The Man That Paid $2 Million for A Wu-Tang Clan Album

10 Dec, 2015

It was one of the greatest sales pitches the music industry has ever heard. In March 2014, Robert Diggs, better known as RZA, the producer and de facto leader of the Wu-Tang Clan, the iconic rap group, announced that the Clan would create only one copy of its next album, Once Upon a Time in Shaolin, and sell it to the highest bidder.

“We’re about to put out a piece of art like nobody else has done in the history of music,” RZA told Forbes. “We’re making a single-sale collector’s item. This is like someone having the scepter of an Egyptian king.”

Initially, the Clan wanted to forbid the buyer from publicly releasing the album for 88 years, but over time decided to grant the buyer total freedom as long as the album wasn’t sold commercially. That meant the owner could listen to the record in a soundproof room, drive a pickup truck over it, or release it for free on the Internet. If the owner desired, he could be the only one who ever heard it. In an era where people are happy to stream music rather than actually possess it, Once Upon a Time in Shaolin offered a chance to own something truly unique.

The Wu-Tang Clan hired Paddle8, an online auction startup, to sell the album. The 31-track album would come in a hand-carved box, accompanied by a leather-bound book with 174 pages of parchment paper filled with lyrics and background on the songs. The music itself was expected to be spectacular. All the surviving members of the Wu-Tang Clan contributed to Once Upon a Time in Shaolin, along with some special guests. Aside from RZA and his co-producer, Tarik “Cilvaringz” Azzougarh, nobody had heard the entire record. It was stored in a vault in the Royal Mansour Marrakech hotel in Morocco and any duplicates had been destroyed.

Even before the bidding began, the Wu-Tang Clan claimed, they had received a $5 million offer. Fans speculated that the buyer might turn out to be the director Quentin Tarantino, a Hollywood associate of RZA, or venture capitalist Ben Horowitz, who has written about his love of rap. Some Wu-Tang fans objected to the group’s plan. Two of the group’s disgruntled admirers started a Kickstarter campaign to buy Once Upon a Time in Shaolin and keep it out of plutocratic hands. “Someone who has disposable millions, it’s just another shiny new toy for them,” says Russell Meyer, one of the organizers. “It’s most likely not going to be someone who appreciates the music.” The drive to keep the music out of the hands of the millionaires was spirited but ultimately too small. Fans pledged just $15,406.

Then, on Nov. 24, Paddle8 announced that the Wu-Tang Clan had sold the album for a record figure “in the millions.” The price had been agreed to in May, but according to the press release, the parties “spent months finalizing contracts and devising legal protections for a distinctive work whose value depends on its singularity.” But the group wouldn’t reveal the buyer’s name. RZA said he wanted his privacy. “This was very much a mutual decision,” RZA insisted in an e-mail. There was only one wrinkle: The buyer didn’t care about his privacy; he wanted to go public.

There’s probably only one group of rappers that could pull off such a stunt. The Clan arrived in 1993 with a debut album titled Enter the Wu-Tang (36 Chambers). The group was comprised of nine guys from Staten Island and Brooklyn with enigmatic stage names such as Masta Killa, U-God, Raekwon, Ghostface Killah, GZA, Method Man, Inspectah Deck, and Ol’ Dirty Bastard. They were some of the most inventive wordsmiths that hip-hop audiences had ever encountered, melding street lingo with martial arts allusions and the sayings of the Five Percent Nation, an obscure black movement.

In a rap world that’s become obsessed with fame and money, the Clan holds a special place. Its members have never achieved the popularity of Eminem or Jay Z, but they are venerated by young rappers such as Drake and Kanye West for their originality. “They’ve been dope for over 20 years,” says Andrew DuBois, co-editor of The Anthology of Rap. “That’s half of hip-hop’s tenure. People all around the world care about the Wu-Tang Clan.”

The architect of Wu-Tang’s early success was RZA, whom the members referred to as the abbot. It was RZA who created the group’s weird aural backdrops using rhythm tracks from old Memphis soul songs interspersed with fragments of jazz master Thelonious Monk’s piano and moans of soul singers that he electronically altered to sound like ghostly exultations. RZA was also a master strategist, persuading all the members to give him full control for five years and allowing him to produce every album by the group and any of their solo records. “I said, ‘Give me five years and I will take us to No. 1,’ ” RZA wrote in The Tao of Wu, his 2009 memoir-cum-spiritual guidebook. “It was a long conversation, eye to eye, man to man. I said that no one could question my authority. It had to be a dictatorship.”

RZA turned out to be just as skilled at business. He showed up every evening at 6 p.m. at the offices of Wu-Tang’s label, Loud Records, with a legal pad full of ideas, including which radio stations to target and where to send promotional street teams. Steve Rifkind, the label’s founder and an accomplished rap pitchman himself, says he approved nearly all of them. “He was definitely business-minded,” Rifkind says. “I think you’re born with that.”

The Clan’s first album sold 2.4 million copies in the U.S., according to Nielsen Music. The follow-up, a double album called Wu-Tang Forever, sold more than 2 million. In between, Raekwon, Ghostface, Method Man, and GZA released RZA-produced solo albums that are considered just as weighty by fans. The group started Wu Wear, one of the first hip-hop artist-branded clothing lines, and opened a Wu Nails shop on Staten Island run by RZA’s sister.

