Lessons From the Jay-Z Business Model -- Vulture
Adam Rifkin stashed this in @jayz
Andrew Rice says Jay-Z is not just a businessman; he's a business, man:
Carter the businessman is working at a creative peak this summer. The new album is merely the loud opening salvo in an inescapable cross-promotional barrage. He’s headed out with Justin Timberlake on a fourteen-show tour promoted by Live Nation, his most important business partner. (He signed a $150 million deal, the largest of its kind, with the company in 2008.) Beyoncé is also touring in what she has titled, demurely, “The Mrs. Carter Show,” and headlining a Philadelphia music festival that her husband is curating for Budweiser. Meanwhile, the entertainment company Carter runs in partnership with Live Nation is launching a sports agency. The move, which required Carter to sell his interest in the Brooklyn Nets, is part of an ambitious diversification strategy that has shaken up the sports world.
Carter’s company, Roc Nation, already manages a stable of music clients, including Rihanna and M.I.A. It is the centerpiece of a portfolio that includes interests in technology (Powermat, a cell-phone-charging device made with Duracell), software (a video-sharing app called Viddy), real estate (small stakes in Barclays Center and the surrounding real-estate project), movie production (The Great Gatsby, a tale with a certain resonance), theater (Fela!), nightlife (the 40/40 Club, a high-end sports bar with locations in the Flatiron district and at the Nets arena), and apparel (in addition to Rocawear, the label he started and still endorses, he’s part of a joint venture that recently acquired half of Pharrell’s lines). A decade ago, Carter rapped that he wouldn’t rest until he was “the hundred million man.” Though a conclusive accounting is impossible, it seems certain he’s surpassed that figure, and on Magna Carta … Holy Grail, he sets a new goal: “Fuck it, I want a billion.”
While other rappers have made comparable fortunes—Dr. Dre, for instance, through his association with Beats headphones—no one rivals Jay-Z when it comes to synergies. In his new songs, he rhymes about the transactional mechanics of the Samsung deal (“A million sold before the album dropped”), boasts of signing sports stars like the NBA’s Kevin Durant and Yankee Robinson Cano, takes a swipe at the latter’s old agent (“Scott Boras, you over, baby”), and taunts those who suggest he overstated his ownership role in the Nets. “He made a song,” says Steve Stoute, his friend and partner in a marketing agency. “A businessman would have put out a press release.”
Carter likes to call himself “the new Sinatra,” but even the original Chairman of the Board wasn’t able to sustain his cultural relevance forever. Sooner or later, everyone ends up singing at the Sands. No Jay-Z album over the past decade has come close to selling like those at his peak (and neither, likely, will Magna Carta). Though this is certainly not how Carter would characterize it, the move to build a diversified entertainment company at once hedges a risk—the natural decay of Jay-Z, middle-aged megastar—and capitalizes on skill set: Carter’s ability to spot, cultivate, and exploit talent.
“Jay-Z has, in my view from the outside, figured it out: how the sports and entertainment business has changed and merged,” says Mark Rosentraub, a University of Michigan professor and co-author of the book Sports Finance and Management. “It’s no longer about the team on the field; it’s really about the real estate and entertainment that swirls around it.”
He's smart. I think he will get to a billion.