Are Rappers truly rich?

Drake how he makes money

How Do Rappers Make Money and REALLY How Much Do They Make?

Certain rappers like to brag about the money they have.  Do rappers really make as much money as they say they do? And if they do, how do rappers make money? Aside from Jay Z, Eminem, Nas, or somebody like Kanye West, I can’t imagine many rappers with as much money as flaunted in the average mainstream rap song.

It is commonly reported that JayZ and P. Diddy are worth in excess of 500 million dollars.

There are 4 main ways a musician is likely to make money. Let’s calculate:
1) Album Sales

According to a list by popular hip hop website, hiphopdx.com, the top selling hip hop albums of early 2013 averaged 304,400 units with Kendrick Lamar’s Good Kid Maad City on top (746,000 units sold) and Trinidad James’ Don’t Be Safe selling the least (11,000).

If we assume that a well-respected, mainstream rapper sells about 300,000 units on an album, and that an album costs anywhere from 8 to 20 dollars, we can say that a rapper makes between 2.4 & 6 million dollars in album sales. The only problem is that rappers rarely make 100% of the money that an album costs. Artists have contracts with their labels. In these contracts, artists usually agree to give up a large percentage of their money for the record label, the distributor, the manufacturer, the retailer, and all studio/production costs. Because of this, many artists end up making less than a dollar for every copy of the album sold.

Now let’s see how much this well respected, mainstream rapper makes from record sales:
This artist sells 300,000 units and sells his album for 10 dollars apiece.
His record deal gives him 6.6% on an album sale, which is the average percentage most artists make on an album (thanks to bandzoogle.com).
This means that the rapper will make 0.66 dollars for every album sold.
In total, he will make 198,000 dollars from his album sales.
This may seem like a lot of money but you must realize that artists still have to pay studio fees and pay their manager (who may demand up to 20% in commission!!)

All in all, this means the average middle class working person makes more money than certain rappers when comparing his annual revenue to only album sales. Rapping, or the music business in general, is not a guarantee of wealth.
2) Touring

Luckily for rappers, touring is where all the money is! The average concert attendance this year has gone up to 9,109 people. If the same well respected, mainstream rapper sells tickets for $25, and assuming that he has an attendance of about 9000 fans, he will make $225,000. It is impossible to tell exactly how many concerts a rapper will do, with cancellations and all, but I am assuming around 30. This means that the average rapper will make 6.75 million dollars from touring. The only problem with this is that touring costs money. On tour, he will need to pay for food, gas, drink, hotels, equipment, transportation, and a roadie crew. Some tours (for bands like U2) can cost tens of MILLIONS of dollars. For our purposes, let’s say the tour costs about a million dollars. What is left? 5.75 million dollars. Then, there are all of the other rappers that are on the tour. They need to be paid as well. For example, artist Mac Miller is currently on tour with 4 other rappers (Chance the Rapper, Earl Sweatshirt, Action Bronson, Vince Staples). When you buy a ticket, you’re paying to see all of them. So, the 5.75 million dollars are split in 5. This means each artist makes 1.15 million dollars.

All in all, if you are a well respected, mainstream rapper you only make 1.25 million dollars every year.

3) Branding and Promotions

In a recent interview, Will I Am stated that he made far more money once he did the score for an advert with all the creatives, than when he was doing only music. Stars can be paid to tweet, paid to star in TV or Movie advertising, paid to endorse a product, paid to appear, and more. Once a musician becomes well known, then the fortune 500 companies trip over themselves to have the artist mention their brand.

4) Diversifying.

Many established rappers discovered long ago, that they need to diversify in order to make the big money. They also have decided to own their own music label, as well as other businesses not related to music, such as fashion, clubs, restaurants, water products, alcohol products,  headphones and of course, real estate.  A Few venture into stocks and shares.

I can guarantee that for every Millionaire Rapper, there are 10,000 wannabee rappers who will not hit the heights dreamed of.  Drake informs us how well he has done… 25 sittin’ on 25 mill (Drake).  For most, to hit $100,000 in profit would be appreciated.  There are many musicians out there living in poverty.  But all is not lost.  It is great to see many of the established artists, sponsoring and bringing through new artists.  Holding a hand out to help someone else up the ladder (even as a hefty commission is earned) is to be highly commended.  Dr Dre helped Eminem, who in turn helped 50 cents, who in turn is helping many others.
Source: http://doolid.com/

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