The Globalization of Hip-Hop, Part I

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Dan Runcie

Nicki Minaj performs at the inaugural iHeartRadio Music Festival at the MGM Grand Garden Arena (via Shutterstock)

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U.S. rappers make more and more money internationally, which forces rap’s superstars to make strategic decisions to maximize the opportunity.

Part I of a two-part Trapital series on globalization.

In 2012, Brooklyn native Talib Kweli shared thoughts on how his U.S. and international fanbases compare. From HipHopDX:

“Americans are a bit spoiled by Hip Hop because it grew up here. It’s like a local celebrity who comes back home and everyone is like, ‘He ain’t shit; I know his mama’…Hip Hop outside of the States is imported. When something is foreign, you have to study the rudiments to appreciate it fully. So international Hip Hop fans and audience are often more nuanced.”

At the time, his comments seemed a bit anecdotal. Brooklyn is a cultural landmark in hip-hop. It’s a proving ground where legendary emcees have made it. The New York City borough has high expectations from its rappers and never holds back. Anybody can get it. It was easy to justify his statements as “New York being New York.”

But looking back, Kweli’s comments have aged gracefully. Almost too gracefully. The international fanbase difference is a reality that most mainstream rappers relate to. It impacts how artists prioritize opportunities and measure tradeoffs. Over time, this shift will have an even more profound impact.

The overseas bag

This past summer, Cardi B tried to silence her haters with a screenshot of her live performance guarantees. She proved that she was financially better off focusing on festivals, but she also benchmarked the industry with her transparency. The post has since been deleted for obvious reasons. On a scale of 1 to 10 (1 is anonymous Glassdoor salary data, and 10 is the infamous Google salary spreadsheet that caused shockwaves in Silicon Valley), this was a solid 6.5.

Most attention focused on the high festival guarantees, but the more interesting difference was U.S. vs. international. The “Bodak Yellow” rapper earned $400,000 at Bonnaroo—one of the U.S. most well-known music festivals. Less than a month later, she earned at least $750,000 at European music festivals with four shows in five nights, and topped it off with a $900,000 performance at the Open Air Festival in Frauenfeld, Switzerland. She ran through that European stretch like an NBA team that went undefeated on a week-long road trip.

One of the reasons that European music festivals tend to pay more is because the demand is higher. High demand translates to higher prices and more shows.

In 2011, I attended the Watch the Throne tour. At the time I was surprised when Jay Z and Kanye West did more shows in London than New York—Jay’s hometown. They also stopped in Manchester, Birmingham, and Sheffield for a total of 10 U.K. shows. But to Talib Kweli’s original point, New York grew up with the “Big Pimpin” rapper. Hov has had a borderline residency at Madison Square Garden.

The difference in demand continues today. Last year, Nicki Minaj raised eyebrows when she indefinitely postponed the U.S. leg of her NICKIHNDRXX tour with Future. Here’s what a Live Nation source told Page Six:

“Nicki’s tour looked to be the most disappointing ticket sales of the year for any artist. She and Future were booked in big arenas with around 20,000 capacities. Sales for opening night in Baltimore were just 2,000 tickets. LA was 3,400 – for a 17,000 capacity venue – New Orleans 1,000, Denver 1,300, Chicago 3,900. Even Nicki’s hometown of New York City, the Barclays Center (which has a capacity of 19,000) sold only 5,050 tickets.”

The “Beez in the Trap” rapper denied that low ticket sales played a factor in the cancellation. But as T-Pain recently told us from personal experience, she was probably saving face:

“Most artists lie. Whenever concerts get canceled or tours get canceled, it’s for low ticket sales. It ain’t really about whatever the fucking reason they say.”

When Nicki went back to the drawing board, she teamed up with Juice WRLD and only toured in Europe. She called Berlin the livest crowd in the history of live crowds. And Nicki, who’s been very critical of those who don’t praise her, can surely relate to the Talib Kweli’s original comments.

Nicki and Cardi— two of hip-hop’s biggest acts, two foes who can’t be in the same room without shoes being thrown—were #12 and #13 on this year’s Forbes Hip-Hop Highest Earner’s List with $29 and $28 million, respectively. Forbes didn’t breakdown their revenue, but a large portion of both figures likely came from deals outside the U.S.

Not all customers are equal

The heightened demand increases the international customer’s willingness to pay, which increases their lifetime value. Mathematically speaking, it’s more valuable to acquire this type of customer if acquisition costs are similar. But they’re not similar. Some rappers believe that its harder than ever to acquire the American customer.

Los Angeles rapper Ras Kass shared this belief in the same HipHopDX interview as Talib Kweli:

“People [overseas] go to a concert to rock with the artist. Sometimes in America, everybody’s a star, everybody’s a tough critic, and everybody in the crowd’s a rapper and they can’t give love, they’re too busy [saying], ‘I should be up there.’”

A customer that’s harder to acquire takes more convincing and therefore, becomes more costly. When companies report on lifetime value and customer acquisition costs, averages are used for simplicity. But not all customers that enter the funnel are equal. Segmentation matters.

But that doesn’t mean that the U.S. customer should be ignored. U.S. fans, despite their difficulty to please, are still considered primary tastemakers. Their blessing can elevate an artist to new heights. Understanding the tastemaker’s preference is important, but catering to it solely will limit an artist whose target audience isn’t tastemakers.

