Originally published Performing Songwriter Magazine
Issues #20-21, Sept-Nov 1996
Money. What a beautiful thing. Without it, we can't tour. We can't produce records. We can't stay home and write songs. Money... what a joy.
Merchandise. How sordid. Moi, a commodity?
Hey there - wake up. A commodity? You?
You bet your ass!
Not for the faint of heart. Nor for those who equate making a decent living with selling out! No, this article is written for people who already understand that merchandising can not only subsidize our lives on and off the road, but can also be an integral part of building and maintaining a career. It's for those people who recognize that there's nothing base or ignoble about selling product, staying after shows to sign that product, and making a little extra money that will go a long way during the lean months we know will eventually arrive.
This article is, by definition, out-dated. It's only based on my own background of 40 years in the music industry. To be frank, most of that time has given me more of your basic "road rat" experience than the upper-level marketing accessible to a U2 or a Whitney Houston. I'm not talking million dollar deals here. Hopefully, anyone reading this will get a few tips, and a better understanding of what we face as commodities. Otherwise, use your common sense!
The rise of artist-driven "self-merchandising" is a relatively new concept for the music industry. Up until the past few decades, artists were rarely involved in their own merchandising, unless it was in the area of creative control ("I like the pink scarf with my head shot on it better, don't you? Let's use that!"). The personal, identifiable merchandising tag was an image of Colonel Tom Parker, who managed Elvis Presley from day one, and used to walk up and down the lines of waiting fans before Elvis' shows, hawking "Genuine signed photos of Elvis!!! Only one single dollah!!!" The corporate identifiable merchandising tags were things like the usage of a hit song in a radio or television commercial for another product, or the kind of mass merchandising you saw with The Beatles - their faces and name on everything from lunchboxes to poodle skirts to stereo sets.
When I started out as a 12-year-old singer-songwriter in 1963, the folk community looked on merchandising as uncool, unhip, and tantamount to betrayal. Not just betrayal of that community and what it stood for, but betrayal of all things artistic. All things truthful. All things good. It was something those icky pop singers did, because they didn't have any real songs or artistry to display, and hence had to filter that creative urge into lunch pails or buttons with their pictures on the front. I'm afraid I was pretty obnoxious about it back then.
During the heyday of "At Seventeen", when I was having top ten pop hits, I had a nice fellow named Nicky Siciliano selling T-shirts outside my shows. We designed them together; then he'd follow our tour bus in a little van with his girlfriend and a beagle (who would also come to the shows). Whenever we had a dead crowd, he'd stand at the back of the theater and yell out "We love ya, Janis!", which would always get some applause and start the ball rolling. I got a small percentage of sales, but more important, I liked the T-shirts he made, and he kept his prices down. Besides, it was fun to have the beagle around.
We were limited to clothing and geegaws, because the record companies signed us to exclusive recording contracts; we couldn't make a "promotional disc" of our own to sell. Furthermore, we couldn't buy our own product from the record companies, because that would offend the rack jobbers and retailers.
In 1983, I took a ten-year break from recording and performing, and the world changed completely. When I started recording again in '92, I inquired about T-shirts and the like. I was told over and over again that merchandisers (the big companies) weren't interested in working with acts making under $10,000 a night, and since that definitely excluded me, I stopped thinking about it. I was still with a major label, compact discs were just coming into their own, and the feasibility of trying to purchase my own product didn't even occur to me.
Then, one night, I filled in at the Keswick Theater in Philadelphia for one of the Bitchin' Babes. The remaining Babes that night were Sally Fingerett, Christine Lavin, and Debbie Smith. We played to a sold out audience, and the ladies were very excited over something they kept calling "merch". Just before intermission, Christine announced that the three Babes would be signing autographs after the show. Sure enough, they walked straight off the stage and out to the lobby, where tables had been set up with their merchandise stacked in front. Each Babe stood behind the merchandise, and I watched from the wings as a feeding frenzy began. Cassettes and CD's were being snapped up as fast as the Babes could swipe credit cards. At the end of the night, they'd sold around $5,000 worth of goods - and I'd kicked myself a hundred times for not bringing any CD's. Being so ignorant, I'd probably only have brought 25 or 30, but that would be 25 or 30 more than I'd sold that night!
I've learned a lot since then, mainly as I've toured around the US and Europe in a seven-seater van with two other people along (sound/road manager, and driver/merch person), or a Jeep with just one other person (sound/road manager). I hope you'll be able to use my hard-earned knowledge at any level - it doesn't matter if you've got one piece of product or a thousand, the rules still apply.
