11.21.10 10:42 PM ET
Bad news for Taylor Swift, President Bush, Matt Lauer, and any other Kanye West haters out there: You’re about to see a whole lot more of the rapper. After experimenting with some brand extensions over the last few years, West’s camp plans to launch a full-on assault on the business world to expand Kanye Inc.
In an exclusive interview with The Daily Beast to coincide with the release of West’s fifth album, My Beautiful Dark Twisted Fantasy, the rapper’s manager, Gee Roberson, reveals details about the strategy for corporate Yeezy and hints at some deals to come.
“It’s safe to say that we’ll be doing more strategic partnerships in areas like fashion and design,” says Roberson. “Music is the foundation for everything Kanye does, but he doesn’t want to be defined only as a musician. He’s really a designer. He designs his sounds, his raps, all aspects of his tour. He wants to do deals where he can have his fingerprints on the product.”
West already announced the first of these partnerships this month, teaming with fragrance manufacturer Parlux to design and create his own cologne, which is expected to hit store shelves next year. According to a business partner of West, the rapper, who was named Stylemaker of the Year, is talking with iconic French fashion label Lanvin about partnering on a branded, high-end clothing line.
“I know they’ve been trying to do something with Lanvin for a while,” says the source, who asked for anonymity because the discussions are in the early stages and could ultimately go nowhere.
While Roberson declined to comment directly on talks with Lanvin, he added that West considers the designer, like Marc Jacobs and others, an inspiration that Kanye’s brand would mesh with well. Of the types of companies West is looking to partner with, Roberson would say only, “It’s all about taste and what Kanye respects and who he looks up to in each space.”
He’s the Sarah Palin of rap: Supporters will follow him blindly, while critics will continually try to discredit him.
Rap and retail have a long history together. As the genre has evolved from underground to mainstream—think of Run-DMC’s “My Adidas,” which led the rap pioneers to an endorsement deal—the business world’s embrace of the hip-hop community has grown tighter. The way rappers have chosen to leverage their fame in the business world has gone through a transformation as well. Rappers like Snoop Dogg, who famously appeared with Lee Iacocca in a Chrysler ad, were just promiscuous promoters, the hip-hop equivalent of Donald Trump. Diddy and Jay-Z took things a step further, becoming actual operators of their own businesses or occupying executive positions at other companies. For instance, Jay-Z, whose net worth is estimated at $450 million, was hired by Anheuser-Busch to help create the marketing campaign for Budweiser Select. Rapper 50 Cent’s strategy is to take equity stakes as payment for endorsements, like he did with Vitamin Water, which ended up netting him $400 million when it was sold to Coca-Cola in 2007.
While those rappers crafted their brands around a broad audience strategy, West’s camp plans to pursue a more targeted, deeper engagement approach. That’s motivated in part by the rapper’s polarizing personality. The episodes with Swift, Lauer, and President Bush—combined with his inability to take criticism, frequent Twitter outbursts, and photos of his exposed man-parts—have either reinforced West’s image among fans as a rebellious leader or given haters more allowance to dismiss him as an egoist and nothing more. He’s the Sarah Palin of rap: Supporters will follow him blindly, while critics will continually try to discredit him.
“There aren’t a hundred brands interested in Kanye like they are Jay-Z,” says Jarrod Moses, who spends his days crafting partnerships between celebrities and brands as the CEO of United Entertainment Group. “The partners that are interested in him are niche and select. But that’s not a bad thing. He can position himself with brands as exactly what he is, which is a curator of high-end lifestyle products. Instead of being a mile wide and an inch deep, his strategy is to be an inch wide and a mile deep.”
West, 33, has only dabbled in the business world, but when his activities have adhered to this strategy they have been successful. And when they have diverted from it, they have flopped miserably. Last year, he released two sneaker lines, one with Nike and the other with Louis Vuitton. Though the Nike Air Yeezy Men’s Shoe was priced at $215 and the line of Louis Vuitton sneakers at $800 or more, both sold out immediately in part because they were branded as “limited editions,” which created a must-have sense among West’s fans. Conversely, West embarrassingly had to shut down his Pastelle clothing line just two days after photos of some of the planned apparel surfaced on the Internet to a poor reception.
Roberson disputes the notion that Pastelle was shut down.“We just decided not to release the line,” he says. “We called a basic audible.”
In addition to these ventures, West also owns the franchise rights for 10 Fatburger restaurants in Chicago through a holding company called KW Foods LLC.
Unlike most rappers, however, West only derives a small portion of his earnings from non-music related ventures. Forbes estimates that Yeezy earned $25 million in 2009 and will approach that amount again this year after his album drops and he goes out on tour. While precise terms of his fragrance, sneaker, and Fatburger deals could not be learned, industry sources sketched out how the financial details of such partnerships are generally structured. Fragrance deals like the one West just announced with Parlux typically include an upfront payment for naming rights of between $500,000 and $2 million, and a guaranteed annual minimum royalty rate of between 6 percent and 12 percent. In sneaker deals like those with Nike and Louis Vuitton, the upfront payment is usually higher, between $1 million and $3 million, but the royalty rate is generally less, around 4 percent to 10 percent, because overhead costs are higher. Sources said West’s deals are likely at the high end of these ranges, or perhaps even higher, given the level of his fame. Roberson declined to comment on the terms of West’s deals.
Still, the majority of West’s fortune comes from his music work. Each of his four studio albums have gone platinum, with his first, The College Drop Out, selling the most at 3.2 million copies, and his last, 808’s & Heartbreak, selling the least at 1.7 million, according to SoundScan. In total, West has sold more than 10 million albums and 20 million individual digital tracks, with today’s release expected to add a few million more in album and track sales to that amount.
Despite those staggering sales figures, West actually makes more money as a producer and songwriter than he does on album sales, because he owns the publishing rights to his songs. As West boasts on “Monster” off his new album, “Ain’t nobody cold as this/Do the rap and the track/Triple-double, no assist.”
Unlike recording rights, which only generate revenue for an artist when a song or album is bought, owning the publishing rights allows West to make money whenever one of his songs is played, be it on the radio, TV, videogames, ringtone, streamed on the Internet, or exploited in other formats. It is a recurring rather than a one-time revenue stream. And for West, owning his publishing means that the revenue opportunities extend beyond just his own songs to the songs he has written for Jay-Z, Ludacris, Drake, Alicia Keys, Janet Jackson, and others. The rapper has a deal with EMI to administer his catalog, which means the record label seeks out ways to weave West’s songs into other ventures and takes a fee for placement. Two sources familiar with the deal’s terms say that the revenue split between West and EMI is 75-25 in his favor. Roberson declined to comment on the terms of the deal with EMI.
While hip-hop isn’t as big a draw on the touring circuit as pop or rock, West is also one of the rare rappers who can sell out arenas. According to data provided by concert industry tracking firm Pollstar, West has sold 1.1 million tickets and grossed just under $60 million in touring revenue since 2004.
Roberson says the goal in expanding West’s brand is to decrease his dependence on music for money. Just as a magazine publisher wants to have a balance between advertising and subscription revenue, for instance, West wants to have something resembling parity between his music and non-music related ventures. Or, to borrow a line from his mentor Jay-Z, West doesn’t just want to be a businessman, he wants to be a business, man.
Peter Lauria is senior correspondent covering business, media, and entertainment for The Daily Beast. He previously covered music, movies, television, cable, radio, and corporate media as a business reporter for The New York Post. His work has also appeared in Avenue, Blender, and Media Magazine, and he's appeared on CNBC, Bloomberg, BBC Radio, and Reuters TV.