Diversification 101: is the class the most successful moguls aced

Malik Melech Soliman: (Curator and Administrator of this Blog)

When I'm in my element I often wear a suit and tie when I work, so that probably makes me corporate. I've always hustled, so that makes me a hustler. Any of my other credentials are but mere mentions in between those lines. A University Degree, street credibility, the respect of your peers, the envy of your enemies - I've aquired all of these things at a great cost, a price that many of you would be unwilling to pay. Hopefully you should never have to, because it is wiser to learn through the suffering of others rather then taste defeat.

Diversification 101:



If you want to know how an industry is doing, you've gotta watch the leaders. You've gotta learn from the innovators in the game, and pay attention to those who make the formulas. For some time now, there's been a pretty simple path to follow when it came to making cash within the Music Business. I said simple, I didn't say easy. First, you made a demo, which—these days—has been replaced by the mixtape. Next, you created some buzz for yourself. After successfully creating some buzz, you might have gotten signed to a recording contract. If the label had enough faith in you, they might have given you an advance on your record sales, follow that up with a major label release, then you went on tour, and presto! Before you knew it, you'd be making it rain and pouring champagne on strippers and video models in no time. Despite the apparent simplicity of that business model, it was still hard work and most couldn't hack it. There were mutations on the plan, some people did things backwards, but for the most part, people followed in the footsteps of artists signed since the 60s. Sure a couple did it better than most. You know the names: Jay-Z, Eminem, Curtis "Interscope" Jackson, Kanye West — artists who have consistently moved units. So what are they doing now that records sales are slumping?



Diversification. That's what the big boys are doing. In the school of Hard Knocks, Diversification 101 is the class the most successful moguls aced. This isn't true just for Hip-Hop. This is true for every enterprise you can think of. Trying to hustle real estate is what I'm about these days...you've gotta be prepared for the down turn. Hustle stocks on the side. Artists like 50-Cent and P-Diddy are never at a loss for an income stream. 50-Cent earned $100 million for his small stake in Glaceau's Vitamin Water brand — which was purchased by Coca-Cola in 2007 — and Diddy's ventures into clothing, film production, and his current role with Ciroc Vodka; co-branding it as that brand's director has the potential to earn him up to $100 million —- these people come to mind as prominent examples of how rappers have parlayed their initial success in Hip-Hop into dollar signs in other industries.

You can ask the street corner hustler or the financial planner; the answer will always be the same: you've gotta diversify your income streams if you want to achieve reliable gains. You can't rely on one source of revenue, and even newer artists are starting to recognize that. Taking their cues from Hip-Hop veterans like Russell Simmons and Jay-Z, relative newcomers like Ciara and Rihanna have already landed major endorsement deals with Rocawear and Marc Jacobs, respectively, to capitalize on their popularity and compensate for shrinking record sales.



That's because they know they can't rely on just music sales to see the financial gains they're used to. Although the popularity of ringtones—and its profitability—caught everyone by surprise, profits from ringtones will be short lived as content providers go through the growing pains of revamping their business models. More and more, music isn't the main product, but it's what's being used to move other products. These days, advertisers are capitalizing on the marketing power of the Hip-Hop lifestyle and culture to sell cars, computers, Nike boots, and even soda—Coke or Pepsi. It doesn't matter what the brand name is. I'm not saying there's anything wrong with that. I'm saying that artists won't be able to make what they did when Hip-Hop was the main product. As the swagger turns from a commodity to a freebie, those who manufacture the swagger will have to take their cut out of the main event.



Even though it is clear to see that the money is draining out of Music record sales, the situation is quite the contrary for Music's marketing. The power that Urban Culture has to bless brands with "The Cool" is legendary, and so the industry still has millions left to milk. Artists just have to be more creative and business minded. Mostly because times are changing, and so are business plans. For instance, R&B artist Ryan Leslie has adopted the TV model for making money from his music. Instead of selling his music to fans, he gives it away for free on his website. And since free music—if it's good— will obviously attract plenty of Internet traffic, he makes money by selling ad space on his website to advertisers.



And that's just one of the business models being field-tested right now. I guarantee you there are more quick minds churning over the next multi-million dollar distribution method for Hip-Hop and other content. The problem of media distribution and gettin' paid for your bits is about to be solved, and someone is gonna get caked up. If you're a young, hungry up-and-comer, you better have your game plans tight and numerous because the point and shoot method of making it big as a rap star or singer is done.



If you are an aspiring Music artist who wants to survive the drought, you better take notes well: Hit up Youtube, start your own channel, and get paid when people watch your videos. Get your Myspace promo game on lock. Look for ways to not only own your music, but the feelings your music gives to people. Create your brand, own your brand, and then license that brand. You should own stocks in the companies that use you to sell their products. Stop giving companies like Nike and Ed Hardy free promotion. Smarten up! When you finally start making some cake, don't waste it on poppin' bottles and supporting your sneaker habit (I talk about shoes because I can lol). Flip that cash with new business ventures. The music business is like musical chairs. It's all about where you are sitting when the music shuts off. But if you're a hustler, you already knew all of this.