One of the big things I've learned is that there are a million ways to do this, and you can make a lot of mistakes along the way. For instance:
After much trial and error, we originally set up a deal with a lady who was then running my "fan club", one Sheri Halton. She held all my merchandise in her office, and theoretically kept track of the stock and re-ordering. She also judged how much we needed to take out with us, depending on venue type, size, and length of tour. She packed and shipped to festivals, or to us when we ran out on the road, and handled everything from the actual design of the T-shirts to negotiating our prices. Since I usually went on the road for a minimum of four to twelve weeks at a clip, it made life much easier all around. Once a week we faxed her our settlement sheets (the itemized list we keep on a per-show basis, showing how many units of each item were sold), and she rendered an accounting to me and my management. The small percentage she took from me seemed well worth it.
Unfortunately, merchandise began to not arrive at the gigs as promised. ("UPS must have lost it.") We weren't compensated for the losses. ("Fedex says it will take some time.") Since she'd been working with me for three years already, I trusted her... until several fans wrote to me saying they'd gotten no merchandise, though their credit cards had been charged. I fired her immediately, and we wound up suing her for the missing money. We also sent out a mailing to every fan we could contact, honestly telling them about the problem and promising that we would make good on all missing orders. Additionally, we posted it on my website.
To be honest, my new business manager thought I was crazy; he was sure that dozens of people would write in asking for merchandise they'd never really paid for. I trusted my fans not to do that, and events proved me right in the end. But it cost me a bucket-load of money; the only reason it didn't cost me the fan's good-will was because I acted so quickly, and so honestly.
So let lesson number one to you be this: If you are not actively involved in cross-checking inventory against sales figures and the money deposited in your account, or if you do not have a bookkeeper doing it for you who is completely separate from your third-party merchandiser, chances are you will get screwed. Anyone can go rogue. Anyone.
For a while after that, I went back to doing it myself, but it was impossible while I was on the road all the time. Right now we seem to have things somewhat under control, but that's mostly been luck of the draw.
Here's how I did it previously, followed by how I do it now:
a) We used an annual mailing that cost quite a bit (four pages with blue ink on white stock); it went to fans all over the world. The mailing contained a letter from me, lots of photos, and a page or two of available merchandise. It' was expensive, but as Chris Lavin told me, "It's the cost of doing business." We found that over the proceeding twelve months, the mailing pays for itself in orders.
b) Now we have an e-mail list that goes out monthly; we list the current tour schedule, any "headline news" like a new album release, and any new merchandise we're offering.
a) We took the same newsletter, had it printed on really cheap paper, and handed it out at shows. It paid for itself, too, since we couldn't possibly carry all the available merchandise with us.
b) Now, I make sure to mention my website at every show, encouraging people to go there and e-mail me; that same website is also on every CD worldwide, every piece of record advertising, and when we can manage it, every show ad.
a) We took mail orders and sold on the road. The mail order was a true pain; you had to wait for the checks to clear, and sometimes that could take a month or two. You also had to deal with bank fees when checks were bad. And some idiots inevitably sent cash. Sales tax was impossible to figure, and once we'd printed those newsletters, we couldn't afford to make any real changes until the next year.
b) Now we work with Yahoo! Stores, through my website. We can show off the merchandise, with photos, track inventory, take credit cards from all over the world. Best of all, our store is now flexible enough that even a fool like me can edit descriptions, change prices, choose the countries we'll ship to (or not). Yahoo! doesn't cost a lot, compared with what we're getting, and it functions down to figuring out sales tax for us.
a) We used to scramble for packing goods: boxes, envelopes, cheap tape. We'd address everything by hand. You know, there's a thin line between looking "homegrown" and looking unprofessional.
b) Now, we re-use boxes from places like Amazon.com whenever possible, but we also have a Uline account. We order our tape, bubble wrap and the like in bulk, taking advantage of their sales and price breaks. We also print nice stick-on address mailers. When someone fulfills an order from Yahoo!, they merely cut out the "Ship to" address and stick it on the mailer with a piece of tape. Looks nice, and makes people who are paying good money for shipping and handling feel good.
a) We used to spend hours in line at the post office, particularly during our annual Christmas sale, when we might send out 1,000 pieces in a week. What a royal pain! Plus, because we were doing everything through the mail, we couldn't offer different shipping options. We also couldn't ship by weight or size individually; we had to guestimate, then put in a shipping table and hope not to lose money.
b) Now we use every service available. Through Yahoo!, we can offer UPS (one day, two day, ground), priority mail, and a host of other choices. We discovered that the US Postal Service and UPS both give you free shipping materials; the USPS priority boxes are perfect for T-shirts and large items. We adjusted our shipping rates to reflect actual weight, adding a bit for labor, and we no longer lose money on postage. And since we've broken it down country by country, we can adjust pretty accurately. We also started an account with Stamps.com; we took an old computer that's not good for much else, bought a digital scale that works with it, got a $69 printer. When we're done packing things, they go on the scale, we print out the stamp according to size and weight and type of service, and we just dump the stuff in the mailbox.
