Rapper-producer Jonathan "Lil Jon" Smith is best known for turning everyday words like "yeah" and "okay" into bloodcurdling sonic extravaganzas. He's crafted hits for the likes of Usher and Ludacris; his first solo effort, Crunk Rock, will hit stores on June 8. But given the state of the recording industry, he's focusing more on a concept that doesn't lend itself to his trademark exhortations: diversification.
Lil Jon's non-music revenue streams include a line of Oakley sunglasses, an energy drink and a wine label. On a recent visit to the DailyFinance studios, Jon estimated that these ventures account for nearly a third of his annual earnings, which total an estimated $11 million, by Forbes' last count.
"The products start to really take off when I have an album out because I'm on TV more," he says. "Definitely [the non-music revenues] will come up a little more in this album cycle. Who knows, maybe it will get to 50-50."
There's never been a better time to diversify. Last year, album sales fell 12.7% across the music industry and 20.9% in the rap category, according to in Nielsen SoundScan. This decade, industry-wide album sales have plummeted from 800 million in 2000 to 400 million in 2009.
Building a Beverage Empire
Lil Jon's most successful business venture is his Crunk!!! Energy Drink, which allowed him to tap into a familiar lifestyle niche. "Crunk is a word we've been using in the South forever-it basically means energy," he explains. "Crunk is past tense for crank. Once you crank it, it's crunk ... it's off the hook, it's crazy."
Jon launched the beverage in 2002 with the help of late liquor baron Sidney Frank, the father of Grey Goose vodka. The two connected while Grey Goose was sponsoring concerts for Jon's group, Lil Jon & the Eastside Boyz. After Frank passed away in 2006, Kimberley Clark veteran Tom Mahlke came in to run Crunk, and these days the energy drink pulls in a reported $15 million per year. Jon won't reveal how much of that sum comes his way, but given the structure of comparable celebrity ventures, his annual take may well approach seven figures.
Jon's next venture took him to a different side of the beverage business. In 2008, he started a wine label, Little Jonathan. The idea stemmed from a small run of private label wine that he'd commissioned for a party earlier that year. When he saw how easy it was to enter the wine business on a permanent basis, he brought in Alison Crowe -- a California winemaker who has worked at Chalone Vineyard, Curtis Winery, Bonny Doon Vineyards and others -- to create a merlot, a cabernet and a chardonnay. Bottles can be had for $15.99 online; sales figures aren't available. But the chardonnay won a silver medal at the 2009 Los Angeles Wine and Spirits Competition.
"People tried to act like it was Boone's Farm or something," Jon says. "But when people tasted it, they saw that this was real and not anything ghetto at all."
Planning for Retirement: Lil Jon Diversifies
Jon's other ventures include a line of Oakley sunglasses ($100 per pair) and an Apple (AAPL) iPhone application ($0.99 per download) that features recordings of all his most popular sayings. He won't disclose how much he earns from either, but he admits they're part of his retirement plan.
"I want to have something to fall back on, so that's a reason you create these different business ventures," he explains. "I don't want to rap forever."
For now, he'll use music to raise the profile of his other products, even though Crunk Rock's singles are unlikely to enjoy the success of 2004's smash hit, Yeah. That song spent 12 weeks atop Billboard's Hot 100 list and ranks 11th on Billboard's all-time list, thanks in part to Lil Jon's unique ululations.
"If I had $20 for every time someone asked me to go 'Yeah!' or 'What!' or 'Okay!" he says, "I wouldn't need to [win] the Lotto."
The Crunk Life: Rapper Lil Jon on How He's Creating a Diversified Portfolio