Company Town : Virgin Records Signs Deal With Rap Label : Music: Controversial Rap-A-Lot Records will help broaden product line.

Virgin Records is plunging into the rap music field. The company will announce a deal today to distribute and market Houston-based Rap-A-Lot Records, one of the most controversial rap labels in the music business.

Sources say Rap-A-Lot, which features such singers as Scarface, the Geto Boys and Bushwick Bill, was being wooed by at least two Virgin competitors, including Madonna’s Maverick label and one of Virgin’s sister companies at parent EMI.

Rap-A-Lot, estimated by sources to have about $12 million in annual sales, is run by James Smith. Its roster of artists tends to revolve around current and past members of the Geto Boys.

In 1990, the Geto Boys made news when Geffen Records refused to distribute the group’s debut album because of violent and sexually explicit lyrics. Last year, it was reported that Warner Bros. Records’ Giant label shelved a distribution deal with Rap-A-Lot under pressure from parent Time Warner Inc., which has been stung by controversy involving some of the company’s rap artists.

Rap-A-Lot has been handled most recently by Priority Records, a Los Angeles-based independent label.

Virgin, which is strong in pop with such singers as Janet Jackson and in alternative rock with Smashing Pumpkins, is looking at the deal as part of an effort to broaden its music line. The company has been eager to expand into rap, where Virgin has had virtually no presence, and believes the Rap-A-Lot agreement will jump-start that effort, said Phil Quartararo, president of Virgin Records America. Earlier this year, Virgin took the initial step of forming its Noo Trybe division for rap music headed by executive Eric Brooks.

The first album under the new deal will be “The Diary” by Scarface, to be released in October. Albums from the Geto Boys and Bushwick Bill are expected to be released next year.

Quartararo said the company expects criticism for doing the deal with the controversial label.

“We presumed there would be some heat attached to this, but at the end of the day we have a philosophy in the company that anybody making quality music should be heard,” he said.

Quartararo added that Virgin provided no guidelines on Rap-A-Lot on lyrics and that any controversies that occur will be handled case by case. “We don’t pretend to know where the line is,” he said. “We didn’t give them any lists.”

Quartararo said Virgin will emphasize broadening Rap-A-Lot’s markets to include non-urban audiences and international markets.