Applying the BCG Matrix to Hip-Hop

10 06 2008

 

 

To successfully understand how RECORD LABELS view their talent, an aspiring artist should look no further than a simple marketing concept known as the BCG Matrix. The BCG Matrix was established in the early 1970’s by Bruce Henderson of the Boston Consulting Group (hence the name BCG Matrix). The BCG Matrix categorizes every product in four categories, with four subsequent categories. Those four categories are called: Cash Cow, Star, Question Marks and Dogs. The subsequent categories based on how they effect the market. The four subsequent categories are: High and Low Market Share and High and Low Market Growth Rate. The categories and subsequent categories have a direct relationship with one another. For example, a STAR commands both a high market share and high market growth. Now, I will break down what each of these mean and how they are relevant to our great genre of music.

Cash Cows: A cash cow is a proven product. This product sells no matter what. This product needs very few if not any marketing dollars. It commands attention. Jay-Z is Def Jam’s Cash Cow. He is a proven seller with great talent. However if you refer to the chart above you will see that his market growth rate is low, which means that he’s pretty much panned out. He’s gone as far as he can go in the music world. He has turned over all the stone so to speak. But, the great thing about Jigga to Def Jam is that the revenue he generates for their company goes into Def Jam developing NEW STARS!

Stars: A Star is what every label is looking for. This product has a very high market growth rate as well as an extremely high market share. They bring just as much if not more revenue in as the above mentioned cash cow. But, their careers are on the upswing. Ne-Yo and Kanye West are just a few of Def Jam’s STARS! These products are widely popular and marketable. Ne-Yo is a rising star R&B singer and writer who with two albums released is heading the new wave of male R&B singers. Kanye West is one of the top rappers in the Industry today but what makes him special is that he doubles as a star producer as well. That combination alone doubles his market share and market growth. Ne-Yo needs one or two more widely successful albums to become a cash cow. Kanye is closer to a cash cow, with all the demand he creates. For Kanye to continue the upswing on his market growth rate he needs more wide spread collaborations and DIFFERENT albums of fans will taper off and come to expect the same thing from him.

Question Marks: When a label has both CASH COWS and STARS then and only then should they begin investing in QUESTION MARKS! Question Marks have a very low market share but they have a very high growth rate simply because of their POTENTIAL!!! A record label wants to turn their question marks into STARS! This is where the majority or your artists fall into. MOST OF YOUR ONE HIT WONDERS ARE QUESTION MARKS!!!!!! However, there are some exceptions. Keeping Def Jam as an example I’m going to give you two examples of Question Marks one where it works and the other where it fails. The Dream, a long time songwriter for the label who penned “Bed” for J-Holiday used his connection with L.A. Reid to get his deal with Def Jam. Def Jam then seeing his potential as a hit songwriter for their artists and analyzing his swagger as an artist decides to promote and market him. He pens his single Shorty is a Ten and Def Jam supports it. They begin to spend marketing $$$ promoting him and his single. People begin to love his single, and ask who this guy is?! His growth rate is HIGH, people are curious and then his second single drops, “I Love your Girl.” Now, Def Jam is looking at ANOTHER star in the R&B world. Def Jam has another question mark by the name of Playaz Circle, a rap duo comprised of Titty Boi and Dolla Boy. They are signed to Ludacris’ label Disturbing the Peace which is a Def Jam subsidiary. PC had a slamming single called “Duffle Bag Boy” featuring Lil Wayne. It was a chart topper all summer and they had a great buzz heading into their album. When their album dropped it flopped. And, now Def Jam is losing interest. Why? because they got outshined by their feature who was ONLY ON THE HOOK!!!! They were not ready for the popularity that came with a hit single. Playaz Circle and Def Jam fumbled the ball. But, because of the success of The Dream, Playaz Circle will probably never see the limelight again. THE GOAL OF EVERY NEW ARTIST IS TO GO FROM QUESTION MARK TO STAR AND AVOID BEING A DOG!

Dog: To be nice, dogs are the bottom of the barrel when it comes to this model. These are your artists who just aren’t relevant anymore or who have lost their way. Record labels usually drop or shelve these artists. They used to shelve them to continue to earn their royalties from past recordings but now with the decline of record sales and increasing DECREASE of American attention span they just drop artists now. Def Jam’s dog rite now is LL COOL J! LL has panned out tremendously. He’s no longer relevant. Both his market share and market growth are near zero. His only customers are middle aged women! Give it up LL. But, he’s a rising star at acting. To that I say, grace the big screen and release the tight grip on the mic! Labels don’t want to invest in anything that’s not making them money. So they stay away from until otherwise. Most dogs never make it back to the Star or Cash Cow status. However, there are exceptions to every rule. Ja Rule a former Def Jam artist went from star to dog by way of him losing a vicious battle with Interscope CASH COW 50 Cent. Rule has sense resurfaced with Universal and now has an album on the way. Most dogs have to have a change of scenery for them to have a fair shot. Ja Rule is a prime example with that. Another example of a dog having a second chance is Atlantic Records’ BG. After leaving his label during the height of their market dominance BG went independent and went from Cash Cow to Dog. But, through his independent releases he proved that he still had some marketability in him and then Atlantic came and signed him. I would put BG in the Question Mark category.

The moral of the story is to understand where you fit in on this matrix and proceed accordingly. The more you know about the industry and how it works, the less of a risk you are because of the better decisions that you can make. ALL NEW ARTISTS ARE QUESTION MARKS! Therefore, it is now your responsibility to go from Question Mark to STAR!

 

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