The issues impacting the Western World in the ‘70s and ‘80s are known to everyone with even a passing interest in economics: the supply-side shocks caused by oil embargos, the stagflation which occurred consequently, the high levels of unemployment, Volcker’s policies which caused even more recessionary pressure. Conversely, the successes of the hip-hop genre in the same period are known to everyone who pays attention to the history of modern music: The Sugarhill Gang, LL Cool J, Run-DMC and the Beastie Boys, to name a few.
Rap seems to be at its most popular in periods of economic unrest – the same pattern can be seen again after the Financial Crash of 2008. Whilst the global economy contracted by almost 2%, the first de-growth in over half a century, Eminem released Relapse. It went platinum in three and a half months. During the first lockdown in 2020, DaBaby released ‘Blame it on Baby’ and it landed at the top of the charts immediately. A week later, YBN YoungBoy witnessed the same achievement. A week after that, Drake released a mixtape, which debuted at the Number 2 spot.
Whether this is a trend or a coincidence is yet to be decided by scholars but what is definitely determinable from this information is clear: hip-hop is a genre which refuses to fold under external economic pressure. The reason for this is not unanimously agreed on by economists, but there is significant evidence that the genre’s resilience comes from entrepreneurship.
It is rare that a rapper is simply just a rapper. Rapping may be what they are known for, but it in many cases, it is not even the artist’s main source of revenue. Entrepreneurship and hip-hop are intricately intertwined concepts, and almost impossible to separate from each other. Ice Cube and 2Pac both starred in leading roles in movies as a result of their music. As time has progressed, the relationship has become more inseparable; J. Coles’ label Dreamville accumulates millions of dollars in revenue each year from merchandise and independently run festivals. The last time a rapper did not headline Coachella was 2016. On a smaller scale, Krept and Konan, UK rappers, own a restaurant ‘Crepes and Cones’ and a skincare range for babies. The degree of entrepreneurial activity is unmatched by any of their peers in other music genres. It’s what economists dub ‘risk-bearing economies of scale’ – diversifying output so that if one stream of income takes a hit, the brand is kept afloat by the revenue from the other streams.
The fashion industry was influenced greatly by entrepreneurship in rap. By the 1990s, luxury fashion firms had transitioned – where runway models used to dress in garments displaying wealth, they then wore necklaces, chains, and headphones. From Prada to Gucci, the fashion world had changed. Luxury brands produce goods known as ‘giffen goods’. These are goods which consumers purchase more of as the price of the good increases. Usually, these products are reserved for those on extremely high incomes – this change in the fashion industry reinforces the idea that rappers have a diversified audience.
A study conducted earlier this year (using the lyrics of 15 rappers who have separate, self-made businesses) found the most common word in their shared discographies was ‘authentic.’ Interestingly, in business studies, ‘authentic’ is seen as a buzzword. Economic analysts have found that consumers are more likely to purchase a good if it is deemed ‘authentic.’ This is an example of moderately irrational behaviour on the demand-side, individuals put too much emphasis on the word, rather than the actual product. It’s hard not to wonder if consumers are so influenced by rappers because they feel like real, genuine people (as opposed to billionaires or other types of celebrities).
Economists still model entrepreneurship as start-ups and small businesses. We need to expand this definition; rappers have shown that a ‘brand,’ in the conventional sense, is not needed. What is important is a deep understanding of economic concepts: the buzzwords which make consumers tick, the brands which people pay attention to, and the product markets which will keep providing one with profit.
Douglas Birkett
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