Peep Zack O’Malley’s Forbes interview with Akon.
Akon is one of the only artists to increase his income in a year that’s been almost as cruel to hip-hop as it’s been to Wall Street. Rap record sales fell 20% in 2008, steeper than the 15% industry-wide decline. Worse, the corporate appetite has all but dried up for “360 deals” like last year’s $150 million pact between Jay-Z and concert promoter Live Nation ( LYV – news - people ). The 20 top earners in hip-hop combined to make $300 million from June 2008 to June 2009–40% less than last year’s half-billion.
Yet Akon’s earnings have nearly doubled. He’s tied with 50 Cent for fourth place on Forbes’ latest list of Hip-Hop’s Cash Kings with an estimated $20 million in pretax earnings over the last 12 months, up from $12 million over the prior year. His camp insists he’s made even more, thanks in part to his new album Freedom, on its way to platinum status despite the slow market.
“I think people lean more to music when they’re going through the hard times,” Akon says, lounging in a midtown Manhattan hotel the day after his Apollo appearance. “The recession is really impacting everyday people, and they want to try to get away from the troubles they’re dealing. Music is always a crutch.”
Selling albums–Akon has moved 9 million in his young career–is just one part of the business. Akon performed a staggering 100 concerts from Antwerp to Vancouver during the past 12 months. According to Pollstar, he grossed $230,000 per show on average, plus merchandise sales. Factor in declining record sales, and it’s not hard to see why touring is such a crucial moneymaker for artists like Akon–especially because they don’t have to split concert proceeds with record labels as they do on albums. “They just try to rape you,” says Akon. “You don’t see money till your second or third album because you’re so busy recouping.” He makes nearly half his money touring.
In addition to writing, singing, producing and rapping his own songs, Akon offers the same services to other artists–sometimes for a six-figure upfront fee, plus as much as half the royalties. He’s logged more than 160 guest appearances, working with acts from Gwen Stefani to fellow cash king T-Pain.
It’s paying off. “At the beginning of his career, like many artists, he did not have the infrastructure in place to handle everything that was coming at him,” says David Bolno, a co-director at Nigro Karlin Segal & Feldstein, which Akon hired to represent him last year. “Together we put a business plan in place in order to manage his current business ventures, the back-end administrative functions on invoicing and collections for his producing and songwriting.”
Akon also launched his own record label Konvict Musik, which includes KonLive Distribution, a 50/50 venture with Interscope. He gets half the profits from album sales and still keeps his own touring revenues, merchandising rights and ringtones. Last year Akon co-produced Lady Gaga’s debut The Fame, which sold more than 1 million copies and collaborated on the multiplatinum single “Just Dance.”
“He’s one of the most prolific producers around, period,” says Ryan Schinman, chief of Platinum Rye, the world’s largest buyer of music and talent for corporations. “Akon is one of the savviest businessmen in the industry. He’s not going anywhere.”