Back in the '90s, major record labels invested millions in top artists by forming joint-venture imprints like Madonna's Warner Bros.-backed Maverick Records. But as CD sales began to plummet in 2000, so did the surplus funds used to launch artist-run ''vanity'' labels. Nonetheless, last month three stars announced plans to hone their boardroom skills, with Toby Keith forming Show Dog, Usher trumpeting Us Records, and OutKast's Big Boi touting future Purple Ribbon releases.
But don't exhale just yet. The industry slump isn't over; music execs have just discovered a cheaper way to soothe fragile pop star egos. Similar to movie back-end deals, these artist/moguls don't see megabucks until they produce hits. ''In the '90s, artists got $6 million or $9 million [advances] with their joint ventures,'' says Jason Geter, CEO of Atlanta rapper T.I.'s Grand Hustle/Atlantic Records imprint. ''Today, it's about the back end, and [artists] proving that they're not gonna take [the label's] money to buy cars.''
Keith, for one, is up for the challenge. ''What I'm hearing [from new artists] is, 'You know what it takes to get there, show me how,''' he says. ''They all wanna know the secret recipe to bake this cake.'' That includes rapper Killer Mike, whose Ghetto Extraordinary CD is due next year on Big Boi's Purple Ribbon. His 2003 debut, Monster, floundered on OutKast's Aquemini/Columbia imprint, in part, he says, because ''they weren't hopping from club to club [to promote] me because they had their own record jumping off.'' But for Boi to profit this time, Mike says, ''I gotta sell records, and for me to do that, OutKast has to share the spotlight.''
And therein lies the greatest hurdle: egos. ''Most artists won't sign artists who can be bigger than them,'' says Sony exec Kawan Prather. ''Madonna did it right when she hired Guy Oseary to run Maverick. He was an A&R person who came from making records, and he signed Alanis Morrisette. I'm not saying Madonna wouldn't [have], but the likelihood would probably be slim.''