Similarities to the movie industry

Hip-hop has followed a globalization trend that’s already underway in the film industry. The Fast & Furious franchise is a product engineered to dominate the international box office.

Here’s what I wrote in a recent Trapital member update:

“The Fast & Furious franchise is stronger outside the U.S. than most other franchises. Fate of the Furious made 81% of its revenue outside the U.S. Furious 7 made 77%. That’s higher than the Marvel movies, which are normally around 68%, and Star Wars at ~53%. It was due time to expand beyond American hip-hop artists and embrace the global culture.”

Fast & Furious 9 will feature Cardi B and Latin trap artist Ozuna. This is an intentional move to attract more of the Latin American audience. It’s an entirely different approach than Star Wars, a franchise that relies heavily on its U.S. fan boy audience.

In 2017, Vox broke down the box office difference:

“Consider the movies whose foreign box office dwarfs the US percentage: The Fate of the Furious (part of a franchise that has always done well globally, due in part to its diverse cast), Pirates of the Caribbean: Dead Men Tell No Tales, Transformers: The Last Knight, xXx: The Return of Xander Cage, and The Mummy, which gave Tom Cruise his biggest global opening weekend ever despite an anemic debut in the US. These films, like many that become hits abroad, tend to be heavy on spectacle and action and light on story. This isn’t because foreign audiences prefer bad storytelling, but rather because visual spectacle translates across languages more readily than plot, with its dependence on dialogue and shared cultural ideas, does.”

The same happens in hip-hop. If I had a dollar for every time someone complained to me about mumble rap, I’d be out here like Fat Joe in the “Make in Rain” music video. The biggest critics will talk about how today’s lyrics can’t match the impressive production in hip-hop. Globalization plays a huge factor in that. But it’s not because international audiences prefer bad lyrics. It’s because well-made trap beats translate across languages and cultures more readily than conscious rap does.

Legal woes

Globalization is not without its challenges. In July, Nicki Minaj pulled out of Saudi Arabia’s Jeddah World Fest to take a stand against the country’s government which criminalizes same-sex marriage and enforces gender segregation in some public areas. That same month, A$AP Rocky was detained in Sweden for nearly a month after an assault charge. Rappers who are friends of A$AP—Tyler, the Creator, ScHoolboy Q, and T.I.— have refused to perform in Sweden to show solidarity with the rapper.

Since artists now perform in regions where the laws are different, they have to take the time to understand the market—especially if there are rules in place that may violate human rights. It’s the same role that general managers play as they launch their company in new markets. They need to study the regulatory environment to see how it impacts their growth and business model. It’s a cost that must be accounted for.

The future is segmented

Hip-hop’s globalization has come at the right time. It forces artists to determine their best course of action much earlier. The common challenge is that some artists don’t realize they’ve made a decision until they’re in too deep.

Superstars like Drake are aware that their subject matter needs to be relatable. The Scorpion rapper knows exactly what he’s doing with lines like “they be mourning you like 8 AM,” and “bills so big I call ’em Williams for real.” Is it ridiculous? Yes. Is that entire song, “Nonstop,” ridiculous? Yes. But hey, it works. Drake’s not American, but the rationale still holds.

Meanwhile, U.S. artists who want to appeal to the critical tastemakers need to be specific about who their customer is (and isn’t). Film studios know early on if a movie’s goal is to break international box office records or win Academy Awards. The smartest rappers keep that same energy.

The best record labels are already built this way. Republic Records and Columbia Records are unapologetically in the business of building superstars. Meanwhile, Dreamville—outside of J. Cole—urges its talent to avoid the commercial performance metrics and focus on building sustainable operations. The independent distributors help artists stay independent, or build up leverage to meet their global ambitions. The infrastructure is in place for them to succeed.

But record labels are just one piece of the puzzle. Globalization impacts the partnership opportunities too. Artists who want to be global icons need to partner with companies that have mass distribution. They should want their visual albums and documentaries on Netflix to reach its 140 million worldwide subscribers. They should want their apparel deals with adidas or Nike to tap into their global distribution. There’s a reason why Rihanna is in big studio movies like Oceans 8 and Battleship, while Janelle Monae is in artsy films like Moonlight and Hidden Figures. These decisions align with their brand ethos.

If an artist is less focused on the global market, then its more valuable to partner with streaming services, apparel companies, or others that are aligned to the target customer.

There’s an underlying question about the future role of the American hip-hop fan. If American megastars have a (theoretical) comparative advantages in other continents, then why bother with the U.S. market at all? Cardi, Nicki, and others have spoken volumes with their business decisions.

But this is still the business of culture. The U.S. may be the primary exporter of hip-hop, but before any artist can export meaningful product, they need to gain traction. That initial traction typically comes from their own backyard.

The day-one fans will always matter, even as the artist grows. This is where hip-hop differs from tech. Facebook’s original users are the Ivy league students who used it as a hook-up site. But that customer segment is largely irrelevant to the product’s current form. Zuckerberg’s not out here holding all-hands meetings at Harvard Square to give back to his day-ones. That would be foolish (but funny as hell to watch, not gonna lie).

Hip-hop’s not there, and it won’t get there either. Even though the day-one American fans show tough love, they won’t be forgotten about completely. With that said, we are still scratching the surface on the long-term implications.

Part II comes next week. It will focus on the rise of hip-hop artists outside the United States!

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Trapital is written by Dan Runcie: info [at] trapital.co

Dan Runcie

Dan Runcie

Founder of Trapital

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