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Chapter NINE

The Money Paths: Merchandising

Merchandising is the selling of products that display the artist’s “brand,” the image or logo associated with the artist/band. Posters, T-shirts, hats, mugs, lighters, and bobble heads are all examples of merchandise. Merchandising is done with vendors in two ways: retail and direct. Retail is done in the traditional sense of stores in a mall, and today the store may be on the Internet. Direct to customer is often done at shows by vendors who sell directly to the fans with no wholesaler or distributor involved. Almost all merchandising is done through a licensing agreement between you and a vendor for a specific time and territory. The rights reverting back to the artist at the expiration of the time (term). more

 

Sponsorships are also handled in this time and territory fashion. Product endorsement is the best-known type of sponsorship. An artist drives that car, uses this perfume, or shaves with this razor. The artist’s brand is often used in the advertisements for these products on TV and in print.

If you compare these figures to the ones in the other money paths, you’ll see that merchandising gives you a BIG bang for your buck! more

 

Let’s follow the money path in merchandising backwards from the customer to the artist.

Retail Merchandising

A T-shirt costs the consumer $30.

The retailer keeps more

 The wholesaler/distributor is the company or group who prints, warehouses, and delivers the T-shirts to the retail stores. They get more

 The manager, and business manager get paid a percentage of the gross sales, totaling about more

 

Tour Merchandising

A T-shirt costs the consumer $30.

The venue gets more

 The tour merchandiser is the company or group who prints, warehouses, delivers, and sells the T-shirts to the venue. They get more

 The manager, and business manager get paid a percentage of the gross sales, totaling about more

 

Sponsorships and Endorsements

The sponsoring company pays more

 The manager, and business manager get paid a percentage of the gross sales, totaling about more

 

Direct to customer

The newest channel to sell products and services is DIRECT to fans. Record companies have not yet been able to ride this wave for some political reasons and contractual obligations with their distribution chains. Artists and bands are starting to understand the value of direct merchandising, but so are other players, like the merchandisers. In fact, merchandisers are doing this very efficiently, and it is hard to duplicate their success. Outsourcing to a merchandiser means less work for you and wider exposure, but you lose both the connection to the fan and a share of the profit. It’s best if you try to control this channel yourself to increase your profitability or do a combination of outsourcing and your own direct sales to fans.

There are places on the merchandising money path where you can put more money in your pocket.

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