We need to stop glorifying “wealth” in Hip-Hop. Here’s where we can start.

Travis Scott’s Astroworld chain worth an estimated $450k (Hypebeast)

The headline may have caught your attention, but I am hoping that you didn’t take it out of context. Personally, I don’t believe that people should tell other people how to spend their hard earned money because they earned it. However, I believe to move the culture forward, we need to stop glorifying the flexing that happens on social media. Whether you may see it or not, it does more bad than good because it encourages the masses to live a lifestyle that they can’t afford only to realize the traumatic effects later. Instead of buying chains or a car, why can’t we glorify rappers who are investors (Nas), have diversified real estate portfolios (Jay-Z) or even building schools (Diddy). In this article, I’ll show you how a bunch of your favorite rappers may be living out of their means and how we can change the materialistic mindset we have in Hip-Hop.

Difference between being rich and wealthy

There is a big difference between being rich and being wealthy. If you work a job that pays you over $100k, you’re rich. If you’re able to take care of yourself, your family and the people around you may be rich. However, the main difference between being rich and wealthy has to do with assets — making the money work for you and not the other way around. A lot of rappers are rich, but they are dependent on the quick bags that they score from their performances, endorsements and other short-term revenue streams. Every rapper has the financial means to become wealthy, but we as a culture need to change our mindset to encourage this type of behavior.

Why Rappers aren’t as rich as you think they are

Let’s break down a million dollar record deal (shoutout to Russ) and show you how much money the artist gets to retain at the end of the day.

1. Let’s say you pay your manager 20% ($200k, $800k left)
2. You pay your lawyer 5% ($50k, $750k left)
3. You pay your business manager 5% ($50k, $700k left)

Before we continue, let me emphasize that 30% ($300k) is already deducted from your $1M. This is before Uncle Sam comes and takes his share and remember we are at $700k as we speak.

Congrats! Now that you are making over $400,000 a year, you are considered to be in the top tax bracket which means your income will be taxed at a rate of ~48%. For the sake of simplicity, let’s just make it 50%.

After Uncle Sam takes his 50% ($350k) you are left with a net of $350k from a $1M dollar deal. Let’s hope that this lucky artist does not go out and splurge thinking that he actually has a million dollars to spend. Now that you’re signed, let’s not forget that you probably signed a 360 deal as well.

What the hell is a 360 deal?

Believe it or not, Spotify pretty much saved the music industry because people stopped paying retail for CDs and found other ways (pirating and bootlegging) to get a 1-UP over the record labels. Because of this, labels began to see their revenues dwindle so they had to be creative about their business model moving forward.

Today, record labels no longer want to develop an artist because they don’t want to invest the upfront costs needed to develop a superstar from the ground up. They prefer an artist who has already proven themselves with some traction (IG and social media following, Spotify listeners and turnout at shows and venues) because they have the infrastructure to propel the artist forward. With this digital age, we have what we know as the 360 deal. Here’s everything you need to know.

1. Back in the day, labels only took a percentage of your record sales. Now, they have their hands in pretty much everything that you do (touring, merchandise, endorsement deals, etc).
2. The 360 deal is the norm now. Think of your favorite rapper within the past 5–7 years and there’s a high probability he has a 360 deal.
3. The 360 deal is not bad for everyone, depending on the dreams of the artist and their level of popularity. For the top 1% (Lil Pump, Cardi B, etc) it makes more sense because they make more money. A small piece of a big pie is always better than a big piece of a small pie.

Moving the culture forward

There was a controversial top 50 rappers released this week and who is always at the top of these lists? Jay-Z and Nas. You also want to know the wealthiest musicians on these lists? Jay-Z and Nas. Even though Diddy is not a “rapper” per say, these three are on their way to becoming Hip-Hop billionaires with Jay already reaching the milestone earlier this year. Let’s look at Jay-Z’s assets and see where his wealth was accumulated (Forbes).

Jay-Z’s latest studio album 4:44. Here, he covers a lot of the topics I discuss in this article.

1. Stake in Ace of Spades ($310M)
2. Cash & Investments ($220M, with $70M coming from Uber investment)
3. Stake in D’Ussé ($100M)
4. Stake in Tidal ($100M)
5. Stake in Roc Nation ($75M)
6. Music Catalog ($75M)
7. Art Collection ($70M)
8. Real Estate ($50M)

To close, I will end with a harsh reality check. YOU WILL NEVER BECOME A BILLIONAIRE THROUGH MUSIC ALONE. Looking at the list above, Jay-Z’s catalog is only 13.3% of his wealth with the biggest cash cows being Ace of Spades and his investments. Let’s all aspire to be bigger than Jay-Z because it can occur if we have the mindset and discipline to do it. Let’s glorify people for making smart money moves instead of spending their money on things that will never appreciate.