We still have to go to the post office for international orders; we can stamp them accurately, but you have to fill out customs forms (depending on weight, size, and a host of other things I can't figure out) and get everything stamped. Still, it's a lot quicker to just hit the PO for international orders than it is for all orders.
a) We used to have Sheri Halton, and after her a couple of trusted fans, doing fulfillment. The problems with both were multiple; the fans lived pretty far from my state, which meant extra shipping costs. Sheri was a thief.
b) When we checked into fulfillment services, the prices they charged seemed absurd for the amount of business we did. Plus, our net profits go to a charitable organization (The Pearl Foundation), so we're loathe to spend any unnecessary money on staff. Nowadays, my partner devotes the better part of a day each week to fulfillment - downloading Yahoo! orders, filling out customs forms when necessary, assembling the merchandise and addressing it. When I'm home for a while, I take that over when I can, and I'm the one who tracks inventory and orders more packing materials and sales goods. We all (my partner, myself, and my co-manager) share drop-off chores, depending on our availability. It doesn't make sense for my partner or co-manager to steal from themselves, so it works for us.
a) I used to just trust whoever was handling it. Stupid, I know.
b) Now, my co-manager cross-checks the show merchandise settlement sheets against the inventory that went out and got returned, then makes sure that amount of money is turned in to the business management folks. My business management office monitors the Yahoo! sales, along with our show settlement sheets. They also make sure I pay franchise taxes and all the other taxes and import duties, so I don't get in trouble with customs or the IRS.
a) I used to have to take inventory monthly; it made me crazy. I kept an Excel spreadsheet with the various inventories (on the road, in my house, in storage) inventory combined on it. I could see at a glance what was selling well, and what wasn't moving. I could also see when we were about to run short far enough in advance to order without worrying that I'd run out of stock. But it was a serious pain.
b) Now, Yahoo! takes care of the website inventory for me; I just take a look at it monthly and figure out what to order. Road inventory is kept in an entirely different spot, and is dealt with by my co-manager and the business office, with me copied on everything.
Well. All of this sounds like a lot of trouble, right? Sometimes, it is. But I'm in a slightly different position from most artists, because I've had such a long career. I originally began importing my own CD's (since I can't legally manufacture most of them here at home) because I found out fans were paying $30-$50 for single copies of unavailable old catalogue items. I added T-shirts because people requested them. From there it was a short step to work shirts, boxer shorts, caps, key chains and the like. At this point, an entire room of our house is devoted to what my partner caustically refers to as "Janis Ian Stuff". Never mind the hassle, though, because:
How can you possibly afford this? To be brutal, you probably can't. As I said
earlier, I'm in an unusual position. I have seventeen major label CD's out in current release worldwide, plus five CD's or EP's that I've done on my own. Most of us are lucky to get one major label release. Like all good things, though, that's a double-edged sword, though. Recently one of my early albums, Present Company, went completely out of print. The record company that owns it, Capitol, decided it wasn't even worth licensing. Since those contracts date back to the 60's, I don't have any right to manufacture that CD anywhere. It's disappointing to fans when that happens, but it seems to be unavoidable.
Additionally, my fans assume I have complete control over the universe, or at least, my corner of the universe. (Well, don't I?!) That means they blame me when something isn't available. As a result, we try very hard to keep everything we can in stock, all the time. That takes up a lot of space, and a lot of dead financing. (Eg you have $5,000 tied up in stock that will take you a year or two to sell. You bought that much because you got a good price break. Now where do you put it all?)
One thing I discovered early on is that banks will lend you money to pre-purchase merchandise before a tour if you speak their language. Now, I don't really advise this - it's horribly easy to miscalculate how much merchandise you need, let alone what items will sell. But it can be a stop gap.
Banks like to hear things like "per head counts", which means how much money, on an average, each person ("head") spends on merchandise at your shows. The industry average seems to be around $2 - 2.50. If you can show a business person contracts and commitments for 20 club dates at an average capacity of 150 people per club, and proof of prior sales that average two dollars a head, they might think you're good for around $6,000 in merchandise by the end of your tour -- and maybe they'll front you a portion of that to purchase T-shirts and CD's before you leave. "Proof of prior sales" is pretty easy to obtain - you just create settlement sheets of your own, and have the venue representative sign off on them each night. In fact, most venues have their own settlement sheets nowadays, because they charge you a percentage and want you to count-in and count-out with them.
