A Hip-Hop Signing Frenzy Sends New Record Deal Prices Soaring
According to WBR chairman Tom Corson, "anything that shows promise is being snatched up. We're definitely in the middle of a very competitive and expensive moment here with hip-hop acts."
Connor Lawrence woke up on Feb. 15 to a text from his friend, Jacob Moore, founder of the popular hip-hop blog Pigeons & Planes: "Have you heard of this Juice WRLDguy?" Lawrence, chief marketing officer of music-data company indify, had not. He scrolled through indify's rankings and realized the 19-year-old suburban Chicago rapper was at No. 60 and rising. Ten days later, video blog Lyrical Lemonade posted the rapper's animated, childlike "All Girls Are the Same," directed by the site's founder, Cole Bennett. That, says Lawrence, was all Juice WRLD needed to "explode."
"All Girls Are the Same" racked up over 4.7 million YouTube views within a month, and Juice WRLD was quickly at the center of a bidding war. "Every label tried to get in -- you rarely come across an artist and songwriter that has that much potential," says one major-label source, though an executive at another label that met Juice weeks before the video posted wasn't convinced. By March 12, Interscope had signed him to a deal that sources tell Billboard amounts to $3 million.
Juice WRLD is one of a slew of new rappers in recent months who have jumped from pop obscurity to seven-figure major-label contracts -- Los Angeles' 03 Greedo told Billboard that his December deal with Alamo/Interscope was for $1.7 million, and Lil Pump re-signed with Warner Bros. Records in early March for $8 million, say sources. Also landing deals worth over $1 million during the past year have been Lil Xan (Columbia), City Morgue's ZillaKami and Sos Mula (Republic), Shoreline Mafia (Atlantic) and SahBabii, who Warner Bros. Records signed for about $2 million, according to other sources. It's a bidding-war frenzy reminiscent of the 1990s, fueled by the streaming-revenue growth in the record business and suddenly potent marketing outlets like Pigeons & Planes and Lyrical Lemonade, which have helped break Lil Pump, Ski Mask the Slump God, Lil Xan and Lil Skies.
"Everyone's competing because urban music is dominating," says a label source. "You can get rich quick, so if you sign the right urban artist, that has the potential to have massive numbers on Apple and Spotify. Some labels don't want to miss any piece of gold in the river."
But with few of these acts household names yet, some industry executives fear the gold rush will lead to a bubble, even though for now, "the labels are seeing real money from it," says Todd Rubenstein, attorney for Lil Pump's management company, Tha Lights Global. "This is all kinds of new and crazy to them. There's some kid over there who's 16, and literally the manager is 16 -- he's his friend. How can you deal with that? You can't have any meetings until after 3:30."
Tom Corson, Warner Bros. Records' new co-chairman, agrees that "anything that shows promise is being snatched up. We're definitely in the middle of a very competitive and expensive moment here with hip-hop acts."
Laurie Soriano, an attorney for acts including Travis Scott, Frank Ocean and M.I.A., cautions that "a lot of times people will have one big single, but that's not enough to sustain a recording career and to justify the big-money deals we're talking about." Fueling the price inflation is young artists' tendency -- in an era of social media and a genre that rewards braggadocio -- to talk publicly about their potential deal terms, a trend Soriano calls "somewhat new."
"Clients are saying, 'So-and-so had a $10 million deal!' " she says. "You don't know what the $10 million means, though. You don't know if they're combining all the advances under the deal or if that includes recording funds that are paid to other artists. Some of it is a bit of a game of hype."
Loosening the labels' checkbooks is streaming revenue, which jumped from $1.8 billion in 2014 to $5.7 billion in 2017 in the United States, according to the RIAA, as well as Spotify's public listing, which could lead to a windfall of billions more, should labels sell their stakes. Major labels are growing their A&R staffs and rosters, and young, aggressive label chiefs, such as Interscope's John Janick, 39, and Columbia's Ron Perry, 39, are anxious to make a splash with hot new stars -- Aaron Bay-Schuck, 36, will start as co-chairman/CEO of Warner Bros. later this year.
Though some labels remain relatively cautious, "executives, presidents and chairmen are willing to jump into a bidding war earlier than they have in the past," says Josh Binder, a partner at Rothenberg Mohr & Binder whose clients include Kendrick Lamar, SZA and Daddy Yankee. "It's relatively low-risk if they're signing the right artists."
Prices also reflect the increasing leverage today's artists have, with the ability to earn enough from -streaming, touring and marketing to hold out for better offers. Before Lyrical Lemonade picked up his video, Juice WRLD had spent nearly three years posting his music on SoundCloud, landing 1 million streams of "Lucid Dreams (Forget Me)" in 2017.
Jake Millan, manager of rising Atlanta rapper Yung Bans, is concerned that inexperienced stars don't understand that a label's $1 million offer usually means an advance that has to be paid back. Bans is independent for now, but "the A&R [reps] are doing their best to persuade us -- taking us out to eat, flying us to hotels, stuff like that," he says, adding that Bans is on house arrest and requires approval for out-of-town trips. "It's super insane how fast artists are coming up right now."