http://www.forbes.com/free_forbes/2007/0507/124.html

The above article by Lyor Cohen, American Chairman and CEO of Recorded Music for Warner Music Group, details the elements necessary to be able to make rap superstars. Cohen didn’t always work for Warner Music Group, he got his start as a club promoter, eventually DMC’s road manager, manager of Rush Management, and eventually Def Jam Records. Through his experience he notes that “You need two networks to sell music: one to find the artists, the other to market them. If one of the networks doesn’t exist, you must invent it. In the case of rap music, a quarter of a century ago neither existed. So we built our own networks to discover artists and promote them.”

This presents an interesting scenario from a networks perspective, because what you have happening is one node who knows people in the marketing network and builds an artist finding network. As this node stands as a bridge between these networks, he can control the flow of information between them and exercises a lot of influence over the decisions of both networks. By strategically positioning himself in a gate-keeping role, Cohen set himself in a position that eventually led to his upward advancement in the music industry.

Cohen then transitions his discussion of hip-hop networks into the current state of modern hip-hop networks. He talks about how now that hip-hop is mainstream that finding artists is usually done through a network of lawyers, artist managers and other insiders. “They have the access to power, and they shop their artists constantly, setting up showcases and starting bidding wars between the music companies to sign their artists.” What is happening here is that there are middlemen standing as a local bridge and they are taking advantage of the very restricted network to make a lot of money by driving down earnings of artists and driving-up prices for record companies. With the artist discovery network becoming price saturated (price bidding wars driving profits to zero), there have been new independent networks popping up that perform the same function as the artist discovery networks. However, unlike the old networks these new networks create their own network of fans and supporters from scratch (so they haven’t had all of the profits sucked out by having many middlemen in a layered network) and if larger companies find these networks they stand to make a substantial profit by singing these record labels. Another advantage to using the new smaller networks over the larger established networks is that the smaller networks build a loyal fan-base, which payoff for more profits in the long run. “The A&R guys feel compelled to sign bands that resemble junk food. Their music goes down easily but doesn’t offer any lasting satisfaction. These bands (we all know the ones I’m talking about) may sell a lot in the short run, but they burn out quickly. That’s costly, because over the long run we lose the opportunity to cultivate the best audience a band can ever have: a loyal base of discerning fans who stick with an artist for decades and sell others on the music, too.”