 artists, among them Jessica Simpson, Nas, The Game and Paris Hilton. Not one of his songs even reached the top 10….
Recently, there’s been some evidence that a correction is coming. Going forward, some are predicting that the labels will begin to move away from the high stakes poker game of manufacturing big stars and invest more resources in developing artists who write and produce their own music. This would likely leave fewer blockbuster acts, but would lead to more constant returns and lower overhead, they say. Even Nash says his own attempt to go solo is partially a way to generate another revenue stream without introducing the high costs associated with building pop stars. “With my projects, it’s not really about me,” he says. “It’s us saying we can deliver this type of product at a lower cost. We’re going to write 300 f—ing songs a year anyway. So don’t give me front end. I don’t need any money. But give me ownership, and I can make money from record one, when it sells the first copy.”
It’s probably wise for The-Dream to develop as many revenue streams as possible, because the story told there should be a wake-up call for any producer looking for a six-digit payday. While having Timbaland on a track can even turn what sounds like a third-rate Fray song into a hit, Storch’s recent dry run and the (for now) fading Neptunes have to put some fear into executives who are desperate for the immediate financial gratification of digital sales and ringtone purchases. With Soulja Boy and the like creating hits on their own that can be picked up by labels without the development costs normally associated with the cultivation of hits, why bother paying up front–and through the nose–for a hit when someone might just make one in their bedroom that can be had for half the price?
