Humble Beast launches coffee arm, Odd Thomas explains business model
Portland, Oregon-based record label Humble Beast is now brewing more than hip hop.
On its first day of business, Left Roasters took over 100 orders, according to Humble Beast co-owner Odd Thomas, who chatted with Rapzilla about the label’s unique arm and business model.
Rapzilla: Who’s going to make Left Coffee?
Odd Thomas: We actually make the coffee. Obviously, you know Humble Beast loves coffee, and we’re a big fan of the culture of coffee. We consume a massive amount of coffee. In our traveling, we tend to highlight all the best coffee spots in the country.
We found that it would be interesting for us to get involved in coffee culture as a way to subsidize all of our ministry expenses. It’s basically a business model that says, “We’re going to provide for you a good — what we think is this amazing craft coffee — because you’re going to buy coffee anyway, and if you’re going to buy coffee anyway, why don’t you buy it from us who know good coffee and help us to sustain our ministry so that we can continue to give away all of our music and all of our resources for free?”
RZ: What ministry expenses haven’t been being paid for that Left Coffee would?
OT: Historically, when you talk about making records, and all that goes into making an excellent record, that costs a lot of money. We have an office space that we need to pay for. That costs a lot of money. If we send out a press release, that costs us over $1,000 just to send one press release alone because of our big database.
When you take into consideration all of the expenses associated with Humble Beast, it’s only then by the grace of God that we’ve been floating. We’ve lived in this tension of complete dependence on God to provide for our needs. We still live in that tension but decided maybe it’s time for us to create a more sustainable model so we don’t compromise giving away the records.
I think a lot of people don’t realize how expensive it is to actually make a record well. You’re looking at minimum $10,000 to make a good record. Then, if you really want to put some effort into it, if you consider all the time, resources and people involved with the project, you’re looking close to $15,000-$16,000.
That doesn’t include rent for the studio space. That doesn’t include equipment. That doesn’t include outsourcing some graphic design or even paying for videos. We do as much as we can on our own with the least amount of money possible, but, at the end of the day, there still does exist a whole lot of expenses that we have to pay for.
RZ: Was Left Coffee birthed out of a need to find a new way to support your free-album system?
OT: I think it caters to both. We approach coffee the same way that we approach music. There’s an aesthetic involved. There’s an appreciation for the art. There’s a desire to create great coffee because we love it, and that’s the same thing with music.
Ultimately, in our creating of good coffee, we believe that brings God glory because he’s given us good pallets for great coffee. He’s given us the ability to make great coffee, package good coffee, market good coffee. It feeds our creative desire.
Then also, at the same time, it provides the various people who love what we do and want to support what we do, but can’t necessarily give a whole bunch of money to us, this provides a way for them buy into our structure, get a good, in exchange for them buying in to what we’re providing. Everybody’s happy. It meets our fiscal goal, but it also meets our creative goal, and it fits within the mission of Humble Beast, and that’s to create excellent things to the glory of God.
RZ: Was there ever a point in Humble Beast’s existence that you worried about that fiscal need?
OT: That’s every day. Every day we worry about our fiscal need, and every day we pray that God would provide, but we knew that getting into it. We knew that if we were to build a record company that is really a ministry incognito, we knew that if we want to give this away for free and bless and encourage people, this is going to be a hard road.
We all were committed to the cost of it. If we were going to make any money doing it, then we were going to struggle through it all the way, and we’ve never compromised that. Sometimes it’s been very, very tight. People don’t realize when we miss deadlines for records and sometimes we plan things that we really can’t execute. A lot of that has to do with our finances.
We don’t put it out there and say, “We don’t have the money to do this, so we’re not going to do it.” We just chill and we wait and we pray and we confess our dependence to God and he, in his kindness, seems to provide ways for us to do it. We even believe that the business mind God has given us for building this sustainable ministry is in fact God’s very means of provision for us.
RZ: Are you, Braille and Courtland [Urbano] going to be making this coffee?
