Developed and narrated by K.Qhamata 4 SMAART INCUBATOR, Inc.
Episode Synopsis: JAY-Z relationship with Def jam sours, and buys out the remaining terms of his contract to finally launch ROC NATION. Gets $150 million to launch ROC NATION. Sells off his remaining shares in Roc-A-Wear for $204 million to Iconix. Plots a takeover of the New Jersey NETs franchise, and partners up with Steve Stoute to launch an advertising agency.
Full Episode Commentary
2007 AMERICAN GANGSTER ( ROC NATION BORN )
It’s raining. Cars are huddled together, jam-packed in typical New York fashion. A young college student observes the chaotic traffic scene as he patiently awaits in front of a recording studio. The studio is open but he can’t enter. This place is only for hitmakers, and He’s unknown. Just another producer-rapper with a dream but no album credits. No, he can’t enter, so he waits. He waits. He waits in the rain, waiting on the one man he believes can change his life, Jay-Z.
Then suddenly, just as his denim can longer hold another ounce of rain, a black Rolls Phantom appears. In its back seat, motioning to the driver to open the rear passenger side door is Jay - unphased by the downpour and ready to put the finishing touches on his 10th studio album, American Gangster. As gets out of the Phantom and begins his ascent into the studio, the young college student musters up the courage to stop him.
Cold, nervous and drenched from standing two and half hours in the rain, the college student stumbles over a short introduction before extending his hand to hand Jay his beat tape. Surprised and unprepared for the gesture, Jay replies "Man, I don't want that," and waves away the young college student. Jay-Z is troubled, overwhelmed and under pressure to recapture what many fans and critics believe he’s lost since going corporate, his ability to make hits. He doesn’t have time for college students standing outside his studio with beat taps. His empire and legacy are under siege. The year is 2007, and the young college student he waved away was J. Cole.
Goodbye President Carter ( Def Jam Contract Ends )
After a great start in 2005 with signing Rihanna, resigning Kanye and bringing over a host of other talented upstarts like Young Jeezy, Jay-Z relationship with Def Jam is deteriorating. Sabotaged by a public’s growing interest in streaming and downloading music, rather than buying it - along with a disgruntled cast of recording artists unable to deliver hit singles, now has Jay facing something he’s never faced since his debut in 1996, failure.
Seeing the writing on the wall, Jay-Z decides to make a few boss moves. While still in recording sessions for his upcoming album “ American Gangster”, Jay-Z begins recruiting key talent on Def Jam to follow him to a recording label and management company, that would eventually form into ROC NATION. With his contract as president of Def Jam set to expire in a matter of months, he buys out the remaining terms of his contract as an artist with Def Jam for $5 million ( He still owed one more album ). But breaking ties with Def Jam wasn’t enough for the God MC. Needing fuel to position himself deeper in music and eventually in sports, Jay-Z finally sells off his remaining shares in Rocawear to Iconix brand for $204 million in cash and $35 million in Iconix stock. The additional cash reserves are used to expand Jay’s reach and power in the NBA and the New Jersey Nets, an NBA team he purchased quietly in 2005 to the tune of $1 million dollars.
American Gangster ( Hova Strikes Back At Critics )
On November 6, 2007, Hova strikes back at critics with the release of his 10th album, American Gangster. Inspired by the movie “American Gangster” starring Denzel Washington and Russell Crowe, the album is an instant success with fans and critics. Debuting at number one on the Billboard 200 chart, selling 425,861 copies in its first week, and helping Jay-Z tie Elvis for having the second most number-one albums in American music history. Jay-Z was doing more than proving he was still the king of Hip Hop, he was solidifying his place as a generational American icon.
( Milestone Moment: Jay-Z purchase of the New Jersey Nets in 2005 for $1 million makes him for the first hip-hop mogul in history to own a professional sports team. )
2008 Live Nation ( $150 Million )
“Live Nation is paying a $50 million premium for the right to spend another $100 million on Jay-Z, Inc”, that was one of the statements made by Peter Kafka, a writer and columnist for Businessinsider.com, when the story broke that Jay-Z had just sealed a $150 million deal with the biggest concert promoting company in the world, Live Nation. The announcement may have been made in April of 2008, but the plan had been in the works since 2005.
