50 CENT SPEAKS ON HOW HEADPHONE BEEF WITH BEATS JIMMY IOVINE AFFECTED HIS MUSIC CAREER

50 CENT

Beats Electronics—the headphone company co-founded by rapper and hip-hop producer Dr. Dre and Interscope Geffen A&M Records chairman Jimmy Iovine, which was bought by Apple for $3 billion last year—had been up and running for three years before 50 Cent, whose real name is Curtis Jackson, launched his premium headphone company. And when he did so, he wasn't prepared for the side effects it would have on his music career.


Celebrity clothing lines, one of the first areas in which musicians branched out into retail, came with a sense of friendly competition. Jackson said he made the mistake of thinking it might be the same with headphones, but he learned competition is much more aggressive in the headphone space. 
 
"When Russell Simmons went into Phat Farm clothing, you saw Rocawear from Jay-Z, you saw Sean John from Puffy, you saw G-Unit from myself, and then numerous other companies," he said. "It showed us that you could successfully utilize the influence generated from music to market things other than music."
 
Several top musicians are cashing in on their celebrity in the premium headphone market. Dre and Iovine were the first to make headphones a cultural movement, releasing versions for artists like Lady Gaga, P Diddy and Justin Bieber.

Jackson's decision to launch SMS came out of a sense of frustration with Beats, but that frustration only grew after the launch.

It wasn't just a feeling that his records were not promoted at the same level as other artists that had deals with Beats once he launched SMS. He was unable to wear SMS headphones in music videos for anything he released on Interscope.

Even an SMS hat he wore in one saw the logo blurred out.

While he said that the decision to launch SMS wasn't a mistake, he added that it's something he could have handled better.

"I would have had communications with Jimmy [Iovine]," Jackson said. "The owner of Beats owned the record company I was on, and I had to get off the record company in order to make music again. He was looking at me as a direct competitor." 
 
Last year, in an amicable divorce with Iovine's label, he took his G-Unit Records independent. 
 
"Whenever a company makes a deal, there's a different house on the other side of the street, ya know? So I went over to that house," Jackson said. Or put another way: "Beats is Nike. We're Adidas."

One of the keys to its continued success, Jackson said, is that SMS Audio doesn't pay celebrities to promote its brands. It convinces them to pay the company by offering them the chance at small ownership stakes, which makes them more invested in the company's success.

"When you have a licensing agreement, you just do what you agreed to," Jackson said. "You may spend an hour or so at a booth. For me, I'll spend three to four days at CES [the Consumer Electronics Show] because it's my company and I'm invested in it. ... I don't mind partners. When I started [SMS], I had it all, but you can [add] partners who are strong enough to go to the end game."
Recruiting the right celebrities is also a core mission for SMS. "When you say Sony, I see an image of Asian people in suits," Jackson said. "When you pick a person to connect to a company and that person has a cool factor around them, people will look at it and appreciate it."

Among those endorsing partners is Knicks power forward Carmelo Anthony.

Coolness isn't limited to individuals, either. SMS and Lucasfilm launched a partnership last year that strongly resonated with consumers. The first line of headphones, based on the Star Wars films and selling at $200 per pair, shattered everyone's expectations.

"Star Wars was an attractive and important license because it is attractive to the youth market," NPD's Arnold said. 

Jackson said what the company projected for first-quarter sales was reached in two days, though the company declined to share its projections or sales. SMS Audio has never released sales or earnings numbers. Among the only publicly available sales data for SMS is from 2012, when Jackson went on QVC to sell the headphones and sold more than $175,000 worth in nine minutes. 
 
SMS Audio headphones retail for $125–$400 per pair. A second line is due in the second quarter of this year.