Why Rappers Should Never Sign a Record Deal

In a time where social media runs the world, it’s very surprising to see major record labels still dominate the hip-hop industry. The uprise of streaming services have set a new standard for all music artist. Sevices like Spotify, Apple Music, YouTube, and other services eliminate the middle man (record label). Back in the day singing a deal was crucial because it was almost impossible for a music artist to create a CD or cassette tape,  package it, and distribute it across the country. Understandably, it was definitely worth singing a deal because of the work that had to be done. 

In today’s digital atmosphere, there is almost no need for a record label. Most rappers are able to self market their music through social media which defeats the purpose of a record label marketing team. Take a look at someone like 6ix9ine who amassed over 14 million followers on Instagram. Someone like him would not need assistance from a record label, yet his money is being sucked up by corporate greed. 

Don’t get me wrong, for some artist a label might them more exposure, better marketing, and new connections, but that would only benefit smaller artists with little or no clout. In that case, a label will help an artist who have been stuck in a plateau for some years. But those artist aren’t the money makers. The artists the record labels are after are the ones with 10+ million followers, making radio hits, and most likely have a short lifespan in the hip-hop community. Artist like Lil Pump, Trippie Redd, Lil Yachty, and others are pretty much gold to record labels. A song like Gucci Gang generates so much money and most of it goes right into the pockets of the high-up executives while the artist just sees a portion of the songs’ success. 

Here the trick though. A label will pay an artist 5-10 million dollars to sign their rights over and then give them a small percentage of their work. Yes that 10 million seems like a lot of money especially when an artist is on the rise. But that money is nothing. To the labels it’s a joke. They’ll give you 10 mil just because they know they’ll profit ten times that amount off your music. 

Now let’s take a look at the net worth of artist that are signed compared to independent artist. Lets take a look at someone like Lil Yachty who has been all over the radio, commercials, social media, and more. Currently his net worth is around 10 million which is pretty good right? Wrong! Yes, I get 10 million is a lot of money, but for what he’s been doing, it’s nothing. Now look at someone like Chance. Chance has only three mixtapes and half the appearances of Yachty yet they have the same net worth. 

Back in 2012, Macklemore hit the scene with his hit song Thrift Shop. The song has been played billions of times and maintained high position on the charts week after week. Now the song has actually been out a year prior to its emergence but without the help of a record label, it was hard for it to see the light. But with some patience, Macklemore got his break and took the world by storm. After the release of his Grammy-winning album The Heist, he did one world tour and bought in the bucks. In pretty much one year of work, Macklemore reached a net worth of 20 million and an independent artist. Now imagine he had the same following and music quantity as these artist today. He would easily have 100 mil or more. In his one song Jimmy Iovine (founder of Interscope), Macklemore breaks down the percentages of a record deal:

“Anyway, you ready? we’ll give you a hundred thousand dollars
After your album comes out we’ll need back that money that you borrowed
So it’s really like a loan, a loan? come on, no
We’re a team, 360 degrees, we will reach your goals!
We’ll get a third of the merch that you sell out on the road
Along with a third of the money you make when you’re out doing your shows
Manager gets 20, booking agent gets 10
So shit, after taxes you and ryan have 7% to split
That’s not bad, i’ve seen a lot worse, no one will give you a better offer than us”

See, it’s not as pretty as it looks. And that was with a 360 deal which is one of the more efficient deals in the hip-hop industry. Overall, it doesn’t make any sense for artist to sign in todays age. The story above was in 2011 and eight years later the power of social media and individual brand marketing has grown so much with just a little patience and consistency, artist can make more money than they ever have. 

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