Rapper’s death hasn’t hurt MCA’s support of label

Is MCA Inc. having second thoughts about its $200-million investment in Interscope Records as a result of the drive-by shooting death of gangsta rap star Tupac Shakur? Not one tiny bit.

Representatives for MCA declined to comment, but high-level sources at the Seagram-owned entertainment combine said this week that they view the slaying of the unarmed rapper as a tragedy that is unrelated to the stark tales of violence often depicted in Shakur’s controversial songs. Shakur’s music is released by Death Row Records, which has a distribution deal with Interscope.

“Blaming rap music for Tupac’s murder is like blaming alternative rock music for Kurt Cobain’s suicide. It’s ridiculous,” said one MCA source. “What we’re talking about here is an unprovoked confrontation during which an acclaimed artist lost his life. This tragic death in no way reflects negatively on MCA’s opinion of Interscope.”

To the contrary, MCA is ecstatic these days about Interscope, whose revenue for fiscal 1996 is projected at more than $200 million and which is likely to outperform most other MCA-affiliated record labels, rivaling rock giant Geffen Records.

Although Interscope has often been branded in the media as a “gangsta rap” company because of its association with Death Row stars such as Shakur, Interscope’s primary source of revenue is generated from hits by such rock and R&B acts as Bush, No Doubt, the Wallflowers and BLACKstreet. Interscope has no ownership interest in Death Row, but charges the firm a fee for helping to market and distribute its recordings. However, Interscope has advanced the fledgling company millions of dollars since 1992, and that money is being repaid from Death Row earnings.

MCA also has no stake in Death Row and will profit only from the sale of Death Row recordings it decides to manufacture and distribute--which, to date, it has not done.

Recent reports that Death Row, which is owned solely by Compton entrepreneur Suge Knight, is under investigation by the FBI do not appear to have ruffled any feathers at MCA, either.

The FBI has declined to comment on the probe, but law enforcement sources say Death Row is being investigated for alleged links to street gangs, drug trafficking and money laundering. So far, no one at MCA, Interscope or Death Row has been contacted by the government regarding the investigation, sources said.

Asked what course of action the corporation would take should the government uncover proof of criminal activity, one MCA source replied, “We would not sit by idly.”

In the meantime, however, MCA has committed to manufacture and distribute Death Row’s next release, “G-Funk Classics, Volume I,” an R&B album by a relatively unknown singer named Nate Dogg. Upcoming projects by Shakur and Snoop Doggy Dogg have not been completed, and it remains unclear whether MCA will be affiliated with those recordings.

Under the terms of its contract with Interscope, MCA has the right to refuse to manufacture and distribute any recording it deems objectionable.

Death Row attracted national attention last year after violent and sexually explicit lyrics on music by such Death Row artists as Tha Dogg Pound set off a political uproar that caused Time Warner to sever its ties to Interscope. Before MCA’s investment, Interscope cut deals with PolyGram and EMI to distribute recordings by such acts as Shakur, Snoop Doggy Dogg, Dr. Dre and Tha Dogg Pound.

At this stage, Death Row currently represents between 15% and 20% of Interscope’s total sales, sources say.

“Death Row is a very tiny record label with a very big reputation,” said one rival executive. “But in the scheme of things, the profit that Death Row could generate for a company the size of MCA is infinitesimally minuscule.”

Death Row has drawn headlines not only because it was the first rap label to consistently dominate the pop charts, but also because of a flurry of violent incidents associated with its stars and management. Despite its remarkable track record on the sales charts, the company has released only a handful of records since its inception in 1992.

Death Row cost millions of dollars to get off the ground--most of which was advanced by Interscope. Like other fledgling start-ups such as LaFace and Trauma, Death Row has taken a number of cash advances to expand its operation and underwrite personal expenditures for its artists and management--funding that contractually must eventually be repaid.

As a result, analysts doubt whether the label, even though it is one of the strongest new firms in the business, is yet turning a profit. There are some who question whether the company can blossom in the future following the loss of its biggest-selling star, Shakur, and its top producer and co-founder, Dr. Dre, who quit in March to launch his own company (which is also distributed by Interscope).

Analysts also question the catalog potential of the gangsta rap musical genre, which is viewed by many in the industry as a fad, despite its popularity and acclaim by pop music critics. For established labels, catalog sales provide a steady stream of revenue that moderates the hit-driven current roster.

Whether Interscope has made any money on the Death Row deal yet or not, the company surely has benefited greatly by its affiliation with the cutting-edge rappers on Death Row’s roster.

By refusing to cave into Time Warner’s demand to yield creative control over Death Row’s music, Interscope bolstered its image as a free-speech defender in the artistic community. It also negotiated a more profitable deal with MCA, which is banking on Interscope to become a full-service record company that handles pop, R&B and folk music as well as cutting-edge rock and rap.

Even if MCA decides to release controversial recordings by Interscope-affiliated Death Row in the future, it certainly won’t have a monopoly on the genre.

Although rap adversaries long ago vowed to hound any mainstream corporation that traffics in gangsta music, all five of MCA’s major competitors--including Time Warner--continue to profit from controversial rap releases by such acts as Junior M.A.F.I.A., Wu-Tang Clan and Bone Thugs-N-Harmony.