I find television very educating. Every time somebody turns on the set, I go into the other room and read a book. - Groucho Marx

The Business of Beats: Dr. Dre


by Thomas Michalski
Aug. 21, 2013

Rappers sometimes do silly shit with their money. It’s not a phenomenon that’s exclusive to hip hop of course (at their first flush of fame, plenty of hard rockers waste a bunch of cash on amps that go up to eleven, white tigers, mountains of cocaine and what-have-you), but in the rap world the pitfalls seem even greater. Young artists, often from impoverished backgrounds, get a hit, are made ‘rich’ overnight, and just as fast the con-men, criminals and record company creeps with confusing contracts come out of the woodwork. Combine all that with the ostentatious luxury and partying associated with the genre, not to mention the cold, hard fact that the music business ain’t what it used to be, and it’s a wonder that anyone in the game can cover their overhead. But on the other hand, there’s plenty of MCs who you can admire as much for their shrewd handling of their career as for their creative gifts; MCs could worse than model their affairs on Jay-Z, groups should pay special attention to the Wu-Tang Clan financial plan, and if you’re a producer, you’ve got to admire the empire built by Dr. Dre, who’s amassed quite the fortune by doing exactly what he wants in the studio.

Probably the first thing to glean from Dre’s illustrious career is that whatever you’re doing, rapping, DJing, producing, you have to take the time to master your craft. Plenty of people have gotten a hit record without much talent or dedication, but the Gladwellian outliers who become legendary are always those who have the passion to put in the hours. It helps if you discover that passion early, as a four year old Andre Young did, developing a love for music picking out 45’s to spin at his mother’s card parties in Compton. It was that passion that kept him behind the decks as he graduated from spinning at neighborhood block parties, which occasionally meant being pelted with drinks by dissatisfied dancers, to residencies at clubs like Eve After Dark, where he often showed up during daylight hours just to practice and perfect his mixes, all of which in turn laid the groundwork for his transition to record producing, starting with the electro-leaning World Class Wreckin’ Cru and, not long after, N.W.A.’s notorious 1988 debut, Straight Outta Compton. “I would definitely not be as good of a producer if I hadn’t started DJing”, he later observed, “Because that’s where I really started paying attention to how records are made. I would critique and just listen and say, ‘I would have done this different’.”

Knowing music inside and out, and being perfectionist enough to tweak tracks until they met his almost impossibly high standards, made Dre’s productions into hits (though the furor over N.W.A.’s uncompromising brand of gangsta rap certainly didn’t hurt), but it also spurred him to continually push things to the next level. All the same, he seemed to instinctively grasp that what sounded great to him may not necessarily connect with audiences. Even in the case of his landmark 1992 G-funk manifesto The Chronic, Dre wasn’t counting his eggs before they hatched, and record company indifference (astonishing in retrospect), only made him more cautious. “I remember being on my balcony with Nate Dogg, listening to my record like, ‘Is this shit good or not?’” he reminisced to XXL Magazine, “I had no idea it would do what it did.” It seems to be a feeling that never left Dre, that the fickle whims of the record buying public, together with what record companies are willing to promote, could end his career as quickly as it began. All the more reason then, to carefully manage the money you are making, and while Dre has done his share of lavish spending, he’s also saved for he and his family’s future and reinvested heavily in his business operations (and paid his damn taxes, the IRS loves to audit famous young men of color after all). You wouldn’t catch them repo-ing Dre’s solid gold toilet, as they had the one belonging to the platinum-selling MC Hammer, because Dre wouldn’t waste his money on something so stupid in the first place.

