falling on def ears

Russell Simmons is a blur.

The man lives in a state of perpetual motion: One minute he's at the MTV Video Music Awards, rubbing shoulders with a new generation of pop music elite weaned on the hip-hop of his pioneering Def Jam label. The next minute he's at Fashion Week, mixing with the beautiful people and promoting Baby Phat, the women's wear line he launched with his wife, supermodel Kimora Lee Simmons. The minute after that, he's speaking to college students in support of the Hip-hop Summit Action Network, the non-partisan organization he co-founded with Benjamin Chavis, former head of the NAACP, to promote voter registration among young adults.

Wherever Simmons goes, whatever he does, he's talking. Sometimes it's with his wife, other times it's with his close friend and business partner Kevin Liles, and sometimes it's with his mentor, Donald Trump. (Sometimes it may be with all three at once.) Moving and talking, moving and talking — in other words, Russell Simmons is the quintessential wireless user.

“I live wireless,” said Simmons, the CEO of Rush Communications, the $330 million company that controls his myriad entrepreneurial pursuits, in an interview with Wireless Review. “Right now I've got a phone in my ear, a phone in my lap and a BlackBerry in my left hand. That's just what I do.”

Actually, what Simmons does is stay connected — to his family, to his friends, to his associates, to a mind-boggling array of powerbrokers across all walks of life and, most impressively, to the culture at large. Simmons has remained a tastemaker for two decades, a merchant of cool virtually synonymous with the hip-hop lifestyle that Def Jam mainstreamed and popularized. Music, film and television, fashion, politics, even financial services — Simmons has done many things, almost all of them very well. And now he's making the leap from wireless maven to wireless magnate.

This month, Simmons and Liles, the president and CEO of Def Jam Enterprises, will launch Def Jam Mobile, a wireless content platform created in partnership with AGMobile, the wireless services division of greeting card giant American Greetings. Targeting a generation of wireless subscribers for whom hip-hop is the unequivocal soundtrack of their lives — teens and 20-somethings raised in the urban sprawl of New York and Chicago, sure, but also products of the farms of Nebraska, the swamplands of the Mississippi Delta and the manicured lawns of Beverly Hills — Def Jam Mobile will deliver not only traditional content like ringtones and SMS news alerts, but also Simmons' Laws of Success and even daily affirmations from his kid brother Joseph, better known as Reverend Run, one half of the legendary rap duo Run-DMC.

“There's all kinds of shit,” Simmons said. “We can provide a lot of content and give it a label — brand it — so people know where to go to get what they need.”

What separates Def Jam from other content developers entering the wireless arena is the sheer strength and longevity of that brand, not to mention the cumulative buying power of the culture it reflects. When Simmons and aspiring producer Rick Rubin founded Def Jam Records in 1984, few recognized hip-hop's staying power, its potential to cross cultural divides or the extent to which it would redefine what a nation of young Americans says, wears and purchases. Two decades later, the music represents a $10 billion annual industry, with an audience that is 80% white.

That audience as a whole is the same demographic the wireless industry has doggedly pursued since its inception: young, hip consumers flush with disposable income, a hyperspeed culture quick to seize on how and how much mobile communications can enhance their lives. Def Jam Mobile promises carriers a point of entry into this world, where the traditional wireless brands signify little or nothing beyond their core business. But Def Jam…well, that's different. That's Public Enemy and LL Cool J and Ludacris and Shyne. That's LIFE.

“I'm hoping people understand that for 20 years, we've not only been making music, but we've been building a lifestyle,” Liles said. “We never felt we were a record company. We always felt we were a lifestyle company. And if you wanna be the cool kid, then you wanna have access to Def Jam Mobile services and whatever we're providing.”