After five years, RZA relinquished his control over the Wu-Tang Clan, and the group was never the same. Subsequent albums and solo projects weren’t as strong and didn’t sell as well. The Clan flooded the market with music under its banner, including albums by artists who weren’t official members but part of a so-called extended Wu-Tang family.

One of those Wu affiliates was Cilvaringz, a Dutch rapper of Moroccan descent who impressed the group in 1997 when he climbed onto the stage at a show in Amsterdam and offered some impromptu verses. Months later he showed up at Wu Nails. Eventually he got a deal to put out a record under the Wu-Tang banner. “Anyone who would go halfway across the world, without a penny, to chase their dream was someone I felt needed to be taken seriously,” RZA says. It was great for Cilvaringz, but fans were overwhelmed. “There was a moment where there was so much Wu product in the world,” says Sasha Frere-Jones, a Los Angeles Times critic-at-large and a former New Yorker writer who has chronicled the group over the years.

As the group’s hits dwindled, the Clan drifted apart. Ol’ Dirty Bastard, whose real name was Russell Jones, died in 2004 of a drug overdose in a New York recording studio. Method Man became an actor, appearing in films such as How High, and briefly co-starring in a Fox sitcom called Method & Red, about two rappers who end up living in a lily-white suburb. RZA also went to Hollywood, providing some music for Tarantino’s martial arts-themed Kill Bill films, and in 2012 he directed and starred with Russell Crowe in The Man With the Iron Fists.

RZA managed to reassemble the Clan’s surviving members for the long-awaited album A Better Tomorrow, released last December. It drew positive reviews but sold only 60,000 copies in the U.S. The Wu-Tang Clan had tried market saturation. Now it went in the opposite direction with Once Upon a Time in Shaolin.

On a chilly evening in March, at the Museum of Modern Art’s PS 1 annex in New York, several dozen potential buyers and writers turned in their cell phones, tablets, laptops, and anything else with recording capability. Joined by 36 giddy fans who had won tickets on Hot 97, a local radio station, they were ushered into a dimly lit domed room for an event billed as the first and only time that a portion of Once Upon a Time in Shaolin would be heard in public. The ornate box that would hold the album was displayed on a pedestal, watched over by dark-suited security guards.

The crowd listened to a 13-minute excerpt played at an eardrum-rattling volume and cheered when it was done. Shaolin sounded like the best Wu-Tang Clan album in years. Afterwards, RZA and Cilvaringz discussed the record with Frere-Jones. Clad in a black jacket, black pants, and a black ball cap, RZA, who is tall and slender, compared the Wu-Tang Clan to Mozart and the album to the Mona Lisa. Cilvaringz, who is shorter and wore a gray puffy jacket over a hoodie, sounded a similar theme when he talked about a trip the two men took a decade ago to Egypt. “RZA and I would ride horses into the desert completely alone and have the pyramids pretty much to ourselves,” Cilvaringz said. “Halfway climbing up the pyramids of Cheops, I said to RZA that one day we would do something special together that would last throughout the ages.”

Music critic Frere-Jones, who loved what he had heard of the album, wanted to know who the bewitching female singer was on one of the tracks.

“That was Cher,” Cilvaringz said.

“Cher?”

“Yeah, Cher. The Cher.” (Cher couldn’t be reached for comment.)

Frere-Jones also quizzed the producers about how the rest of the Clan felt about not being as involved in the making of Once Upon a Time in Shaolin as they presumably had been with previous records. “I guess the best way to describe it is with an analogy,” RZA answered. “Everybody got on the boat, but they didn’t know where the boat was going. But look where it landed. You know what I mean? Hey, it’s not on Gilligan’s Island.”

“Well, we don’t know which island it’s going to be on yet, right?” Frere-Jones said.

“We don’t know,” RZA said.

According to RZA, Shaolin attracted many suitors: “Private collectors, trophy hunters, millionaires, billionaires, unknown folks, publicly known folks, businesses, companies with commercial intent, young, old,” he says. “It varied.” Serious bidders got to hear the 13-minute highlights in private listening sessions arranged by Paddle8 in New York.

One of them was a pharmaceutical company executive named Martin Shkreli. He’s 32 years old but seems much younger, with a tendency to fiddle with his hair and squirm in his seat like an adolescent. The son of Albanian immigrants, Shkreli grew up in what he describes as a tough part of Brooklyn’s Sheepshead Bay neighborhood. He skipped grades in school because he was so bright. Shkreli idolized scientists, but he was also a music fan. Primarily interested in rock as a teenager, he didn’t understand rap, but that changed when he read Shakespeare in high school. “You would get these rhyming couplets and soliloquies and stuff like that, but the couplets would really kind of jar you,” he says. “They would be really these big, soul-crushing moments that Shakespeare intended to stir your spirit. And in many ways, music does that.”