Sometimes a loan is the only alternative to going out with no product. And believe me, no matter what level you're on as a performer, going out with no product is self-destructive behavior at its worst! Think about it this way - if your CD's cost even five dollars apiece to manufacture (and what idiot pays that much for a self-made CD nowadays?), and you can sell two each night at fifteen apiece, you've just made a profit of $20. Even after you deduct the venue's take, that's enough money for a couple of lunches!
I've learned a lot the hard way, and lost money on it, too. Those T-shirts with FBI quotes that fans kept clamoring for when we released "god & the fbi" sold so well that I went ahead and ordered twice as many as I ever had before; we ended up knocking them down to $5 at a lot of the shows, because we couldn't get rid of them. People don't buy the same T-shirt twice, or at least, my audience doesn't. Sure, at $5 we were still making a small profit, but it was really small...
I also learned the hard way that people who attend shows at Performing Arts Centers usually don't spend much money on merchandise, since they've already spent so much on tickets. And people at free shows (particularly outdoors) spend next-to-nothing. (That makes no sense to me, but there it is. Maybe most of the people coming to free shows wouldn't come otherwise. Hard on the ego, but it does make sense.)
On the other hand, a small venue with a packed, enthusiastic crowd may suddenly net you $5 a head, and with any luck you can sell enough to put an extra $750 in your pocket! So it's well worth the effort.
As to how much you carry, or what you carry, it doesn't really matter if you have one product or a dozen different items; what matters is that they make a profit, and you get rid of them. I've seen singers who ordered 5,000 units of their CD to get a price break, and finished the tour with 4,000 pieces rotting in their basement. Stores used to be willing to take your unsold CD's for a minimal price, so they could re-sell them, but the latter sentence has happened so much that stores and companies now charge you to junk those for scrap.
Like it or not, as performers, we are commodities. The only difference between us and Dove soap is that we walk and talk. The same rules apply to both. If you're going to get into merchandising yourself, you have to look at it like a business person.
Sell something everybody wants. This is probably obvious, but you'd be surprised how many people choose their merchandise by what they personally like, not by what their fans will buy. I've seen artists invest heavily in beautifully crocheted vests, assuming that since they like wearing them, the fans will, too. It can be a devastatingly expensive lesson. Think long and hard about what you're going to sell. CD's are usually a safe bet, provided you're not over-playing a territory (in which event they'll want a new CD every time you play there). Sometimes T-shirts are good, but as a marketing executive recently told me, "name-brand shirts haven't really done well since the early '90's." Just putting your name on a T-shirt isn't going to do you any good. You're better off with a stunning picture, like the white-on-black Miles Davis T-shirts you see around, or a great phrase. People are more inclined to wear a phrase that describes how they feel emotionally or politically, than they are to wear your name on a shirt.
Sell something they can't buy anywhere else. This is less obvious, but it's really important. Of course you want to sell your CD's at the shows, and if you stay to autograph them, they'll probably do very well. But other than CD's, sell something they can't buy anywhere else! This holds true for everything. If they already own your albums, or can find them locally, you want to try and sell something they can't get any other way. For instance:
Due to some twenty year old contracts, I own the rights to all my old CBS (Sony) records everywhere but the North America, where I only have the rights to four. Unfortunately, those four don't include "At Seventeen" or "Stars", two songs fans want to buy on CD. Sony also does not have the right to re-release those songs in the United States, or create a compilation record, without my approval, so it's a mess. For whatever reason, Sony refuse to discuss co-releasing a "Best Of" CD here in the US, but we've licensed and released them overseas. When we discovered that fans were paying absurd prices for them at import stores, we started importing them ourselves. From importing them from the licensor, we went to manufacturing them with overseas companies ourselves. And eventually, we solved the entire problem by making a whole new "live best of" CD that's a regular best-seller for us.
You can apply the same principle to anything from basement tape demo collections to "official bootleg" tapes of your live shows. If you're signed to a label that doesn't allow you to record for anyone but them for the duration of your contract, try to figure out ways around it, or to get them to work with you. Can you use your old masters, recordings that were created before you signed the contract? Bingo! you have a CD called "Joe Blow - the Early Years." What about songbooks? Sally Fingerett has a few songs that are tremendously popular with her fans; she had a friend with music software do a lead sheet of each, then had another friend mock up a cover. She copies them at Kinko's in full color, and sells them at a nice profit. We're now experimenting with a low-cost, digital-download songbook of my new album Folk Is the New Black on my website, and it's selling so well that we're planning to do a bunch of other songbooks that way. I've seen people have calligraphers do a template of one of their lyrics; they either Xerox it or have it printed onto nice paper, and sell those at shows. There are all kinds of ways around things, if you search hard enough.
