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Hip-hop was born in the mid-1970s in an impoverished seven-mile area in the South Bronx amongst rampant unemployment, drugs, and gangs. As such, it was an unlikely candidate to grow and permeate mainstream American society. Yet at over 200 million digital tracks sold, hip-hop was the third biggest seller in 2013 after rock and pop, according to Nielson Soundscan. How did this tremendous growth happen?
When hip-hop began, people outside of the South Bronx didn’t understand it. There was no demand for the “bizarre talking records,” as radio stations used to call them. If anything, mainstream music institutions were hostile to rap. Black radio stations didn’t play it because it reminded them too much of disco—early rap recordings often used disco backing tracks—which had fallen out of favor. Major record labels did not spend any money discovering, recording, developing, or promoting rap artists like they were doing for established genres, because they didn’t believe it would sell. And there were no other hip-hop scenes in the country on which the New York scene could rely on for support.
In fact, early practitioners of hip-hop were just like entrepreneurs in emerging industries. They were not only trying to establish themselves as professional musicians, they were trying to establish rap or hip-hop as a viable musical genre. They had to develop the market for scratching from scratch, as it were. And they had to do so without the support of existing institutions.
Entrepreneurs in any new industry suffer unique problems because they don’t benefit from the taken-for-granted nature of existing products. They have to gain acceptance and support from the relevant leaders and gatekeepers.
Take the grass-fed meat and dairy industry. Twenty years ago, it was virtually unheard of. Only cattle ranchers and livestock commodity analysts even knew what the term “grass-fed beef” meant, and they knew it to refer to low-quality low-price meat that had not followed standard production processes. In 2000, the total number of slaughtered cows who had been exclusively grass-fed was 5000. Yet by 2006, that number grew to between 45,000 to 60,000. Now, grass-fed meat and dairy products are sold at a premium by high-end restaurants and gourmet groceries.
Early proponents of grass-fed meat faced an industry environment that was baffled at best, and hostile at worst, just like hip-hop. They had to explain what they were doing, just like hip-hop artists. That’s why The Sugar Hill Gang began their song, “Rapper’s Delight,” by making clear, “Now what you hear is not a test – I’m rappin’ to the beat. And me, the groove, and my friends are gonna try to move your feet.” As with the beef industry, the power holders in the music industry—major labels, radio stations, music venues, MTV, and the music press—largely ignored hip-hop.
As a new genre with no institutional support, rap seemed headed for obscurity. So how did it rise out of the ghetto and into the mainstream? In a paper on entrepreneurs in emerging industries, University of North Carolina professor of sociology Howard Aldrich and University of Colorado management professor C. Marlene Fiol argued that new industry creators need to overcome the skepticism and resistance to obtain legitimacy and inclusion using their powers of persuasion. In other words, they need to rap. Which comes naturally to rappers.
“If there are no institutions, no record companies that support you, you have to basically sell those records out the trunk of your car,” told me Dan Charnas, author of The Big Payback: The History of the Business of Hip-Hop. “You have to learn salesmanship. And since rappers are salesmen anyway, they’re selling themselves on stage, it’s just what they do.”
Rapping made the transition to entrepreneurship easier for hip-hop artists. It helped that they had honed their craft off the radar. As Jeff Chang writes in Can’t Stop Won’t Stop: A History of the Hip-hop Generation, “You had to answer to no one except the others who shared your condition. It meant you became obsessed with showing and proving, distinguishing yourself and your originality above the crowd.” Early rap artists were on a quest to prove that they were bigger, wilder and bolder than their circumstances would make possible. They took up the challenge to create something from nothing and rose to it with style and swagger.
Because they lacked institutional support, hip-hop artists and their early supporters had to innovate. Some of their innovations include securing corporate sponsorship deals for hip-hop events and artists, inventing the concept of street team marketing, and turning artist merchandise into high-fashion clothing lines. “Rap was completely off of the radar,” Charnas told me. “So everything that had to be done had to be done entrepreneurially and that’s why hip-hop created a class of not only new entrepreneurs but also artists who were entrepreneurs.” By remaining entrepreneurial, rap artists eventually attained unprecedented levels of ownership and control of the rights to their music and brands.
Entrepreneurship researchers have argued that the particular circumstances and events of the early founding period leave an imprint on the organizations that persist. They set a certain pattern, culture and mentality in place. In today’s hip-hop, you can still see the influence of the early days when rappers had to hustle to get their music heard. To this day, rappers lead the way in innovating and developing new ways to leverage their brand, product, and revenue stream, as the recent record releases from Wu-Tang Clan and Jay-Z illustrate.
In a 1997 essay, Chuck D wrote that “If we don’t step up and realize that we have a vested interest in seizing control of this industry and take advantage of what we have to do right now we will be relegated to just being artists, entertainers, and actors. If you’re in the Rap game you should want to see the game elevated.” By elevating their game from music to industry creation, hip-hop remains entrepreneurial forty years into its history.
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