Shkreli was taken by the Wu-Tang song C.R.E.A.M., which stands for “Cash Rules Everything Around Me.” It includes the often-repeated phrase “Dolla dolla bill, y’all!” Shkreli turned out to be good at making dollars himself. He founded two hedge funds that shorted pharmaceutical stocks and then started his own drug company, Retrophin, earning a reputation on Wall Street as something of a boy genius. In September 2014, however, he says he was “asked to leave” by the company’s board. Retrophin later alleged after an internal investigation that he’d abused his position and misused assets. Shkreli says that he didn’t do anything without the company’s approval. Retrophin and its former CEO are now facing off in court. “I was pretty pissed,” Shkreli says. “But I realized that it actually would be better for me, maybe not ego-wise, but financially. I could just sell my stock and build my own next company.”

Now that Shkreli had more money, he started collecting music-related items. He once joked on Twitter about trying to buy Katy Perry’s guitar so he could get a date with her. He purchased Kurt Cobain’s Visa card in a Paddle8 auction and occasionally produces it to get a rise out of people when it’s time to pay a check.

Shkreli heard about Once Upon a Time in Shaolin and thought it would be nice to own, too. He attended a private listening session at the Standard Hotel hosted by Paddle8 co-founder Alexander Gilkes. Shkreli, who describes himself as a bit of a recluse, recalls Gilkes telling him that if he bought the record, he would have the opportunity to rub shoulders with celebrities and rappers who would want to hear it. “Then I really became convinced that I should be the buyer,” Shkreli says. (Paddle8 declined to comment, citing their policy of client confidentiality.) He also got to have lunch with RZA. “We didn’t have a ton in common,” Shkreli says. “I can’t say I got to know him that well, but I obviously like him.”

Having participated in bidding wars for companies and drugs, Shkreli says he had a feeling from the start that he’d made the highest offer for Shaolin. As it turned out, he was right. Shkreli won’t say how much he paid. But someone familiar with the deal says that the Wu-Tang Clan sold him the album for $2 million. Before he closed on the acquisition, Shkreli was permitted to listen to a few more snippets to make sure it was all there. Shkreli delegated the task to an employee. The same month, news broke that Shkreli’s new company, Turing Pharmaceuticals, had purchased an anti-parasitic drug called Daraprim and raised its price from $13.50 a pill to $750. Democratic presidential candidate Hillary Clinton denounced him. “Price gouging like this in the specialty drug market is outrageous,” Clinton tweeted. Her Republican opponent Donald Trump also attacked Shkreli. “He looks like a spoiled brat to me,” Trump said. The BBC wrote that Shkreli “may be the most hated man in America.”

Shkreli seems mildly amused by the controversy. He says it’s his duty as Turing CEO to maximize profits for his investors. “What’s escaped the conversation is, hey, how about the fact that this is actually what I’ve been hired to do,” Shkreli says. “It’s like someone criticizing a basketball player for scoring too many points.” He adds that he’s tried to make Daraprim more easily available to hospitals. Meanwhile, he’s been pranking his critics. In October, he donated $2,700 to Bernie Sanders, Clinton’s rival, which the campaign donated to a Washington health-care facility. Shkreli then applied for an internship on the Vermont senator’s campaign. “I enjoy the back and forth,” he says.

Shkreli seems more concerned about how the Wu-Tang Clan would react to the Daraprim dispute. “I was a little worried that they were going to walk out of the deal,” he says. “But by then we’d closed. The whole kind of thing since then has been just kind of ‘Well, do we want to announce it’s him? Do we not want to announce it’s him?’ I think they were trying to cover their butts a little bit.” Paddle8 says it doesn’t disclose client information.

After learning that Bloomberg Businessweek was about to report that Shkreli had purchased the album, RZA e-mailed a statement: “The sale of Once Upon a Time in Shaolin was agreed upon in May, well before Martin Skhreli’s [sic] business practices came to light. We decided to give a significant portion of the proceeds to charity.”

As for the Wu-Tang fans who are likely to feel queasy when they learn that he’s the owner of Once Upon a Time in Shaolin, Shkreli just shrugs. “At the end of the day,” he says, “they didn’t buy the last album or the one before that, and all they had to pay was $10.”

It’s a Friday afternoon at Turing’s Manhattan headquarters, and Shkreli and his employees are preparing for a Christmas party that evening. Three executives play a video game. A woman shows Shkreli the cocktail dress she plans to wear. Shkreli had arranged for the rap star Fetty Wap to perform for his employees. “Typically you would say, ‘As an average fan, I can’t get Fetty Wap to give me a personal concert,’ ” he says. “The reality is, sure you could. You know, at the right price these guys basically will do anything.”

Shkreli wants more artists to make private albums for him. He figures they could use the money, and he will let them do whatever they want. “It’s almost like the instructions to the band are, ‘Do your best work, however much time it takes, and never compromise anything for me,’ ” he says. “ ‘I just want to hear what you’ve got.’ ”

He hasn’t listened to Once Upon a Time in Shaolin yet. He’s saving that for a time when he’s feeling low and needs something to lift his spirits. “I could be convinced to listen to it earlier if Taylor Swift wants to hear it or something like that,” Shkreli says. “But for now, I think I’m going to kind of save it for a rainy day.”

Bloomberg.com

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