Dan Charnas began his career in the mailroom of seminal rap label Profile Records, home to Run-DMC. He wrote some of the first cover stories for The Source, and eventually went on to become the VP of Hip-Hop A&R for Rick Rubin’s Def American Recordings. Over time, Charnas collected stories of the rap industry that few fans and outsiders knew. After a decade working in the music business and another four years of painstaking reporting and research, Charnas has created the first-ever definitive re-telling of the creation and growth of the industry, The Big Payback: The History of the Business of Hip-Hop. Culled from over 300 interviews, The Big Payback spans 40 years, from 1968 to 2008. In this exclusive for Complex, Charnas distills some of the book’s essence into a master list of The 25 Biggest Business Power Moves in Hip-Hop History.
#25: Sugar Hill Corners The Hip-Hop Market
Famed singer/songwriter/producer Sylvia Robinson wasn’t first person to conceive of putting the “raps” of New York City’s burgeoning MC-and-DJ culture onto a record; that distinction likely goes to Bill Curtis of The Fatback Band, who in the summer of 1979 recorded MC Timothy Washington on a song called “King Tim III (Personality Jock).” But it was Robinson’s record—a 15-minute rap marathon by three unknown New Jersey MCs over a sound-a-like version of Chic’s “Good Times”—that marked the true debut of hip-hop in pop culture. “Rapper’s Delight” by the Sugar Hill Gang quickly became the best selling 12-inch single of its time (Sugar Hill Records claims two million copies were sold domestically and eight million copies worldwide), and transformed Sylvia Robinson’s (and her husband and partner Joe’s) nascent Sugar Hill Records into a successful, Black-owned independent label.
The Sugar Hill Gang and their patrons were reviled by the established hip-hop crews of the Bronx and Harlem, who resented that a pre-fabricated rap trio with no history or reputation was suddenly the ubiquitous face of the culture. But the Robinsons, flush with cash, quickly snapped up more authentic rap crews like the Treacherous Three and Grandmaster Flash and the Furious Five, buying the assets of smaller, less savvy players like Bobby Robinson’s Enjoy Records. In the early ’80s, Sugar Hill Records ruled rap almost completely and was on track to become the Motown for a new generation of young Americans.
So why didn’t it happen? It’s a tangled tale, but no story is more telling than that of a young concert promoter named Cedric Walker, who flew to New York on his own dime to propose a hip-hop concert tour to Sugar Hill. Sylvia Robinson cursed Walker and threw him out of her office. Walker retreated and offered the same opportunity to a small-time artist manager named Russell Simmons. That tour became the New York City Fresh Fest, featuring a new crop of hip-hop performers who weren’t signed to Sugar Hill. Within a few years, Sugar Hill would lose its dominant position to smaller, white-owned dance labels like Profile and Tommy Boy, and to the biracial partnership of Russell Simmons and Rick Rubin at Def Jam.
#24: Def Jam’s Deal With Columbia Records
At first, major record labels had no idea what to do with rap music, so they didn’t do much of anything. To most corporate music executives, the “rapping record” thing had all the makings of a fad; in the wake of the disco crash, few had the stomach to tempt another one. The upscale Black staffs of the majors’ so-called “Black Music” departments viewed rap as a vile, unwanted visitor from the ghetto.
And so, even with the success of “Rapper’s Delight” in 1979, the lightning-fast singles sales of rap 12-inches in the early ’80s, and the platinum success of Run-DMC’s album in 1984, the six major labels turned their backs on the burgeoning and profitable hip-hop culture—with the exception of Kurtis Blow, who had a gold single for Mercury Records with “The Breaks” in 1980. Fittingly, it would be Blow and Run-DMC’s manager, Russell Simmons, who landed the first legitimate major label partnership with a rap-oriented independent in 1985 for the label he co-owned with Rick Rubin, Def Jam Recordings.
Al Teller, the general manager of Columbia Records, started to become curious about the rap music scene around the same time that a new A&R executive named Steve Ralbovsky—an acquaintance of Simmons’—came to work for the company. Teller asked Ralbovsky what he thought of doing a distribution deal with Tommy Boy Records. Ralbovsky told Teller that he had a better idea, and brought Simmons in for a meeting. Columbia gave Def Jam Recordings a six-figure production deal, one that immediately paid off with the success of L.L. Cool J.’s debut album Radio, and became hugely profitable with the Beastie Boys’ Licensed to Ill in 1986. More importantly, the Def Jam deal presaged the entrance of other major labels into indie partnerships, with Columbia rival Warner Bros. purchasing Tommy Boy Records in 1985, and giving Cold Chillin’ a distribution deal a couple of years later.
#23: Run-DMC’s Adidas Endorsement
Once upon a time, the relationship between hip-hop culture and the world of consumer products was one-sided and unrequited. The early DJs and MCs, b-boys and b-girls were zealous consumers and fans, but largely invisible to the corporate brands they religiously used. In the world of hip-hop, brands could be an especially important emblem of identity. No rap act exemplified that self-branding impulse more than Run-DMC, who made Adidas sneakers and sweat suits a part of their official costume.
So when Run-DMC recorded and released the heart-on-their-sleeves single “My Adidas” in 1986, they did so out of enthusiasm for the brand, with no thought to compensation. But the song was too much of an advertisement for Adidas for the company to miss. A former European soccer star named Angelo Anastasio ran a lonely outpost for Adidas in Los Angeles, an outreach office to the world of sports and entertainment in a time before that kind of thing became de rigeur for sportswear companies.
Anastasio already knew about Run-DMC when Russell Simmons and Lyor Cohen invited him to see the group perform “My Adidas” at Madison Square Garden in New York. The sight of tens of thousands of rap fans holding their Adidas aloft moved Anastasio to tears—and to urge his superiors to bestow Run-DMC with a million-dollar endorsement deal, the first of its kind in hip-hop. The Adidas deal marked the end of hip-hop’s corporate invisibility, and a growing realization of the power of hip-hop as a marketing tool for corporate brands. It would be a harbinger of even more lucrative deals to come.
#22: Elektra Records Hires Dante Ross
By the end of the ’80s, major labels still hadn’t figured out how to produce and promote rap music on their own. The only successful way into the market for most majors was to partner with an independent: as Columbia did with Def Jam, as Warner did with Tommy Boy, as Atlantic did with First Priority, and so on. The indie labels had the maps to navigate the backwaters of the rap world; the majors didn’t, and most of the attempts by their own, clueless executives to sign and market rap artists were dismal failures.
Then one major label executive got wise. In 1989, Elektra Records chief Bob Krasnow hired a 22-year-old talent scout by the name of Dante Ross away from Tommy Boy Records, where he had overseen the recording of De La Soul’s debut album and helped sign rap acts Queen Latifah and Digital Underground. Ross would build a powerful, respected roster of rap acts for Elektra including Brand Nubian, Leaders of the New School (featuring a soon-to-go-solo Busta Rhymes), and Ol’ Dirty Bastard.
More importantly, Ross’s hiring marked the first time that a major label placed a knowledgeable person from the hip-hop scene among its executive ranks. The departure of Dante Ross from Tommy Boy marked the start of the exodus of both artistic and executive talent from indie labels as major labels began to outbid and, eventually, outsmart them. By the mid-’90s, the eclipse of the original rap indies was all but complete.