Make it easy for them to purchase from you. Whether that means taking credit cards at live gigs and on your website, or having enough five dollar bills to make change for 100 CD's at $15 apiece, you have to keep it simple. If purchasing is difficult, people don't bother. For instance, at our shows we try to divide people into two lines while I'm signing. One line is those who've already purchased; the other is those purchasing now. The down side is that people purchasing "now" see the other line, and think they'll have to go to the end of it and wait all over again. So instead of losing those sales, I go right/left right/left, and everybody's happy.
It's not difficult to set up a credit card account; your local bank can do it for you. On-line places like CDBaby will help as well. If you have a Costco card, they'll help. And it's surprisingly inexpensive, considering the return. On the occasions when we don't use credit cards at gigs, our sales drop by almost half. It's simple, too; you swipe the card, take their phone number (and on large orders, their driver's license number), then give them a receipt. When you get back to the hotel, you call a toll-free number and punch in the credit card numbers and amounts, then write down the approval code. Nowadays, we've even got a special wireless terminal; we can either use it to immediately check credit and issue receipts (when high speed/wireless is available), or it will store everything until we reach an area with high speed/wireless capability, then run everything.
As to credit cards and security (for you!), my business manager was very against our using them when we started, reasoning that since I'm not a big enough act to have a telephone line available at the table every night and verify their credit as they purchase, I'd get screwed. Well, in eleven years, we've lost exactly $50.00. Most of the time, when someone's charge doesn't clear, a simple phone call to them will take care of it.
Let people know what items are available. They can't buy what they can't see. This means using signs, posters, a sales person, brochures, or whatever you can think of or afford. We color-Xerox the album covers and use those for our displays, along with easy-to-read signs giving a little detail about the CD, and the price. Ani Difranco carries a nice tri-fold brochure listing everything, which you can pick up at her merch tables before the show. Carrying hangers to put T-shirts up on walls or posts is a good idea, too - folded Tees aren't nearly as attractive as being able to see the whole thing.
And use your on-stage time to sell your merchandise, silly! Admittedly, this can be awkward, but there are ways to get around it. Vance Gilbert does a great rap where he explains that he's selling CD's, T-shirts, and "action figures". If you can make the audience laugh, it takes the sting out of it, and turns your self-promotion from a hard sell into part of the show. When I do press, and on my website, I encourage people to bring their old CD's and albums in for signing. I find that most people, once they're in line with their old stuff, will also buy the new stuff.
I realize this sounds horribly mercenary, and it is. But looked at from another angle, it's also providing something the fans want - they don't have to buy anything, you know! And you're keeping your product out there and alive, while giving the ones who buy it a chance to take home part of the show.
Invest in quality. Obviously there's a limit to your budget, but remember that if you sell Extra Large T-shirts that shrink to Extra Small after washing, you'll be blamed. Fans truly do think the artist controls everything; they expect you to supervise every single detail of your life as they perceive it. And it helps sales to be able to put "100% pre-shrunk cotton!" on your sign.
Make it attractive. This applies particularly to your website photos. First, you do need photos of the merchandise. Our clothing sells best when I'm wearing it in the photos, though we once dressed our dogs up in the merch T-shirts and the fans got a huge kick out of it. CD's sell best if you can either let them hear a bit of the songs (or direct them to Amazon.com or iTunes et al), and you post the entire song list for each album, as well as snippets of reviews and a description. In my own discography, each album gets that information, as well as an "inside scoop" by me.
Know your profit margins. First comes the gross (what you receive for that piece of product), then the "first" net (what you keep after deducting the cost of that product) and what we call the "real net" (what you actually get to keep after all costs). That might break down like this:
Received for sale of one CD $ 15.00
Cost of that CD 6.00
Shipping that CD (pro-rated) .15
Venue percentage (let's say it's 20%) 3.00
Manager commission (let's say 15%) 2.25
Accountant commission (at 5%) .75
Local/franchise tax (yes, let's stay legal!) at 8% 1.20
Your "real net" in this instance, after deducting all the costs, would be $1.65. Hardly worth bothering, right?
Wrong on three counts. First, that person took home a little piece of you, and a memory of the show. They may play it for someone else who'll then buy their own company. Second, let's assume you sell only 20 units; you've still made $48 extra. Third, let's also assume you're a great negotiator and comparison shopper, who manages to buy their CD's for $5 apiece including shipping to you. And that the venue that night takes no percentage because they're good guys and want your business again. And your manager understands how tough it is out there and takes no cut, and you only have to pay the business manager and franchise tax at the end of the year. Your take per CD with this scenario would be closer to $9, a healthy profit. If you sell just 20 a night, you've put $180 into your pocket. Which brings me to my next point.
