own the content of the things you create, whether it’s music, movies,
or merchandising.
We’d heard the horror stories about what can happen when an artist doesn’t read before signing on the dotted line and someone
else ends up owning all your publishing and gets all the royalty checks. We didn’t want to do all the up-front work and sign
our lives away to lawyers and accountants who were making all the real money behind the scenes. We wanted to build our own
business and create an independent record label with all these amazing artists we’d found. The numbers didn’t lie. You have
to pay a small fee to get the record printed up and sent to the stores, but after expenses you can make as much as $10 a record.
With minimal success, you can reap lots of benefits.
But we didn’t factor in the tremendous overhead and start-up costs. Getting your own business off the ground can be like throwing
money into a vast pit. It never ends. And Shakim and I didn’t help ourselves. We had way too many employees on our payroll,
more than ten, and very few of them were generating enough income to justify their salaries. We were both guilty of being
too soft on our employees. We had friends and family members working for us—people we liked and felt deserved a shot—and we
wanted tobe loyal to them. It was hard for us to separate our emotions from our business.
We threw hundreds of thousands of dollars into our new label. We spent $60,000 to host the Hot 97 Summer Jam and generate
some buzz about our artists. We spent thousands more on radio promotion, tours, merchandising, vans, you name it. Instead
of buying studio time, which was getting expensive, we decided to buy our own forty-eight-track recording studio. We took
over Whitney Houston’s old space and called it Millennium Recordings. We redid the whole place. In addition to the main recording
studio, it had nice lounges, two pre-production rooms, and a rehearsal space to prepare for touring.
Good Money After Bad
I’m not saying it was a bad investment, but now we were paying for our offices, the studio, way too many employees (including
their salaries and benefits), and artists’ expenses. And boy, let me tell you, artists can be like thankless children. They
are expensive to keep happy, and they have no appreciation or idea of what is being done for them, all before they’ve even
dropped an album. As much as we believed in their talents, they had yet to generate a cent for our label.
Meanwhile, my personal expenses were running high. I had my mom and dad and everyone else I’m looking out for. It was bad
for Shakim, too. He put his own skin in the game, even though he had a wife and two kids to support. We were working on finding
investors to raise some cash and help us cover our costs until we could generate revenue, but everyone who took to our idea
somehow never got around to paying us the money for it. Still, Shakim and I continued to cover the costs, because we believed
we’d raise the cash eventually.
Sign Everything
Somehow in the confusion and our zealousness to reach our goal, we weren’t thinking clearly and we had overextended ourselves
almost to the point of bankruptcy. They were honest mistakes. No one was doing anything wrong. But in a short space of time,
my bookkeeper had signed some $500,000 worth of checks out of my account, and I wasn’t keeping tabs on any of this.
Then, bam! That phone call. By the time I scraped myself up off the floor, phone still in hand, I knew I had some serious
housecleaning to do. I called my mother, and she calmed me down, like she alwaysdoes. Then I called my accountant, who helped
me come up with a plan to pay back the IRS in a way that could be maintained. What happened wasn’t his fault, either, because
lots of bills weren’t going directly to his office. But we had to work out a new system.
Around that time, I remember watching an episode of
Oprah
, where
or merchandising.
We’d heard the horror stories about what can happen when an artist doesn’t read before signing on the dotted line and someone
else ends up owning all your publishing and gets all the royalty checks. We didn’t want to do all the up-front work and sign
our lives away to lawyers and accountants who were making all the real money behind the scenes. We wanted to build our own
business and create an independent record label with all these amazing artists we’d found. The numbers didn’t lie. You have
to pay a small fee to get the record printed up and sent to the stores, but after expenses you can make as much as $10 a record.
With minimal success, you can reap lots of benefits.
But we didn’t factor in the tremendous overhead and start-up costs. Getting your own business off the ground can be like throwing
money into a vast pit. It never ends. And Shakim and I didn’t help ourselves. We had way too many employees on our payroll,
more than ten, and very few of them were generating enough income to justify their salaries. We were both guilty of being
too soft on our employees. We had friends and family members working for us—people we liked and felt deserved a shot—and we
wanted tobe loyal to them. It was hard for us to separate our emotions from our business.
We threw hundreds of thousands of dollars into our new label. We spent $60,000 to host the Hot 97 Summer Jam and generate
some buzz about our artists. We spent thousands more on radio promotion, tours, merchandising, vans, you name it. Instead
of buying studio time, which was getting expensive, we decided to buy our own forty-eight-track recording studio. We took
over Whitney Houston’s old space and called it Millennium Recordings. We redid the whole place. In addition to the main recording
studio, it had nice lounges, two pre-production rooms, and a rehearsal space to prepare for touring.
Good Money After Bad
I’m not saying it was a bad investment, but now we were paying for our offices, the studio, way too many employees (including
their salaries and benefits), and artists’ expenses. And boy, let me tell you, artists can be like thankless children. They
are expensive to keep happy, and they have no appreciation or idea of what is being done for them, all before they’ve even
dropped an album. As much as we believed in their talents, they had yet to generate a cent for our label.
Meanwhile, my personal expenses were running high. I had my mom and dad and everyone else I’m looking out for. It was bad
for Shakim, too. He put his own skin in the game, even though he had a wife and two kids to support. We were working on finding
investors to raise some cash and help us cover our costs until we could generate revenue, but everyone who took to our idea
somehow never got around to paying us the money for it. Still, Shakim and I continued to cover the costs, because we believed
we’d raise the cash eventually.
Sign Everything
Somehow in the confusion and our zealousness to reach our goal, we weren’t thinking clearly and we had overextended ourselves
almost to the point of bankruptcy. They were honest mistakes. No one was doing anything wrong. But in a short space of time,
my bookkeeper had signed some $500,000 worth of checks out of my account, and I wasn’t keeping tabs on any of this.
Then, bam! That phone call. By the time I scraped myself up off the floor, phone still in hand, I knew I had some serious
housecleaning to do. I called my mother, and she calmed me down, like she alwaysdoes. Then I called my accountant, who helped
me come up with a plan to pay back the IRS in a way that could be maintained. What happened wasn’t his fault, either, because
lots of bills weren’t going directly to his office. But we had to work out a new system.
Around that time, I remember watching an episode of
Oprah
, where
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