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Direct-to-Consumer Hip-Hop is Not a Game

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Dan Runcie

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Nipsey Hussle and other rappers have established strong brands to serve fans directly, but it takes focus and commitment to replicate their model.

Nipsey Hussle (Original photo via Meron Menghistab/BET)

Nipsey Hussle deserves his roses. The 33-year-old rapper is fresh off a GQ photo shoot, a feature in Forbes, and several other media spots. Each interview is rich with business principles that he follows religiously. One of his tenets is the economic value in the scarcity of markets. In 2013 and 2015, he made headlines when he sold copies of his mixtapes for $100 and $1,000, respectively. On his Grammy-nominated album Victory Lap, he rapped about his quest for vertical integration. The Crenshaw native is one of hip-hop’s direct-to-consumer (DTC) gurus. It’s an approach that many in hip-hop desire, but few can execute well.

His retail store—The Marathon Clothing— is the channel aimed to bring this vision to life. “If I have 10 Marathon stores in different parts of the globe, and I drop 1,000 units to each store at $100 each, I’ll make $1 million as soon as we sell out the first 10,000,” he said to Forbes. “Then, we continue to fulfill orders, which generates cash on the books, with no distribution fee. That’s a different model, and we’re in position to do that.”

Nip’s self-made strategy may seem replicable, but it takes more than a high sticker price and limited drops. Fans are locked into Nipsey’s mentality. It’s a paradigm shift from the industry norm. Traditionally, artists rely heavily on distributors, make their music ubiquitous, and compete for digital streams. Those who occasionally attempt DTC tactics often struggle to find immediate success.

Nipsey has a diverse portfolio. There’s an opportunity to connect his customers behind a sole identity.


Direct-to-consumer’s growth in hip-hop

Nipsey’s approach is not for everyone, but several artists have done it well. Last year, French liquor company Luc Belaire did a Self Made Tastes Better video series with different rappers. The conversations with Russ and Rapsody stuck out.

Russ has been loud and proud of his independent journey. The New Jersey rapper gets hated on for his ‘holier than thou’ attitude, but his approach is still noteworthy. DTC is his means to bypass industry politics and connect directly with fans. He shared a follow-up in Forbes with Julian Mitchell:

I came up hearing so many rappers speak about how fake it is, and as I experienced it for myself, I realized they were right. From politics, social climbing and the emphasis on needing to know certain people to climb the ladder — I just don’t think it’s necessary to be successful. That’s why you don’t see me at industry events, or making the effort to be seen in certain circles. To be successful in this era, you just need the internet and fans.

The 26-year-old will probably never win a Grammy given the campaigning required to win. He could probably care less though. His strategy led him to sell out the Staples Center and earn $15 million last year.

Meanwhile, Rapsody built her direct-to-consumer approach out of necessity. In interviews, the North Carolina rapper often speaks on how the industry only elevates one woman at a time in hip-hop. In her interview, she said that 73% of her fans were men and 27% were women. Most mainstream rappers probably don’t know the specific demographic breakdown of their fanbase. The Laila’s Wisdom rapper’s attention to her consumers has helped her tour across the world, perform for thousands of fans, and not rely on the standard industry model.

The DTC life is not for everybody

For years, Nipsey has been a proud supporter of Tidal. He shared his thoughts in a 2018 Forbes interview:

Jay-Z owning Tidal was ahead of its time, and people still don’t get it. You hear people take shots, saying he only has a few million users, but that’s not even the point. That doesn’t even matter. Even if he only had his fan base on Tidal, he’s still vertically integrated, and he’s the first.

Nipsey’s support is on-brand, but we need to separate Tidal’s criticism from its value proposition. Tidal is positioned as a premium, artist-centric streaming service. There are audiences that value Tidal’s product. Audiophiles enjoy its high-quality lossless sound. Music fans who vote with their wallets value that artists earn a higher revenue share per stream on the platform. The company has identified these customers and has built partnerships to strengthen its base.

