Since I learned about it on the Colbert Report, I'm guessing it's the latter.
Either way, it's a good story and yet another reason why branding gets a bad rap... (sorry).
This is another example of what I call veneer branding, taking an ordinary product and applying a brand to the surface in an attempt to make it more valuable. In this case it works – shockingly well – but it's the rare example. Kanye's following is either passionate enough or so utterly blind that they're willing to pay ridiculous amounts of money for anything that has his name on it. Good for him.
But every time he adds more benjamins to his bank account by charging $120 for a product that's not substantially different from the one that's available at Target or Walmart for $5, he's making a withdrawal from his his brand bank.
All he has to do is look at Plymouth, TWA, Circuit City and Hydrox and the thousands of other brands that slapped their names on undifferentiated products to turn a profit.
What Kanye's doing isn't really branding. It's profiteering.