The first building block in Simmons' lifestyle company was Def Jam Records. He discovered hip-hop during the mid-1970s while he was a sociology student at City College of New York. Soon he was promoting concerts and managing local artists, pushing to get their records played on radio. But his official entrée into the recording industry was co-producing Run-DMC, the first rap act to enjoy true crossover success on white pop radio. By 1985, when he and Rubin signed a production deal with CBS Records to the tune of a then-unprecedented $600,000, the Def Jam brand was virtually synonymous with the hip-hop genre. The label's superstar acts, like Public Enemy and the Beastie Boys, expanded rap into uncharted creative and commercial territory, exerting a chokehold on the global teen culture that the music maintains to this day.

“Def Jam is part of a movement,” Simmons said. “Hip-hop is the most powerful social, political and cultural force African-Americans have ever seen, and it's a great opportunity for them to change the world. Music is a small part of it.”

Music was always just part of it for Simmons himself. In 1985 he produced “Krush Groove,” a feature film loosely based on Def Jam's origins. Made for just $3 million, the movie earned about $20 million at the box office and established Simmons as a force in Hollywood. From there he moved into television, creating “Def Comedy Jam” and “Def Poetry Jam” for HBO, followed by excursions into fashion (Phat Farm and its sequel, Baby Phat), magazines (OneWorld) and financial services (Rush Cards, a prepaid Visa card for Americans with blemished or non-existent credit histories). Before Def Jam Mobile, he even dabbled in the wireless phone business, creating a signature handset in a partnership with Motorola.

“I'm very slow,” Simmons said. “By the time I get into things, it's when the thing's ready to pop off. I was late with rap — I worked with rap for years, and by the time I made a record, it was time to make a record. I've been watching this [wireless] market without paying attention. I'm always on the phone — you always see pictures of me with the phone. I've been using mobile phones since before anybody used 'em. And there came a point when I knew the content was really critical.”

Liles' story follows the same central themes: bootstrapping, ambition and vision. While a member of the group Numarx, the former engineering student co-wrote and recorded “Girl, You Know It's True,” a regional hit licensed by the Chrysalis label and later re-recorded by the infamous lip-syncing duo Milli Vanilli, for which it was a massive worldwide hit in 1989. Liles joined Def Jam in 1992 as an unpaid intern, and within four years he was the label's general manager and vice president of promotions. In 1998, he was promoted to president, and four years later he was named vice president of Island Def Jam Music, the label's parent company (Simmons sold his 40% stake to the Universal Music Group for $120 million in 1999).

Today, Liles is a part owner of the Def Jam brand and serves as president and CEO of Def Jam Enterprises, which includes Def Jam Interactive, Def Jam Gaming, Def Jam Electronics and now Def Jam Mobile — everything but Def Jam Records, more or less. He was particularly instrumental in the company's partnership with independent video game publisher Electronic Arts, a deal that in 2003 yielded the blockbuster “Def Jam Vendetta” and earlier this year resulted in the follow-up “Fight for New York.” Both games proved Def Jam could successfully translate the music and likenesses of its roster of artists into a digital medium. Wireless is a natural extension of the same approach.

“Everybody uses their cell phone — not just to call people but to instant message and for self-expression,” Liles said. “I hold hands with my wireless device more than I do with my girlfriend. I said, ‘I have to find out how I make that connection — how do I make this an extension of myself and bring the lifestyle we've brought to the music and the clothing to wireless?’”

For starters, Def Jam Mobile will focus on what the company does best: developing content inspired by its rich musical history.

“Everybody has ringtones, but we don't want to just go for the ringtones that everybody has,” Liles said. “We want to go into those favorite B-sides that are pumpin' at every club around the country. We want to make sure that we have an exclusive 16 bars of rhymes or unreleased beats.”

But despite the lucrative market for ringtones — week in and week out, the latest hip-hop smash unfailingly ranks as the industry's most-downloaded ringer — neither Simmons nor Liles can stress strongly enough that Def Jam Mobile is about far more than music. “It's our job not to make it just about one facet of a lifestyle but about everything,” Liles said. “If you break it up into percentages, I think music will play 20%. It's not just licensing for us. We plan on doing so many things that people aren't thinking about. When you think of Def Jam Mobile, you think of hip-hop. You don't think of one particular artist. We're going to continue to push that we're a lifestyle company, and you're going to receive a lifestyle service. It's not about color. It's all cultures.”

