Hip-Hop Moguls: Beyond The Hype

As rap music has exploded, so too have the fortunes and businesses of some of today's hottest young music executives

magazines, the Internet-and start making inroads into those businesses earlier,” says Andre Harrell, former CEO of Uptown and Motown Records and now president of Bad Boy Records. Like medieval lords, these princes of the ghetto are establishing fiefdoms they hope will endure beyond their reign at the top of the charts.

But the ability to diversify is predicated on building a profitable record company, and there are still only two paths to power in the music biz: by keeping it real for consumers or by capturing the attention of the music industry’s idol makers. Or, in the words of Niccolò Machiavelli, “One attains [power] either by popular favor or by favor of the aristocracy.”

“I’m the ghetto Bill Gates, but I’m legit.” –Master P
“One of the main reasons I’m so successful is because I didn’t go to a record label looking for any money,” says 29-year-old Percy Miller (better known as Master P or, simply, P). Instead, in 1994, they came looking for him. “He’d been selling a lot of our records in his [Richmond, California-based] No Limit Record Store and had also gotten his self-produced No Limit records distributed in stores throughout the Bay Area,” says Bryan Turner, president and CEO of Los Angeles-based Priority Records. After hearing of Miller’s success, Turner offered him a typical boutique-label deal that heavily favored Priority, the exec says. It was promptly declined.

“P never coveted the short money. He knew there was much more upside if he made the right deal,” says Turner. After Miller had independently sold over 350,000 copies of his first two albums, 99 Ways to Die and The Ghetto’s Tryin’ to Kill Me, Turner sweetened the pot. The right deal was one in which Priority receives about 15% of the profits in return for pressing and distribution. The rest goes to No Limit, as does 100% ownership of the master recordings, which allows No Limit to profit from future sales such as catalogs and reissues.

Over the past two years, Master P, along with fellow hard-core acts Snoop Dogg, Mia X, Mystikal, Silkk the Shocker and C-Murder, have pushed No Limit’s sales to over 28 million records, with gross receipts of nearly $250 million. No Limit’s heralded cross-marketing strategies, in which each release is used to promote other No Limit artists and products, keep expenses low and profit margins high. “A lot of companies are trying to figure out how we keep our costs down,” says No Limit Records COO Tevester Scott. “We just learned the game quickly and understand where to put our money.”

Rather than pay top dollar for sought after hip-hop producers who charge as much as $20,000 per track, No Limit uses mostly in-house producers and records in its own studios. As for big-budget videos, “save that for Britney Spears and the Backstreet Boys,” laughs Scott, who runs the record company’s day-to-day operations. Such frugality has afforded Miller the capital to pursue other ventures. “I let this rap thing open up other avenues because you can’t just depend

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