Dr Dre: The first 'hip-hop billionaire'?

Dr Dre Is Dr Dre - born Andre Young - hip-hop's first billionaire?

Related Stories

"The Forbes list just changed."

That is the boast made by singer-songwriter Tyrese Gibson in a video posted on Facebook (and later removed), before he is pushed aside by Dr Dre, the co-founder of the Beats Electronics firm.

The list of the richest people on the planet, says Dre, the 49-year-old hip-hop star and entrepreneur, has changed "in a big way".

"The first billionaire in hip hop right here from the... West Coast, believe me," he said, before the video abruptly ends.

By most accounts, Apple's $3bn (£1.8bn) acquisition of the Beats headphone and music streaming service will increase Dre's net worth from an estimated $550m to almost $800m - making him, if not hip-hop's first billionaire, certainly hip-hop's wealthiest man.

So how did Dr Dre, born Andre Romelle Young in inner-city Los Angeles, build his fortune?

Hip-hop's richest artists

Jay-Z and Beyonce
  1. Dr Dre / Andre Young - $800m (estimated)
  2. Sean "Diddy" Combs - $700m
  3. Jay-Z / Shawn Carter - $520m
  4. Birdman / Bryan Williams - $160m
  5. 50 Cent / Curtis Jackson III - $140m

Source: Forbes list

Borne of necessity

Dan Charnas, a former hip-hop record producer and author of The Big Payback: The History of the Business of Hip-Hop, says that Dr Dre's business acumen was shaped by the culture of hip-hop in the 1980s, which was by necessity more entrepreneurial.

"There's a long tradition of entrepreneurship for artists in the hip-hop business because there was no other way they were going to get out there," says Charnas, noting that in the 1980s, major record labels and radio stations were hesitant to invest in and promote hip-hop music.

"Russell Simmons [and Rick Rubin] had to start their own music company if people were going to hear these records," he adds, referring to Def Jam records, one of the first and most successful hip-hop labels.

"The hustle of that extended to everything."

Diversify

Dr Dre was certainly part of that early, scrappy hip-hop milieu.

Dr Dre, Eminem, and Xhibit Dr Dre diversified his revenue stream by identifying and producing new music by artists like Eminem

Although he first found success as a musician with the World Class Wreckin' Cru and then with the seminal group N.W.A. - pioneers of gangsta rap - he was also a keen collaborator and producer, thus ensuring he had two revenue streams: one from performing, and another from producing.

Start Quote

Why beg Adidas for an endorsement deal and make them all the money when you could put your own clothing out and do it yourself?”

End Quote Dan Charnas Former hip-hop producer

Just a year after he released his debut album, The Chronic, in 1992 - which sold three million copies and won a Grammy award - Dr Dre also helped produce Snoop Dogg's first album, Doggystyle, which sold an astonishing five million copies.

Like many hip-hop stars of the era, Dre also made sure that he earned a cut of his own sales as a producer - eventually becoming "the single most influential producer in hip-hop history", according to Rolling Stone magazine.

After a falling out with his label, Death Row Records, due to a contract dispute (among other concerns), Dre negotiated a deal with Interscope to start his own label, Aftermath Entertainment, in 1996.

He then signed and helped produce albums by young hip-hop artists, most notably Eminem, before selling his share of the label back to Interscope in 2001 for a reported $35m.

Brand power

Although he rose to fame as a performer, Dr Dre has not released a solo album since 1999.

Jimmy Iovine and Dr Dre Successful music mogul Jimmy Iovine (left) suggested the idea of an audio line to Dr Dre

Instead, he has capitalised on a trend in hip-hop that sprang up during the 1990s, when the genre's biggest stars, like Jay-Z and Sean "Diddy" Combs - aka Puff Daddy and P Diddy - launched their own clothing labels and consumer products.

Jay-Z founded Rocawear and Combs founded Sean Jean. Both are worth many millions of dollars.

Start Quote

People look at you like you're crazy when you say you don't need any more money - who says that?”