Def Jam is entering the wireless space in partnership with another brand better known for its efforts in other markets: AGMobile, the fledgling mobile applications and content division of American Greetings, the mammoth manufacturer of social-expression products such as greeting cards, gift wrap, candles and calendars. Launched in early 2004, AGMobile is itself an extension of the company's new media arm AGInteractive, which operates a network of Web sites — AmericanGreetings.com, BlueMountain.com and Beatgreets.com among them — that together offer in excess of 20,000 greetings and other types of what the company calls “expressive content.”

According to Bryan Biniak, AG Mobile's senior vice president and general manager, American Greetings chose to build its wireless business by targeting specific consumer segments, analyzing their wireless consumption habits and determining the specific brands best-suited to reach each demographic. What AGMobile found is information mirrored in the April 2004 Forrester Research report “Selling Telecom to Ethnic Minorities,” which states that among U.S. wireless subscribers, minorities are far more inclined to adopt and pay for new services such as photo messaging and ringtones; that while only 7% of white subscribers use wireless data services, African-Americans come in at 20% and Hispanics at 12%; that African-Americans and Hispanics are twice as likely to express enthusiasm for feature-rich handsets than whites; and that Hispanics spend an average of $54.65 on wireless service per month, more than any other ethnic group.

“Ask carriers who their number one target markets are, and they'll tell you it's consumer markets who over-index, but they all under-index in terms of those particular demographics,” Biniak said. “We asked ourselves, ‘Do we want to own the ringtone vertical, or do we want to own a particular market segment and then super-serve that segment to be the data provider for the Hispanic market and the urban market?’ So the strategy was developed based on historical data and market reality, and what we did then is identify the number one brands in those verticals.”

This past March, a few months before signing on with Def Jam, AGMobile announced a deal with broadcasting giant Univision to create Spanish-language content, services and applications. Among the products are customized telegreetings, personalized graphics, ringtones and Spanish-language information and entertainment options — all of them marketed via Univision.com, the most visited Spanish-language Web site in the U.S.

“There are tons of ringtone providers, tons of wallpaper providers, tons of news and information — content like crazy. But we bring powerful brands that end users can recognize,” said Nick Montes, AGMobile's vice president of marketing and the former director of multicultural marketing and international services at Verizon Wireless. “From a carrier perspective, putting brands like Univision or Def Jam on your deck will definitely increase your revenue and downloads because consumers can relate to those brands. They're familiar with what kind of content these brands have delivered in the past and know the content they're gonna deliver by mobile is just as good.”

But what most sets AGMobile apart from other content developers and aggregators is its retail presence. American Greetings has agreements with more than 115,000 different retail outlets in the U.S., including exclusive deals with Target and K-Mart as well as partnerships with Wal-Mart, Rite-Aid, CVS and others.

“Carriers don't have mature or established channels for third parties to market their products to subscribers,” Biniak said. “When I put my product up with a BREW carrier, there's no established channel to market. I have to get very aggressive and creative to reach subscribers. Also, people are buying from their handsets, not the Web, so that makes it very challenging. But we're able to leverage our channels to points of activation at Kmart or Wal-Mart. We can tie [mobile content] in with a new DVD being launched, or a new CD, or some other type of product relevant to the mobile offering. Or we can create a program with the retailer for point-of-activation programs.”

According to Liles, the depth and breadth of AGMobile's retail penetration was a huge selling point for Def Jam. “We were very interested in their business model,” Liles said. “One of the things a lot of companies don't have is the amount of square footage inside a Wal-Mart or inside a Target or individual stores around the country. I looked at that as a plus for us. If I went with a Verizon or an MCI, I would be limited to just that carrier, where if I partnered with a non-carrier, I could go with everybody. I wanted to have access and work with all the different carriers.”