But most of the shots taken at Tidal still stem from the botched launch event in 2015. It might seem unfair that a tone-deaf celebratory event lingers with an organization, but that’s our culture. (LeBron James, Dwyane Wade, and Chris Bosh’s Miami Heat teams got flamed for their infamous pep rally for years).

The top artists who preached about artist ownership at Tidal’s event were justified, but they all made bank from the music industry’s standard model. The message would have hit home stronger if delivered by an artist like Nipsey Hussle. He could have reminded folks that he’s been saying “fuck the middleman” since 2003, had difficulty earning substantial revenue from other streaming services, and explain why he believes that Tidal is the solution.

The director-to-consumer approach also extends to how artists go on tour and give back to their fans. In October, Nipsey collaborated with the Time Done Campaign to headline a free benefit concert to raise money for criminal justice reform. Nipsey is an active player in Crenshaw’s revitalization efforts. He speaks frequently about the mass incarceration of black men in California. The choice to do this small benefit concert was on brand.

But intimate concerts are not always easy, especially for those who have not established their brands to naturally put on an event like that. In 2015, Future hosted a small series of free concerts called “Salute the Fans” to promote DS2. The event was out of pocket for Future, whose business model is to drop new music nonstop. In 2017, only Drake earned more revenue from streaming. The “March Madness” rapper has done philanthropic events before, but rarely in small, fan-centric settings.

Unfortunately, “Salute The Fans” was a logistical nightmare. Venues were changed and canceled the day of the concert. Future’s Freebandz team probably saw the success that Dreamville—a record label with strong DTC principles— had with J. Cole’s Dollar & A Dream tours and wanted to do the same. Unfortunately, they came up short. But the mishap flew under the radar and escaped schadenfreude. DS2 was too strong a force that year.

The event could have been more successful with more attention to detail. But it also would have been easier if Future chose an option that better fit his strategy.

A short clip from the 2017 grand opening of Nipsey’s Marathon store in Crenshaw (via YouTube)

Opportunities to expand

Nipsey has a diverse portfolio. His other business ventures span cryptocurrency, real estate, barbershops, STEM, and a co-working space. There’s an opportunity to connect his customers behind a sole identity.

In the 2PM newsletter, Web Smith recently wrote about how DTC brands can earn a competitive advantage:

A moat for DTC brands is the competitive advantage earned by focusing on brand, product, distribution, acquisition, and the hive – the brand’s most visible customers and product activations. This competitive advantage fuels incremental growth in established industries.

Nipsey Hussle has most of these things, but his hive is quiet. Currently, the most common displays of fandom are the occasional Instagram posts at the Marathon store. Nipsey can build a stronger public community with his day-ones by selling apparel that embodies his brand.

Right now, his ‘Crenshaw’ shirts get prime website placement. But those shirts do more to rep the South Central Los Angeles neighborhood than Nipsey himself. Nip still needs iconic gear that directly links to him.

For instance, Chance the Rapper has his “Chance 3” hats. J. Cole has Dreamville t-shirts and hoodies. Even the political podcast Pod Save America has fueled its base with ‘Friend of the Pod’ t-shirts.

Nipsey can also extend his strategy to other consumer products. If his customers are willing to pay $10 for Crenshaw lighters, there’s a market to sell additional high-priced merchandise. Companies like Supreme have mastered limited drops for expensive items. Nipsey can take a similar strategy with premium electronics like headphones or speakers.

Physical copies of Mailbox Money (2015) are still on sale for $1,000 at The Marathon Clothing

Most rappers go straight to the industry standard approach without taking a step back. They don’t realize that they’ve already made a choice. Rap is no different than other industries. Each artist needs to choose their strategy and make decisions accordingly.

Big name artists can rely on distributors and succeed. And DTC rappers like Nipsey can serve customers directly and succeed. The artists stuck in the middle are the ones to worry about.

Trapital is written by Dan Runcie. Contact me at dan@danruncie.com. If you enjoyed this story, forward to a friend and tell them to sign up for the newsletter!

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Dan Runcie

Dan Runcie

Founder of Trapital

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