But before you can manage your money, you’ve got to have some coming in, and it’s no secret that scoring a record contract is not as great a windfall as it may seem. Young artists, usually without much grasp of the ins-and-outs of contract negotiations, often end up with little more than an advance, which ends up flying out the door rather quickly. It’s far better to have your own stake in the infrastructure that sells the product you produce. Dre, obviously, has become a mogul in his own right, but he didn’t get there without making a few missteps. As house producer at N.W.A. cohort Eazy-E’s Ruthless Records, he saw first-hand how rapid growth and little oversight of funds could turn a promising label into a dicey house of cards, and while he was right to break away, perhaps vicious thug Suge Knight, who drummed up part of the money for a new label, Death Row, by (allegedly) extorting it from Vanilla Ice by (allegedly) dangling him from a hotel balcony, wasn’t the wisest choice for a business partner. The atmosphere of violence and greed cultivated by the gargantuan, menacing Knight, coupled with disputes over production credits, eventually made Dre’s involvement untenable, but his departure freed him up for a much more successful enterprise, his own Interscope subsidiary, Aftermath Entertainment, where he’s nurtured money-making superstars like Eminem, 50 Cent and, more recently, Kendrick Lamar.

With a steady stream of money coming in through Aftermath, Dre soon had the ability to expand into other markets beyond making and selling music, including co-founding, alongside longtime associate and chairman of music industry juggernaut Interscope-Geffen-A&M Jimmy Iovine, the company that would that would earn him most of his immense fortune (Forbes Magazine estimated his net worth at $250 million in 2011), Beats Electronics, makers of high-end speakers and headphones. Lots of rap stars invest in businesses, but few know the market or the logistics of the enterprise they’re investing in as well as Dre knows sound equipment (Flava Flav’s Iowa restaurant, Flav’s Fried Chicken, folded after four months) or are the perfect pitchman for their product, and the revenue the company generated proved it a smart move. On the other hand, the line of premium cognac and vodka he launched in 2008 didn’t prove nearly as lucrative, but not every idea can be a home run, and thanks to his solid financial foundation, they don’t need to be in order for Dre and company to keep the lights on.

At the end of the day though, Dre’s whole career, his whole financial portfolio, is built on his art, which has never slipped below his exacting standards, even if it’s long been employed more to make other people sound good than on Dre’s own projects. After The Chronic in 1992, it was a long wait until it’s 1999 follow-up 2001, but the third installment in the trilogy, Detox, has been delayed so much that eager listeners are left continually wondering if the album will come out all (an in some ways even more enticing record, The Planets, an instrumental suite based on the solar system that Dre described to Vibe as “just my interpretation of what each planet sounds like”, has also failed to materialize). The point is though, even if we never hear Detox, the man’s making a killing doing what he loves, making music. It seems doubtful that every young MC, DJ or producer will learn from Dre’s triumphs and tribulations (maybe one day he’ll start a foundation like that co-chaired by his musical idol Quincy Jones, the Five Million Kids Initiative, which teaches at risk youth financial literacy among other life skills), but if they’ve got a passion for what they do, and want it to get them rich, not get them ripped off, it would pay to follow Dre’s lead, both musically and monetarily.

http://www.forbes.com/pictures/eeel45edgm/3-andre-dr-dre-young-250-million-2/#gallerycontent

http://www.xxlmag.com/bloggers/2008/08/dr-dres-interview-from-vibe-magazines-15th-anniversary-issue/

http://www.bundle.com/article/what-we-can-learn-how-rappers-spend-their-money/

http://www.xxlmag.com/features/2011/12/hard-times-except-from-the-dec-jan-2012-issue/

http://books.google.com/books?id=o5eyEaMteo4C&printsec=frontcover&dq=dr.+dre&source=bl&ots=BjfInrMBYZ&sig=d3R0YcDHQdKh6LK05agO20UI7aA&hl=en&sa=X&ei=UNiEUKurOfK-0QHGx4GADg&ved=0CC8QuwUwAA#v=onepage&q=dr.%20dre&f=false

http://www.vibe.com/article/dr-dre-talks-detox-waitunder-pressure-frustration-and-instrumental-album

http://www.reuters.com/article/2008/08/06/us-drdre-idUSN0636409820080806

Thomas Michalski is a writer and radio host from Milwaukee, Wisconsin. You can keep up with his comings and goings over at http://www.voodooinspector.com/