Likewise, carriers want to work with different content providers, Biniak said. “Carriers focused on getting [multimedia] services launched. It wasn't brand-centric, and it wasn't demographic-centric. But over time, carriers are starting to realize that isn't the best approach. Everyone ends up with the same thing. There's a big challenge for carriers to be experts in entertaining, programming and retailing. They need to reach out to partners who understand these things and have a record in being successful at them. They have to have unique stuff that distinguishes them from everyone else.”

But at least for now, carriers maintain a virtual monopoly on marketing and selling mobile content, no matter how limited or homogeneous that content might be.

“Russell has a great brand — it's in music, television, comedy and fashion,” said Mark Levy, vice president of content for wireless content provider and publisher InfoSpace Mobile. “But at the moment, it's so difficult to explain to somebody how they find content on a phone or where they're going to get it. Even if it's a Web site, you still have to drive people to that site. For the time being, carriers have a great lock on revenue: They're the access, the button right on that device. When there's 20 different ways, it's very confusing. The evolution of this industry will be toward companies like Def Jam that want to use their brands to drive sales, but I don't know if the market's ready for that.”

However, certain segments of the consumer population seem more ready than others. Youth-focused Virgin Mobile USA, a mobile virtual network operator, has enjoyed a successful relationship with another longtime bastion of teen culture, MTV. Virgin Mobile delivers exclusive MTV-branded news alerts, audio voting, ringtones and interactive voting for the network's hit “Total Request Live” music video countdown to its subscribers.

“There's increasing sophistication and significant uptake in these types of things,” said Howard Handler, chief marketing officer for Virgin Mobile USA. “Everyone's hearing the clarion call. MTV got in early with us, and for Russell to step up and say ‘Hey, man, now it's time for the world to know what Def Jam Mobile is about’ is fantastic. Russell's a progressive guy, so he's one more progressive voice that's saying ‘This is a very important way for me to share my content with people that love it and people that care about it and people that are intrigued by it.’ You can see lots and lots of other people going, ‘If he gets it and it's important to him, it better be important to me.’”

But there are no guarantees. For all his success, Simmons has also made the occasional misstep. dRush, the advertising agency he established with ad giant Donny Deutsch to market mainstream products to urban demographic groups, closed shop in 2003, and earlier this year it was reported that OneWorld was on the verge of declaring bankruptcy.

Perhaps the biggest question is whether Def Jam — which, at 20, is now older than many hip-hop artists and their fans — can still connect with the 18-to-25-year-olds that comprise the core of the mobile multimedia audience. While the label's roster of artists remains fresh and impressive, it is no longer the sole monolith on the hip-hop landscape: Both Bad Boy Entertainment and Roc-a-Fella (owned respectively by rap superstars Sean “P. Diddy” Combs and Jay-Z, both avowed Simmons admirers) now rival Def Jam for star power, audience share and sheer cultural influence.

“I see Def Jam as a very strong musical brand and voice of expression,” Levy said. “I think with Russell's extension into ‘Def Poetry Jam’ on HBO, he's got an extended audience there, but is it the target audience of 14 to 25 that's buying all this stuff? I don't know. Russell's done a good job of reinventing himself every few years. At a business level, people know who he is, and in the music industry, people know who he is, but how far that extends to the buyers of the content we're talking about, I don't know.”

Either way, Def Jam Mobile represents a new kind of wireless data — insight into cool, from the people who help define it. “We want to give [subscribers] more access to what's hot, locally and nationally,” Liles said. “We want to make sure everyone has access and opportunity. All of us can go buy a new pair of tennis shoes, and anybody can go buy a new phone, but having it first and having the service first and knowing the information first — we're going to be able to make everybody think they're cool. But you know, only cool people are cool. You can't make somebody cool, but you can give them the tools to be cool.”

To Simmons, it's even simpler than that. Def Jam Mobile will blow up. It's what Def Jam products do.

“People want to know about the hip-hop news alerts we're going to send them,” Simmons said. “They want to know about the fashion designs that suit them. They want to know about the kind of political statements being made by hip-hop and the kinds of social and political implications of hip-hop. They want Reverend Run's Words of Wisdom. They want Def Comedy. They want Def Poetry. They want everything Def.”