So, what are merchandisers? You can compare a merchandiser to a label, in a way. A merchandiser has the right (once you sign a contract with them) to use your name on goods. So, in short, they manufacture your goods, they look into the sales at your gigs and, the most important part, they pay you royalties for each sale.
The royalties involved in merchandising are simpler, thankfully, than royalties in music sales. These royalties are percentage of gross sales – the price to the public minus taxes (and/or credit card fees). The royalties that you will earn are subject to where you are based and the deal or contract you have arranged with the merchandiser. In America for example, your cut could be 30% or 40%. Of course, superstar artists are more likely to earn higher royalty percentages.
In these deals its a good idea to include an escalation. An escalation is a deal that means your royalty percentage increases after a certain amount of merchandise is sold. Again, depending on the contract, this can be merch sold in one night or per tour etc.
Once you’re thinking about festivals and arenas be aware that these places might be inclined to offer a profit split. At these venues it takes more time to set up the merchandise stands. Festivals don’t tend to sell as much merchandise per artist. This cut tends to be about 15% or 20% to the venue or festival.
If you’re a touring band with a merchandiser, you might have come across hall fees. This simply means that the merchandiser hands over a part of the merchandise to the venue, which they then sell. At the end of the evening, the merchandiser is given back the stock that wasn’t sold as well as the money earned, minus a percentage that the venue will keep. This percentage is the hall fee and can be as high as 25 to 30%.
Before you jump into a deal with a merchandiser there are a few things to consider.
- Will you get advances? What kind of advances are they?
- Consider the length of the term. You don’t want to be stuck in a contract with one merchandiser forever. Usually, these deals last for as long as one album cycle but the deal stands until the advances are recouped. If you aren’t careful, its the advances which will get you stuck.
- Remember, all merchandise deals are exclusive. A merchandiser doesn’t want to see their manufactured merchandise somewhere else.
- Another important point is your creative control as artist. You should always be able to approve the design, artwork, photos etc. they’re using for your merchandise.
- Your deal should always mention ‘sell-off rights’.
Merchandisers Vs. Bootleggers
As well as the things we’ve mentioned, merchandisers have another very important role – to follow up on every lead they have with bootleggers. As you’re probably aware, bootleggers are people that copy your merchandise without any right to do so. You’ve seen them before, they stand outside of arenas and try to sell fake posters or shirts. Sadly, this is the reality of today. But, a merchandiser can help with this and they have the authority to take the bootlegger to court in order to stop what they’re doing.
As with most parts of the music industry, even for something as seemingly simple as merchandise, it can get really complicated. Hopefully, this shed some light into some of the deals you might find yourself a part of and what questions you should be asking.