Why Def Jam Should Split the Record Label

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Dan Runcie

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The hip-hop label is on to something with its new Rap Camp, but can maximize its value as a separate business unit.

(via Shutterstock)

Def Jam is on a mission to recapture its glory. CEO Paul Rosenberg—Eminem’s former manager—has a number of initiatives underway. The most notable one is “Rap Camp,” a week-long gathering with the label’s newly-signed acts. In January, the rappers met in Hollywood and produced over 200 songs together. The best tracks were chosen for the recently released Undisputed compilation album. In the background, an eight-part docu-series was filmed to capture the artist’s journey.

It feels like a modern version of Making the Band, but with none of the outlandish drama that Diddy’s show had. There were no continuous threats to shut down the studio. No one like Chopper who was always on sight. And no one like Dylan who swore he was a Top Five dead or alive rapper. This Rap Camp is a legitimate push from the thirty-five-year-old record label.

Rosenberg knows that labels need to think different. He shared his thoughts in an interview with Rolling Stone:

“Hopefully we’re able to demonstrate not only why you might need a label, but what a modern label can be in this era. It’s an optimistic and maybe altruistic way of approaching things, and I might be naive. But if we can show the support, camaraderie and brand benefit that artists might not be able to get elsewhere, that’s a huge win.”

To truly realize this vision, Def Jam should restructure. Currently, Rap Camp is exclusive to newly signed talent. This excludes artists who value Def Jam’s offering but are reticent to give their masters away. If Def Jam separates the camp’s operations from the record label, it can offer artists less binding terms and compete with the growing number of alternative options.

The separation would also let the record label focus on its established artists. There’s no need for the two efforts to compete for the same resources, especially in today’s industry.

Def Jam needs an identity for artists to vibe with

Rap Camp is not a new concept. In January, Dreamville Records had its own recording session for the label’s upcoming compilation album. In a recent interview with Complex, Def Jam’s A&R Dro Genao made a distinction between each label’s efforts. “[Dreamville is] riding off a staple artist. Me personally, that’s J. Cole’s project. This is just people you don’t know.”

That’s true, but the connection to Cole is what built Dreamville’s identity— just like Kendrick Lamar with Top Dawg Entertainment and the Migos with Quality Control Music. It’s why those labels are relevant. Def Jam does not have a sole identity. And honestly, it never did.

Def Jam is arguably hip-hop’s most successful label ever, but its success came from a wide spectrum of big-name artists. LL Cool J was nothing like the Beastie Boys. Wu-Tang Clan had little in common with the rock band Slayer. The label had a brief moment with New York rap in the 90s, but there was never a signature sound. Not like Bad Boy had. Not like Death Row. In a landscape where labels operate like boutique fashion brands, Def Jam has been the Gap—a longstanding go-to destination with a general sense for what’s in.

Steven Victor, Def Jam’s EVP, wants to change that. He told Billboard that he limited the number of producers at Rap Camp to create that iconic sound. It’s a step in the right direction, but more can be done.

If an artist signs with Def Jam (or any label), it’s because they value the brand. Today’s acts care less about getting put on. They can get that anywhere. But without an identity to define the label’s brand, artists need to be sold on the opportunity.

The split will maximize value for the label

Like most labels today, Def Jam faces two challenges. First, it needs to convince artists that labels are still viable. Rosenberg’s label competes with non-label options, like staying independent or signing with a distribution service. Second, it needs to convince artists that Def Jam is the best label to sign with. These are two related, but very different challenges.

Def Jam can address both with this split. Rap Camp has all the tools to entice indie artists. It’s designed to build camaraderie, provide album placement, and boost publicity with the docu-series. But if Rap Camp was open to indie artists and those yet to be signed, then Def Jam can select participants from a wider and stronger talent base.

Instead of requiring artists to be signed, Def Jam can take 5-10% of revenue from the tracks that come out of Rap Camp and any music those artists release that following year. This would give artists the flexibility and ownership they desire, and help Def Jam compete with Stem, UnitedMasters, Amuse, and other distribution services.

Several Rap Camp rappers joined Def Jam because they wanted help to take the next step in their careers. “A lot of times, there are artists who don’t have the resources. It’s a blessing to be at a label that allows you to pluck roses from the streets and nurture and develop artists,” said Alexander “A.E” Edwards, Def Jam’s A&R vice president in the Rolling Stone interview. Sure, the label should want to help artists that need a boost to get to the next level. But it also should want a chance to work with the once-in-a-generation artists that will be fine without a label deal. Moving Rap Camp outside the label walls will attract that talent.

If Def Jam does a great job with the “open” Rap Camp, then many of those artists can choose to sign with Def Jam thereafter if both parties are interested. The label can structure the distribution deal to get first right of refusal with Rap Camp participants. But if artists choose to part ways, no hard feelings. Both parties still got something from the deal.

The goal is for Def Jam is to unlock the value it has created. Today’s artists are more hesitant than ever to sign to record labels. If all the label’s perks are kept within the confines of its traditional business model, it will continue to lose out on top talent.

Record labels need to prepare for the future

Def Jam—which is owned by Universal Music Group—still has established acts like Nas and Q-Tip. It competes with Roc Nation to keep its stable of mature acts. The separation will build autonomy for the harvest strategy needed for Nas and Q-Tip and the high growth tactics that support Rap Camp.

In December, I wrote an article on Roc Nation. The company’s diversification has helped protect it from changes in the music industry:

Although the company has shifted in priorities, music still served a critical role. Roc Nation used its record label as an opening to the entertainment industry, the same way that Amazon sold books as its entry into retail.

Amazon would have shut its doors years ago if it still relied on revenue from hardcover novels, just as Roc Nation would have struggled if it still banked on 360 deals. Both companies were well-diversified to handle the disruption in their initial industries and moved forward.

Def Jam’s record label split is not as drastic, but the sentiment is similar. The diversification elements are already there. It’s a matter of unbundling what currently exists.

For years, Def Jam was hesitant to change. Jay Z expressed his frustration with the label’s reserved nature when he was CEO last decade. But Rosenberg’s team is ready to push the envelope. “It’s about taking a risk,” Dro (one of the A&Rs) said to Complex earlier this month. “If you’re gonna come into a new atmosphere, in any business, you wanna shake shit up.”

Right now, Rap Camp is designed to attract the Grayson Allens of hip-hop. These folks got talent, but need an extra boost from an established organization and are willing to give up years of freedom to get it. But even Duke needed to get with the times and bring on folks like Zion Williamson and R.J. Barrett—the one-and-done stars who want in but won’t stick around forever. A little flexibility can go a long way. The same can be true for Def Jam.

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Dan Runcie

Dan Runcie

Founder of Trapital

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