End Quote Dr Dre

"Why beg Adidas for an endorsement deal and make them all the money when you could put your own clothing out and do it yourself?" says Mr Charnas of the entrepreneurial spirit which pervaded hip-hop at the time.

Dr Dre was similarly pushed into consumer branding, but he took a slightly different route.

As the possibly apocryphal story goes, Dre's lawyers had asked him to endorse sneakers.

He ran into then-Interscope chairman Jimmy Iovine on the beach, who said something along the lines of: "[Expletive] sneakers, let's sell speakers."

'The way I do'

From there, the pair first partnered with Monster, a well-respected audio firm known mostly for their HDMI cables, to design and manufacture the Beats headphones. (In 2012, Monster and Beats announced the partnership had ended.)

"Monster had a good name in audio circles," says Mr Charnas of the early hype surrounding the headphones, which soon became known as accessories for the "true" music lover.

Lil Wayne wearing Beats headphones Most experts say the Beats success story is due in part to a canny marketing effort

The Monster reputation helped - but so did celebrity endorsements, which included Lady Gaga, as well as prominent placement within music videos.

"Beats is viewed as a triumph of marketing more than it is a fantastic product - there are a lot of people who feel there are better headphones to be bought in the market," says Mr Charnas.

Dr Dre used his reputation as a producer to market the product, saying: "Hear what the artists hear, and listen to the music the way they should, the way I do."

But the hip-hop artist has previously maintained that for him, it isn't all about the cash.

In an interview with Esquire last year, he talked about turning down potential investors by telling them he doesn't need any more money.

"That part is entertaining, because people look at you like you're crazy when you say you don't need any more money. Who says that?" he said.

Perhaps hip-hop's richest man did used to say that. At least until Apple came knocking.

More on This Story

Related Stories

More Business stories

RSS

Business Live

  1.  
    08:45: Deutsche earnings
    dbk

    Deutsche Bank has reported a surprise pre-tax profit of €253m in the three months to the end of 2014, helped by an unexpected drop in litigation costs and a rise in trading revenue at its investment bank. Germany's largest lender was able to postpone major legal expenses in the quarter because a number of major cases have yet to be settled, but the threat of future fines still hangs over the lender, frustrating management's efforts to boost profit.

     
  2.  
    Shell earnings Kamal Ahmed BBC Business editor

    As the first of the major oil companies to report its figures for last year, Shell plays the role of the canary in the coal mine - or on the oil rig. After a rather sickly 2013, profits are actually up. But the impact of the low oil price is clearly biting. The company announced that it would be cutting investment over the next three years in new exploration and the development of oil and gas fields, a move that will raise fresh concerns about its business in the North Sea.

     
  3.  
    08:19: House prices
    The sun illuminates property in the historic city centre of Bath

    Nationwide says house price growth got off to a weak start in January with property values up just 0.3% in the month and 3.8% higher than the same month a year earlier. That marks the lowest rates of house price growth for 14 months.

     
  4.  
    Saudi oil Via Email Neil Carter, Business live reader from Devon

    "In the eighties it was one to three dollars a barrel. Today I expect that it is in the region of six to eight dollars. Some newer fields may have higher costs due to higher exploration and extraction costs, so maybe ten to twenty dollars a barrel."

     
  5.  
    07:55: Diageo results Radio 5 live

    "The results today show we are seeing a pick up in momentum," Diageo's John Kennedy tells Radio 5 live breakfast. "If you look at the overall picture... we've seen an emerging market slowdown... but the big developed markets... are performing well despite a muted recovery particularly in Europe." India is performing strongly, as is Mexico, he adds.

     
  6.  
    07:51: Diageo results
    guinness

    Distillers Diageo say profit for the six months to the end of December dropped to £1.36bn from £1.65bn as the pound strengthened and they suffered "lower income from associates and joint ventures".

     
  7.  
    07:41: Shell earnings

    Shell's has also pulled $15bn of investment in oil exploration over the next three years. It says organic capital investment in 2015 is expected to be lower than 2014 levels. "Shell has options to further reduce spending, but we are not over-reacting to current low oil prices and keeping our best opportunities on the table," it adds.