Be fair. Try to pass savings along to the customers. I do the merchandise purchasing for myself. People tend to give the artist a better break than they will a third party. And don't think I don't beg and argue (though always with a smile)! Because we've been able to keep most of our purchase prices so low, we can do things like an annual website sale, where every item on the website is deeply discounted for a month. We balance it out; most items get knocked down at least by half, and CD's we manufactured ourselves go as low as $2.95 apiece. We also offer "one-time" items at a high price; out-of-print CD's I spend time buying on Ebay, beautiful prints of album covers, sometimes old stage clothing. Whatever I can think of. The fans wait all year for our sale, and we make a huge production out of it, because it spreads the music around. We offer incentives; this past holiday season, anyone who bought anything also received a nice-looking card with my next album cover on it, entitling them to a free gift of our choice at any show. A nice perk for new customers, and payback for loyal older patrons. When we get a good deal on something (for instance, purchasing leftover inventory from a licensor at a dollar a unit), we feature that item during the sale. Fans are really grateful, it's a terrific way to get rid of old stock, and it's good karma - there's enough price--gouging going on out there without us adding to it!
Be consistent, and they'll be loyal. My fans know that unless it's posted on my tour schedule, I will stay to sign after a show - even when I'm not feeling well. They also know about the annual website sale, so now we're stuck doing it every year. And they know that when we run out of an item after a show, they can order it then and there, and we'll pay shipping charges when we get it back in stock. Fans come to depend on things like that.
Be responsive! Customer care means everything these days. So many times, you'll purchase something, or try to get information, only to find yourself given a run-around, or sitting on hold for thirty minutes, or worse yet, completely ignored. I have three people who check the email account each day; most of our queries and complaints are dealt with in 24 hours, 48 max. If someone finds a shirt doesn't fit, and it hasn't been worn, we'll exchange it in return for the postage. If someone got a damaged CD, we'll exchange it, no questions asked. I'd rather lose a few dollars, and inspire consumer loyalty, than pick at the nickels and dimes. Believe me, those people turn around and purchase more!
Think like a fan. Our imports, and self-manufactured CD's, aren't shrink-wrapped. I never thought about it; I figured everyone knew the US is the only country stupid enough to do that. However, during last year's sale one gentleman bought all the CD's, then wrote me a very angry e-mail saying "If I'd known they were used, I'd never have bought them. You really should tell people up front!" I immediately wrote to explain, then posted a note on our CD page explaining as well.
Understand that your product is money. I'm always amazed when other acts sharing the bill with me dump 20 CD's on the table and wander off for an hour or two. My person isn't going to stand around guarding someone else's stuff, the hall is filled with hangers-on, and the box is laying there open for all the world to see. Would you leave three hundred dollar bills laying there? But that's what they're doing.
Know how far you're prepared to go. Will you stay after every show to sign? Once people are used to that, they resent it if you don't. Will you take the chance on a bank loan to finance the initial purchases? If your sales are good, will you allow management (or whomever) to take a bite? If the venue wants 40% of gross, will you sell or walk? Think about these things up front, so they don't catch you off guard when they happen. Some city-run venues have to take a certain percentage, and there's no negotiating - it's defined by the city.
Some clubs have gotten incredibly greedy; the last time I played the Iron Horse in Northampton, Massachusetts, the new owner demanded a very high percentage, refused to return phone calls asking him to discuss it, showed up three hours later than promised (so there'd be no discussion before the show was over), gave us a table that wasn't big enough to place a credit card swipe and a box of CD's on... and adding insult to injury, placed a "watchdog" over us who wouldn't let my own person handle the merchandise, much less the money.
Now, I don't steal from venues. I don't miscount, and I don't allow anyone working for me to cheat, either. I have a pretty good reputation, and it insulted me that he'd behave that way with no reason. The final straw was watching him take that same percentage from our opening act, who'd drive in from Boston for the show. These two kids sold a big three CD's, and out of that and the $50 he was paying them, they had to cover gas, food, and lodging. It really burned me. I told him what I thought of him in no uncertain terms, and I won't play there until he's gone. People like him, confronted with the unfairness of what they're doing ("How can you possibly charge me 40% of gross, with me paying all the taxes and shipping, give me a table the diameter of a stool to sell and sign from, with no light anywhere for me or the fans to see, then suggest that I make up that 40% by raising my price by $5.00 a CD?!"), huff and puff that they need that income to survive. Bullshit.
Hear me loud and clear. I have no problem with a venue taking a reasonable percentage. If they go to the trouble of giving us adequate table space, good light, helpers who can get people into line, and people who have to stay an hour overtime for us to sell the merchandise, I think it's only fair that they receive something. But there's a limit.
