Since the 1990s, the path to hip-hop stardom largely ran through mixtapes. By 2006, the RIAA estimated the mixtape economy was responsible for 30 million to 50 million sales per year, working out to an estimated $250 million underground industry, one the trade organization viewed as piracy. Eventually the model moved online, where rising and established MCs alike would give away downloads of their projects on sites like Datpiff and LiveMixtapes. (Meek Mill’s 2012 tape, Dreamchasers 2, the most successful mixtape in Datpiff history, has been downloaded 4.7 million times and streamed another 3.2 million times on the site, according to Datpiff.) But royalty-generating streaming services have made the free model all but obsolete. “Most of those listens [were] in the black market,” says Saleh. “Now everyone wants to be in the rap business.”
“We suffered from piracy, we suffered from the free model, and we weren't demanding anything in return for our art,” adds Ghazi Shami, whose hybrid label/distributor EMPIRE earned six Grammy nominations this year for D.R.A.M.’s “Broccoli” (jointly released with Atlantic), Fat Joe and Remy Ma’s “All the Way Up” and Anderson .Paak’s Malibu. “Now there’s a new generation that says it’s okay to pay a subscription fee to Apple Music or Spotify.”
EMPIRE’s digital-first ethos has become a model for the industry, with deals that allow a label to give young acts a platform and support without a long-term commitment or investment. Priority’s relaunch is based on a similar idea, while labels like Interscope, Epic and Capitol have started focusing on joint ventures with independent labels and artists that offer distribution and major-label support when needed. (Interscope just partnered with LVRN, home to singer-rapper 6LACK; Capitol’s partnership with Quality Control includes Lil Yachty and, moving forward, Migos.)
“This structure is the future of the business,” says Habtemariam, who along with Wilson was brought in by Capitol chairman/CEO Steve Barnett to lead the label group’s surge in hip-hop. “Everyone will want the opportunity to be in business with someone from the beginning as a distributor and then connect the dots at a major level and be in a full deal with them.”
“Without the physical product being in the middle, you’re able to be a lot more nimble,” adds Saleh, who in March helped Future make history with back-to-back No. 1 debuts on the Billboard 200. That speed is a blessing and, potentially, a curse. Saleh says he’s “worried” that streaming-driven songs-of-the-moment could lead artists to focus on “quick noise” at the expense of a sustained career; Hamad says that can lead to artists being “not as realistic” in plotting tours. And the importance of playlists has, in some cases, changed what it takes to be successful. “The most exciting thing for me has always been the diversity of hip-hop,” says Shami. “I don’t want to lose that just because so-and-so has a song booming on a playlist and I can emulate it and get on that playlist.”
Still, the streaming-led R&B/hip-hop takeover is showing few, if any, signs of slowing. Total audio/video on-demand streams are on pace to top 500 billion for the first time by the end of this year, according to Nielsen Music. Thirty of the 50 slots on the Sept. 9 Streaming Songs chart are R&B/hip-hop tracks. And while 37 percent of music listeners used audio streaming services globally in 2016, that number rises to 62 percent among 16- to 24-year-olds, according to IFPI.
Meanwhile, Atlantic’s young MCs are finding success beyond playlists and singles: Kodak Black recently landed an album at No. 2 on the Billboard 200, and Lil Uzi Vert’s debut, Luv Is Rage 2, just opened at No. 1.