OT: We have a good brother of ours. His name is Samuel Nagel. He also happens to be a member of our church. He roasts coffee all the time. He’s excellent at what he does. He works full-time at the Portland Rescue Mission.
In addition to his full-time job, he serves Humble Beast bi-vocationally to roast coffee with us. What happens is, we take that coffee, and then all of the guys who hustle at Humble Beast, including the interns, package it, manufacture it, we ship it, we distribute it, we run the website and we take the orders. We all have our hands in it. Everybody’s hands are filled with coffee beans, but really there’s no full-time job up to this point.
Consider if you were starting a company with no resources and no money like Humble Beast was, you couldn’t just quit your regular full-time job to start this new company. You have to work a full-time job and then spend 20 hours a week hustling on your side job until it became sustainable. Well, we started Humble Beast realizing that it might never become sustainable because we give away the very good that most businesses sell to sustain themselves.
RZ: According to Billboard charts and a press release of top-selling albums that Syntax Creative released last week, Humble Beast, despite offering its music for free, still seems to sell as much as or more than a lot of other independent Christian hip-hop labels, so can you explain that in terms of still needing money?
OT: Sure, I think people have a preconceived idea that if you chart on Billboard or if you’re No. 4 or 5 on hip-hop iTunes that you’re raking in money. The reality is, that’s just not true. We do chart on Billboard, and we do get pretty high on hip-hop charts, but it’s a very short-lived experience.
People will go there, and they’ll rally around it, “Yay, they got to No. 2 on hip-hop iTunes!” But it really only signifies 4,000 record sales. In some cases, like a Propaganda, it might be a lot more. But even though we get 4,000 record sales, the label functions very differently than the traditional record label.
For example, when we as Humble Beast sell records, we split that profit with the artists. The artist right away sees 50 percent of the profits that sell on iTunes or whatever digital retailer that we’re selling through, where most record companies pay an artist 7-8 percent of the record sales.
Now you take that, and if it costs the label $15,000 to produce and put out a record, when a record drops, the artist never has to recoup those expenses. The label eats that expense so that the artist can live off of that revenue for a short period of time and not feel overwhelmed and burdened because the label’s having to get paid back for all of their investment, or we’re only giving them a small portion of money to live off of their records.
We don’t see that as a sustainable ministry model. When you take into consideration 4,000 record sales — and that’s not all the artists on Humble Beast. Not all the artists chart on Billboard. That’s only some of the artists — but when they do chart on Billboard, that’s still not a lot of money, and that money is split in so many different ways. It’s split half to the artist, and then with the half that the label gets, we have to pay back all the money that we fronted.
That $15,000, we have to pay that back somehow. In a sense, the label is built by artists/ministers to support the artist/minister, so it’s not your traditional record model. We’re just ministers who happen to be in the business of making hip-hop records.
RZ: If Beautiful Eulogy is going to help with the coffee operation, are you worried whether or not making coffee will take away from the music?
OT: No, because being bi-vocational is in our DNA. We make music, and we do that to provide for our household. But in addition to making music, we’re marketing and writing copy for Humble Beast, we’re doing photo shoots and editing videos, we’re mixing records, mastering records and designing records. That’s already a part of what we do. Work is something that people who are in the family of Humble Beast are used to and not afraid of, and so we have the appropriate mindset of working hard at what we do because we want to see the gospel go forth.
It’s never really an issue of, “Well, if we make coffee now, we’re not going to be able to do hip hop.” There are pastors in places all over the country, especially in the inner-city, who work full-time at UPS or FedEx as well as pastor churches because there’s no money there. That in no way reflects on their passion for God or their ability to be effective in communicating the gospel. They just recognize part of my burden that is uniquely mine is to work a full-time job and when I’m not working a full-time job, I’m spending the rest of my free time writing sermons, loving and caring for the people of my congregation and doing marriage counseling.
You have to consider Humble Beast as much more a ministry than a textbook record company. If you view it that way, you get a better picture and a better sense of how we operate.