Joell Ortiz remembers finding out he was on bad terms with his boss. It was June 26, 2007, and the rapper, who was signed to Aftermath Records, a subsidiary of Interscope, was schmoozing at the Def Jam after-party for the 2007 BET Awards. He hadn’t been invited to Interscope’s bash, and here he received a complimentary bottle of Champagne. But it wasn’t just the snub that tipped him off.

That night, he ran into a guy from Interscope “who spilled the beans.” He told Ortiz he was on “thin ice” at the label. The knockout blow followed: “It sucks, man,” said the label guy. “Jimmy”—that’s Interscope chairman Jimmy Iovine—“doesn’t want you up there.”

Ortiz was perplexed. After all, he’d done nothing wrong. The Brooklyn-born MC knew how to make records (“When I went to Aftermath, I was already a seasoned steak”), didn’t ravage the label’s budget (“I didn’t get that deal and live that movie; I didn’t go to Sony Studios or the superbig producers”), and had never crossed Iovine, either on the phone (“We never spoke”) or in person (“We never met”). But here he was, apparently in danger of being dropped. “I left that party a little upset,” Ortiz says.

There were other signals that he wasn’t a priority at the label. Ortiz’s manager, Mike “Heron” Herard, remembers he “could not get the person who does digital marketing for Interscope on the phone” and claims Interscope ignored repeated requests from Rockstar Games to use Ortiz in Grand Theft Auto IV. “[Rockstar Games] finally got in touch with me, but they originally went through Interscope, who never reached out to us. That was such a clear sign for me that we weren’t going to stay there.”

Rather than landing in Jimmy Jail—industry slang for being shelved at Interscope if the album isn’t a guaranteed hit—Ortiz asked for his release. (According to his camp, handing over a record Dr. Dre wanted, presumably for inclusion on Detox, expedited the process.) And by February 2008, Joell Ortiz was no longer on the Aftermath roster.

So rapper and label part ways. Big deal, right? Happens all the time. But Joell Ortiz is a gifted lyricist with mixtape chops and a devoted following. He was on the cover of XXL. He had a video added to BET. He was supposed to be the MC who could “bring New York back.” But, then again, so was Saigon. And Papoose. And Tru Life. And Uncle Murda. All five New York rappers signed with a major label. Not one released an album. And not one is still signed.

Nothing could get them a release date. Not a co-sign from the greatest producer in hip-hop history. Not the exposure provided by a recurring role on HBO’s Entourage. Not 21 (and counting) mixtapes. Not the street cred that comes with punching famous rappers in the face. And not the newspaper headlines that pop up after getting shot in the head. Every trick in the book failed. An era ended before it could even begin.

“You are talking to someone who A&R’d and mixtaped this whole generation,” says DJ Sickamore, CEO of the talent development company The Famous Firm. “There are, like, 20 to 30 record deals in there from first-stringers like Saigon and Papoose to guys like Vic Damone and Rasco. Now, in New York, it’s a straight Great Depression.”

In May 2006, Sickamore did a little shock-blogging for He wrote that Young Jeezy, T.I. and Lil Wayne were the new incarnations of Biggie, Jay-Z and Nas. Commenters howled. Sure, it was a stretch. Today, however, Jeezy, T.I. and Wayne are responsible for the whole climate in the rap industry shifting down south. Perhaps nothing personified this transfer of power like L.A. Reid’s taking over at Def Jam Records. Here was an Atlanta-based executive reared on R&B running hip-hop’s most storied label, one historically associated with New York MCs like LL Cool J, Slick Rick, Method Man, Jay-Z, Ja Rule, and DMX. L.A.’s reign hasn’t gone over well with some artists.

“You know, L.A. Reid does R&B. He’s not really with the rap shit,” says Uncle Murda, who left Def Jam last fall. “Jay-Z signed me… We all felt good about the situation. But when Jay-Z left, we felt uncomfortable.”

Meanwhile, ringtone rap—the unabashedly poppy music perfected by Southern artists like Soulja Boy, Flo Rida, D4L and T-Pain—became the rage. (Not much room for a single like Saigon’s “Pain in My Life,” a record about teenage girls with STDs.) Even the icons got down with it. Wayne’s “Lollipop” and T.I.’s “Whatever You Like” feature sung choruses and not much traditional rapping (at least not in the Kool G Rap sense of the word), but they were the biggest rap hits of 2008. And radio, of course, plays the hits.

“Who doesn’t want to hear their song on the radio?” says Joell Ortiz. “So I’m not going to sit here and lie and say it doesn’t affect me, because it does. And then you’ve got people saying, ‘New York rappers are trying to sound South.’ Umm, maybe because they want to get on the radio. What’s on the radio? Southern-sounding stuff. Maybe if I get a simple chorus and a skip beat I’ll make the radio.”

The point is, Southern rap styles are more accessible to a national audience. Says Jeff Sledge, president of Jive Records, “New York’s tone tends to be aggressive and mad, and that’s not what people want to hear anymore… They loop a beat and rap real hard. The audience for that is shrinking.”

Some recently successful New York artists seem to have taken the hint. Jim Jones’s star-making single “We Fly High” could have been a leftover from a Jeezy/Mannie Fresh session. Mims’s “This Is Why I’m Hot” rivaled D4L’s “Laffy Taffy” in simplicity and doofy catchiness. Maino’s “Hi Hater” came equipped with ringtone-ready synth blips and a sing-along chorus straight from the schoolyard. Jae Millz hooked up with Lil Wayne for “Every Girl.” And Ron Browz latched onto the T-Pain–pioneered Auto-Tune craze with “Pop Champagne” and “Jumping (Out the Window).”

Saigon learned a lesson from releasing a downer like “Pain in My Life.” So now he’s changing his strategy. “I just made a strip-club song,” he says begrudgingly. “I said, Fuck it. I got to come in through the back door, because they are not going to let me in my way. So I have to play their game a little bit… I feel good because I produced the record myself, but I feel bad because I know it’s the bullshit. It’s bullshit. It’s bullshit, but, unfortunately, people are gravitating toward bullshit.”

Bullshit or not, it’s the new shit. And in the eyes of some label executives, New York rappers are stuck in the past. “The Joell Ortizes, Sais, Papooses, they are making the same record,” Sledge says. “If you took a Papoose record and placed it in 1994, it would not sound out of place.”

Former Roc-A-Fella/Def Jam artist Tru Life, who scored a minor hit with “The New New York” in 2007, ran into similar problems with producers while crafting his still-unreleased debut album. “I wanted that old-school vibe, but with a new twist on it,” he says. “I couldn’t really find it. I wanted to bring that New York vibe back that was missing, but it couldn’t be over those same old-school beats. It had to be a new sound.”-By Thomas Golianopoulos

For more of the How Ya Like Them Apples? feature, make sure to pick up XXL's May issue hitting newsstands April 7.