     
  8.  
    07:24: New fund BBC Radio 4

    Nigel Wilson, chief executive of asset manager and insurer Legal & General, says the firm will put £1.5bn for a new infrastructure fund in the UK on Today. "We are very long-term investors - 20, 30, 40, 50, years," he says. Longer-term financing from fund managers like him are the future rather than shorter-term bank lending, he says. Will £1.5bn be enough? He's attracting outside investors and will borrow money to grow the fund to about £25bn.

     
  9.  
    07:15: Royal Mail chairman
    mail

    Donald Brydon will step down as chairman of Royal Mail, the company says. The company is looking for a new one. Mr Brydon will carry on until the firm's annual meeting in the summer.

     
  10.  
    07:10: Shell earnings

    Shell has reported full year earnings (on a current cost of supply basis) of $19bn compared with $16.7bn a year earlier. Fourth quarter earnings were also higher at $4.2bn compared with $2.2bn for the same quarter a year ago.

     
  11.  
    06:58: Eurozone union BBC Radio 4

    Bank of England Governor Mark Carney yesterday said the eurozone needs fiscal union to manage monetary union. James Bevan, an asset manager CCLA, tells Today "a root cause of the problem is absence of growth," low money rates alone won't get growth going.

     
  12.  
    06:48: Shell results
    Car lights are seen streaking past an oil rig extracting petroleum

    Some discussion here on the business livepage as to just how cheap it really is to extract oil in Saudi Arabia. So we thought we'd open it up to the floor. How much do you think it costs Saudi Arabia - per barrel - to extract oil from the ground. Send your answers to bizlivepage@bbc.co.uk or tweet @bbcbbusiness. Usual rules apply: no peeking at the internet.

     
  13.  
    06:38: Shell results Radio 5 live

    How does the lower oil price affect alternative ways of exploring for oil such as shale? Michael Hewson of CMC markets tells Wake Up to Money shale oil exploration is largely dead in the water. Getting shale oil out of the ground is still far more expensive than getting oil out of the ground in Saudi Arabia, he says. What pushed up Saudi Arabia's oil extraction costs was the welfare programme the country introduced when the Arab Spring broke out in 2011. He adds Saudi Arabia can live with a low oil price for a long time.

     
  14.  
    06:23: Shell results Radio 5 live

    "I think there is a good chance that we could see a reduction in [Shell's] dividend and that could affect pension funds here in the UK," Michael Hewson of CMC markets tells Wake Up to Money. He doesn't see that happening just yet, but if the oil price continues to fall, or stays low for a long time, then he thinks it is unavoidable.

     
  15.  
    06:11: Shell results Radio 5 live

    Michael Hewson of CMC markets tells Wake Up to Money he expects Shell's revenues will be slightly lower when it publishes results later this morning. He is, naturally, interested in how Shell is coping with the lower oil price. He doesn't think "we've hit bottom yet" in terms of oil prices. "The Saudi's have still got their foot to the floor in terms of market share," he says. "The low hanging fruit in terms of getting oil of out the ground is gone," he adds.

     
  16.  
    06:01: Apple analysis
    apple

    Apple caught up with Samsung as the world's biggest smartphone seller in the fourth quarter of 2014, thanks to booming sales of its new iPhone 6, market researcher Strategy Analytics said. Strategy Analytics said Apple flogged 74.5 million handsets in the fourth quarter, compared to 51 million a year ago. Samsung shifted the same number, which for them was a reduction from 86 million the previous year.

     
  17.  
    06:01: Matthew West Business Reporter

    Morning. Do get in touch at bizlivepage@bbc.co.uk or tweet us @bbcbusiness.

     
  18.  
    06:00: Howard Mustoe Business reporter

    Good morning everyone. Overnight, McDonald's has said Don Thompson will retire as chief executive of the fast food firm to be replaced by British-born Steve Easterbrook, the company's current chief brand officer. We have house price data from the Land Registry at 09:30 and Shell's results to look forward to. Stay tuned.

     

Features

Copyright © 2015 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.