Being $53 million in debt is a big deal, but did Kanye just get a nasty credit card bill and freak out?
This article originally appeared on VICE UK
His extravagance makes Liberace look like Frank Gallagher, but over the weekend, Kanye West tweeted that he was $53 million dollars in personal debt and asked tech billionaires such as Larry Page and Mark Zuckerberg to help fund his future projects rather than "open up one school in Africa like you really helped the country."
You can imagine Kanye has a few big bills to pay at the moment. Last week's huge Madison Square Garden fashion show, beamed live to cinemas around the world, was just the latest in a string of very expensive projects. When he proposed to Kim Kardashian, he rented out the entire AT&T baseball stadium in San Francisco and got the Chicago Symphony Orchestra to perform. His last big US tour, for Yeezus, included a 60-foot-wide circular LED screen, a custom soundsystem, and a 50-foot-high mountain that could change into a volcano.
Just days before tweeting about his debt, Kanye had offered to give Puma their "measly" million dollars back after they signed Kylie Jenner as a model, something Adidas-sponsored Kanye saw as "dividing the family."
Perhaps because he regularly compares himself to an omnipotent deity, people don't tend to think too much about how Kanye pays for all this. Still, it seems confusing that one of the biggest music artists in the world would have fallen so far into the red. We spoke to music industry expert Chris Cooke, MD and Business Editor of music-industry website Complete Music Update, to find out if someone as big as Kanye could be broke.
VICE: Hi Chris. So $53 million seems like an awful lot of debt for something other than a nation state.
Chris Cooke: It does. I mean we can't know if that's true, but I tend to assume that around two thirds of what Kanye says is bollocks. He has his fair share of businesses, both in music and fashion, and so he could be running up debts there. But that does seem like a lot of money still, and Twitter is a very odd place to admit it if it were true.
I do worry about his expenditure though. How much does it cost to rent out all of Madison Square Garden for a fashion show and beam it around the world? How much does it cost to create a bespoke soundsystem for your tour, especially if you don't play that many dates and keep postponing shows?
Yep, absolutely. For example, as a record company, you make most of your money on the first two albums an artist puts out, in part because when you're a big artist putting out records, it becomes incredibly expensive. You want the best studios, the best producers, and the most outlandish tours, and that all effects the profitability of the record. One Direction live shows, for example, are basically just them jumping up and down. That's an incredibly profitable way to tour. Whereas Kanye sees himself as more than just a performer—he has artistic vision and so he puts on a big show—but that will affect the profitability of touring. If you're not willing to just tour it for 18 months solidly so it becomes more cost-efficient over time, then you're not going to make big profits.
So how do you think Kanye makes most of his money?
If you're a big star then your single biggest revenue stream is often trademark licensing, which is basically licensing out your name and your brand to other companies in sponsorship deals and products. That will always outperform record sales, partly because you keep most of the money from those deals rather than the record label taking a share. Kanye remains a very bankable artist. He has decent sales. He's streaming this album for seven days exclusively through Tidal, and presumably he's being paid quite well for that.
What do you think is going on here then, if Kanye's not as in debt as he say he is? Did he just get a shocker of a credit card bill and freak out?
Well the callout to the tech world is interesting. In the hip-hop world, it seems as if the people he aspires to be are more like Dre and Jay Z, who arguably have achieved more as entrepreneurs as they have as artists, certainly in terms of their wealth. It's interesting his rant is aimed not at the entertainment business or his record label but at the tech industry. It's kind of saying: You bought Dre's business, why won't you go into business with me?
Right, and maybe as a designer for Adidas, you're not making the same kind of money that you would be if you owned a big stake in Vitamin Water like 50 Cent, or sold your headphone company to Apple like Dre?
Dre made a lot of money with Beats but 50 Cent was pleading poverty last year, albeit as part of a messy lawsuit, so these business aren't always successful.
Do you think that Kim Kardashian, who does countless brand partnerships, as well as perfumes and apps, is making more money than her husband is from music?
Oh yeah, if you're getting to the level where you're doing those kinds of deals then you're making more money from that than anything else. For Beyonce, perfume is one of her biggest revenue streams. That's why One Direction and Justin Bieber have perfume deals, because they're incredibly lucrative. It's almost all profit.
So should Mark Zuckerberg return Kanye's call?
I'm not sure about that, but he could certainly afford it. And I'm sure if he does, Kanye will be the first to tell us about it.
In 17 numbered tweets, no doubt. Thanks Mark.