We have a standing rule: if the road manager thinks the venue is being unfair (they want 40%, they won't provide a table or someone to watch merchandise during the show, etc.), we don't sell. Instead, I explain to the audience that I'd lose money on each sale, and suggest they go to the website. I say it nicely, I explain that I understand the venue's position - and the venue gets the point. It happens very rarely - you'd be surprised at how reasonable venue managers become, when they realize their choice is between being reasonable, and not making a dime.
When you're operating with the instincts of a singer/songwriter, rather than a P.T. Barnum, choosing merchandise can be tricky. There are pitfalls galore, and it's your own hard-earned cash that falls into them. I thought dog tags would go like wildfire, especially nice brass ones with Breaking Silence stamped on them. We sold about 10 dog tags over the course of an entire tour, and had dozens of requests for mugs. You would be amazed at what people will (and won't) buy — I once literally auctioned the shirt off my back after a show for a fund raiser, and got $450 for it!
Things I've seen in other peoples' merchandise racks recently include T-shirts (all colors, all types, with artist's name on front, back, sleeves, collars, or not at all), mugs, jackets (suede, leather, denim, nylon), boxer shorts, condoms, hats, songbooks, tour books (usually combining song lyrics with bio material & lots of photos), key chains (from the really cheesy plastic kind country artists usually sell to nice pewter, with leather thongs), luggage tags, guitar picks—we've come a long way from buttons, folks! Lots of people offer photos, too; at $2-$8 apiece with a cost of around 25 cents, they're a good investment. We don't do it because we find that people then buy photos instead of CD's. And on occasion, photos can turn into a nightmare. For instance:
We played the Portland Zoo amphitheater to an audience of around 3,000 last summer. My partner had decided she was tired of carrying around the four or five hundred photos we had remaining, so she offered one free with every purchase. In addition, the zoo was trying to raise funds for Packy the Elephant, so we sold photos for $5 each at the other end of the field, with 100% of the profit going to Packy. We promised I'd stay after the show and sign.
Do you have any idea how many small children can weasel $5 out of their parents to buy a photo and help their favorite elephant? And of course, for every 7-CD set we sold, we gave away 7 photos. All of which had to be signed to various friends of the purchaser. After the show ended we had over 600 people in line, each clutching their photos. Over the course of four hours I signed every single one, though I had to stop shaking hands around halfway through. I then proceeded to destroy any photos we had left!
When it comes to purchasing merchandise, and dealing with manufacturers, I just ask everyone I know for recommendations, then speak with each entity directly. Since most of the people selling product will have a label deal, you might want to know that (as rude as this sounds) pretty much every company you deal with, including the independents, is lying about how much they have to charge you to buy your own product. I've paid anything from $9.70 a CD for my album Breaking Silence, to $4.50 a CD for my Oh Boy albums, and it's all nonsense.
The bottom line is that it costs your company somewhere between $1.00 and $1.75 to make your CD; that includes the jewel box, art work, and shipping costs. The average price they charge you is $6-$8, delivered. Their reasoning is that they have to pay mechanical royalties to us (though usually your statements will come through calling the CD's you've purchased "promotional", so you don't get paid mechanicals), publishing royalties (see previous parentheses), etc.
The real truth is that if they can sell the CD's to a retailer for $6-8 apiece, why should they sell them to you for less? The ugly truth is that they'd all rather be selling through major chains in order to get those SoundScan numbers, which look good on the annual reports. And while you can send in SoundScan sheets to the label from your live shows (hoping they remember to forward them), you can't do it with your website sales.
As artists, our main concern is to get our product heard, which hopefully leads to more work, which allows us to make more records and start the whole cycle over again. Unfortunately, record companies don't think like that.
I'm in the very fortunate position of having independent licensing deals with several different territories, which gives me some bargaining power. If I want to order 500 CD's, or even 50, I can go to different entities in Europe, America, Australia, Holland, and see who'll sell them to me cheapest. It still doesn't get down to the $1.45 price, but it does save me some. Most of us aren't that lucky, so my suggestion is that you bargain with your record company. Keep in mind that record companies have two prices for artists who want to buy their own recordings: re-sale price, and promotional price, which is substantially lower. Since we send out dozens of free CD's each month to venues, charities, and the like, I buy a portion of my CD's from the label at promotional pricing.
If possible, put it in your initial contract that all product will be sold to you at the lowest price offered any other retailer or artist. (This assumes, of course, that they will allow you to sell your own product, which is a whole other article.) If necessary, beg.
