Wednesday, June 2, 2010

Finally, A cRapper With Some Fiscal Common Sense.

The music industry is a notoriously cruel business which routinely gouges its artists of mechanical and performing royalties. Tomes have been written about singer who've sold millions of albums, but were flat-a$$ed broke because of shady dealings of some sort or another. And for that matter, when artists do actually make some money, most of them are so fiscally naive that they either piss it all away on bullsh*t cars and jewelry, or go broke overextending themselves into "bidnesses" they have no business delving in like auto dealerships and sports franchises.

Sure, it's easy to point to obvious examples like Diddy, Jay-Z, and Master P, but reality is these folks are the exception, not the rule. The next time you hear some moron blathering on and on about how "hip hop has created more black millionaires than anything else", smack this person upside the head and simply mention the name "Hammer". A good education, determination, and hard work will give any kid a better chance of becoming wealthy than trying to strike it rich as a cRapper.

Word to M.I.M.S.

That said, it's refreshing to occasionally hear about an artist who stayed ahead of the game and found ways of making his money work for him long after the records stopped selling. This is one such story.
Rapper-producer Jonathan Mortimer "Lil Jon" Smith is best known for turning everyday words like "yeah" and "okay" into bloodcurdling sonic extravaganzas. He's crafted hits for the likes of Usher and Ludacris; his first solo effort, Crunk Rock, will hit stores on June 8. But given the state of the recording industry, he's focusing more on a concept that doesn't lend itself to his trademark exhortations: diversification.

Lil Jon's non-music revenue streams include a line of Oakley sunglasses, an energy drink and a wine label. On a recent visit to the DailyFinance studios, Jon estimated that these ventures account for nearly a third of his annual earnings, which total an estimated $11 million, by Forbes' last count.

There's never been a better time to diversify. Last year, album sales fell 12.7% across the music industry and 20.9% in the rap category, according to in Nielsen SoundScan. This decade, industry-wide album sales have plummeted from 800 million in 2000 to 400 million in 2009.

Lil Jon's most successful business venture is his Crunk!!! Energy Drink, which allowed him to tap into a familiar lifestyle niche. "Crunk is a word we've been using in the South forever-it basically means energy," he explains. "Crunk is past tense for crank. Once you crank it, it's crunk ... it's off the hook, it's crazy."

Jon launched the beverage in 2002 with the help of late liquor baron Sidney Frank, the father of Grey Goose vodka. The two connected while Grey Goose was sponsoring concerts for Jon's group, Lil Jon & the Eastside Boyz. After Frank passed away in 2006, Kimberley Clark veteran Tom Mahlke came in to run Crunk, and these days the energy drink pulls in a reported $15 million per year. Jon won't reveal how much of that sum comes his way, but given the structure of comparable celebrity ventures, his annual take may well approach seven figures.

Jon's next venture took him to a different side of the beverage business. In 2008, he started a wine label, Little Jonathan. The idea stemmed from a small run of private label wine that he'd commissioned for a party earlier that year. When he saw how easy it was to enter the wine business on a permanent basis, he brought in Alison Crowe -- a California winemaker who has worked at Chalone Vineyard, Curtis Winery, Bonny Doon Vineyards and others -- to create a merlot, a cabernet and a chardonnay. Bottles can be had for $15.99 online; sales figures aren't available. But the chardonnay won a silver medal at the 2009 Los Angeles Wine and Spirits Competition.

Jon's other ventures include a line of Oakley sunglasses ($100 per pair) and an Apple (AAPL) iPhone application ($0.99 per download) that features recordings of all his most popular sayings. He won't disclose how much he earns from either, but he admits they're part of his retirement plan.

"I want to have something to fall back on, so that's a reason you create these different business ventures," he explains. "I don't want to rap forever."
While it was easy to look at Lil' Jon's ascent a few years ago and assume a crash back to Earth was coming soon, there's clearly more than meets the eye here. I've heard conflicting reports on Lil' Jon's upbringing, but what's certain is that he came from an affluent family in which both parents are well-educated professionals. It didn't take a genius to tell that his trendy snap & synth brand of production had a short shelf-life, and his 15 minutes were coming to an end with the 67 millionth spin of "Yeah". Thankfully, Smith was able to find profitable side hustles that traded on his personality, not necessarily his music.

Like much of what you see in the music industry, Lil' Jon's coonish antics were little more than a clever ruse to move units.

Question: Does it shock you that Lil' Jon had much more business acumen than originally thought, or is these sorts of theatrics just necessary evils to get yourself noticed?

The Crunk Life: Rapper Lil Jon on How He's Creating a Diversified Portfolio [DailyFinance]

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