Somewhere near the time, Jay-Z assumed the office of President at Def Jam, ideas were introduced about Jay-Z creating a company that could bridge the ever-widening gap between artists, record labels, production houses and tour promoters. During Jay-Z’s tenure at Def Jam, these ideas would eventually culminate into ROC NATION. A record label, production house, promotional firm and touring company all wrapped in one. Staffed with some of the most forward-thinking minds in entertainment, ROC NATION’s launch was not only an event for Jay-Z fans but an event for the industry insiders everywhere.
Jay-Z’s deal with Live Nation was bigger than any other pop star at that time, beating out lucrative deals with pop stars Madonna and U2. The deal, per the Times, guaranteed Jay-Z the following;
$25M: Funding to cover the ROC NATION's operating expenses for 5 years
$25M: Line of credit, available to finance Jay-Z's acquisitions or investments
$25M: Immediate upfront fee paid directly to Jay-Z for accepting the deal terms
$25M: Advance for current tour in 2008 ( Heart of the City Tour )
$30M: $10M per album advance for 3 albums over 10 years
$20M: For a share in publishing, licensing and other rights from ROC NATION projects
Jay-Z Launches Advertising Agency ( Translation )
In February of 2008 Jay-Z partners with former MCA executive, and Hip Hop business legend, Steve Stoute, to form Translation - an Ad firm specializing in creating multicultural campaigns for corporations. For the first time in history, a hip-hop artist would not only own and operate his own record label, management company and touring company, but also his own advertising company. Jay-Z had reached a new threshold of power, and critics and fans everywhere were beginning to see the prophecy behind the words utter by Jay in 2005, “ I’m not a businessman, I’m business man!”.
2009 J. Cole & Rhapsody
In 2009 riding high from the success of the live nation deal and his newly minted partnership with Steve Stoute, Jay-Z, headed back into the studio to record his eleventh studio album The Blueprint 3. But he wouldn’t be alone, after silencing his critics, and expanding his business game, Jay-Z went back for the college student he left drenched, standing in front of his Chelsea studio back in 2007. Jermaine Cole, aka J. Cole, was signed to ROC NATION in the first quarter of 2009. He would be featured on the Blueprint 3, rapping along Jay on the title track, “ A Star Is Born”.
On September 11th the Blueprint 3 was released. Debuting at number one on the billboard 200, and selling 476,000 copies in its first week. The album became Jay-Z's eleventh U.S. number-one album, breaking the record he had previously shared with Elvis Presley, and produced five singles that would dominate the charts going into 2010. Aside from crushing Elvis’s record, the Blueprint release marked another major accomplishment for Jay. A few months prior to the album’s release, Jay-Z had sealed a marketing deal with Rhapsody to advertise the Blueprint 3, by releasing songs from the album two weeks before it’s release. The advertising campaign even features a special commercial, recapping the evolution of Jay-Z’s career visually displayed by Jay reenacting the poses of each of his album covers. The campaign would change the music business and the way records are marketed forever.
Sources: ABC NEWS JAY-Z protege attended college to be closer 2009, Rolling Stone 2009 Article, Forbes Why Jay-Z Nets Investment Makes Sense 2011, Hip Hop DX Jay-Z sells Roc-A-Wear 2007, 2008 Businessinsider Article Jay-Z Gets $150 Million, New York Times 2008 Jay-Z Steve Stoute Form Translation, Wikipedia The Blueprint 3 article, Complex J.Cole talks ROC NATION,
Hip Hop DX Article Rhapsody Partnership Jay-Z.
Khufere Qhamata, is the founder of the SMAART INCUBATOR, a serial entrepreneur, and dedicated futurist. He is chief executive of Leap72, a strategic innovation consultancy advising corporations on how to use startup economics to grow and compete for the future. He is also a co-founder and board member of Academy M, a 501 (c) 3 nonprofit specializes in the mentorship and career development of millennials. You can follow him on Linkedin.