Artists have a rough time negotiating - most of us have no experience with the give and take, the joy of battle and eventual compromise. I remember watching my manager and business manager take opposite sides of an argument over my next tour, literally yelling at one another for twenty minutes, and suddenly realizing that they were enjoying it! I will never, ever understand how someone can take pleasure in whittling away at a deal, point by point, line by line, when it would be so much easier to honestly say "Here is what I can afford to do. Here is what you can afford to do. We both want to make it work, so let's agree to meet in the middle," and move on to something more interesting, like writing a song. Since those people don't write songs, I can only assume this is their way of fueling their creative juices.
There is, however, a lot to be said for learning to negotiate. For many of us, it can make the difference between earning a living, and going under. If you don't know how to negotiate, or the rules of negotiating, you're at the mercy of those you hire to negotiate for you. How will you know if they're getting you the best deal, unless you can give them reasonable input based on your own knowledge?
My first rule is: Don't be afraid to ask. Most artists live in a state of siege, terrified of everything - worried our talent will desert us, managers will leave us, business people will defraud us... it's a wonder we ever get anything done! The idea of asking for something that's not directly connected to our creative work is very scary. But you have nothing to lose by asking.
Even better, don't be afraid to ask and then to explain. If the venue contract says they get 20% of your merchandise (remember, that's 20% of your gross), what's the harm in going to them and explaining that your profit margin is really low, it's been a rough summer, and could they possibly come down a little? Sometimes they won't - but sometimes they will.
Ditto with management; your manager wants to build your career. That's hard to do if you can't afford to tour. Sit down and discuss profit margins; maybe management will forego commissions on merchandise, or commission on net only.
Don't be afraid to speak up when you're negotiating a contract, either! I had a major company after my print rights for several years; I kept turning them down, because I knew I'd want to offer that product for sale myself someday, and I couldn't afford to do it at the price they were going to charge me. One year I happened to be at NAMM (National Association of Music Manufacturers), and ran into the president of the company. I told him how much I'd like to make the deal, explained the problem to him, then broke it down dollar by dollar, proving that to sell at his price, I'd have to lose a dollar per unit!! He gave me a better price.
Don't be afraid to turn your back. Venues are getting unspeakably greedy about merchandise lately. Some of them think nothing of charging 40% of gross on all merch, and then deducting taxes off the top! It's grossly unfair, but they're getting away with it. The huge acts sell their merchandise touring rights to companies that give them a lot of upfront money, so it's affordable for them. For us small folks, it's a killer. I find that people will either help me out a little, maybe lowering the cap on CD's but keeping it up on T shirts, or compromising because we bring our own sales person - or they won't help me at all. On a couple of occasions where the venue percentage was too high and we would have been losing money on each sale, we've just packed up the merchandise and refused to sell.
I have heard of people turning around in that situation and parking their van or bus across the street, then selling from there after the show. I haven't done it yet because I hate leaving that kind of bad taste in everyone's mouth, but if venues continue to insist on raking off most of our profits, it'll come to that.
On the other hand, if I'm asking the venue to provide tables, chairs, lighting, possibly security people, and I'm keeping everyone from going home an hour earlier, I figure it's fair enough to give them a percentage. Just not too much. And 40% is too much!
We threw a clause into our last rider stating that if the venue took a percentage of merchandise, we received the same percentage from their liquor and food sales. My agency was appalled, but a few of the venues said it made them think twice about their own greed level.
A last point -- I carry my own person to sell merch whenever possible. This means I have someone intimately familiar with my material to explain, cajole, relate with the audience each night before I get out there to sign. They already know how to do the credit card stuff and the like. Often, the venue will come down on percentage when they realize they don't have to hire an extra person to help you.
In addition, with my own merchandise person, I don't have to worry about counting in/out, .or venue staff "losing" a few CD's into their own pockets. Don't get me wrong - we usually discount merchandise to venue staff, and often give it away for free (not feasible, when there are 30 ushers and 20 crew!). But I recall all too clearly one instance a few years ago, where the staff weren't expecting us to count back out at settlement. We did, and found they were 25 CDs short. (In other words, we hadn't received any money for 25 CDs.) Oddly enough, those CDs turned up under a nearby table...
If you have a good road manager, who is told that's part of his job, he can sell before and after, and all you'll need is someone to watch it while you're both working the show. A trusted friend in that town might be willing to help out, too. It's all worth trying.
We keep a list of everything necessary for the merch to go out on a long tour, and adjust it according to the number and size of venues I'll be playing. Our list includes:
Last but not least, we carry merchandise settlement sheets. Each sheet includes the name of the venue, location (city and state), and date, along with a list of the products we're selling that night (and how many came in, how many went out), the price we're selling each item for, whether the money was received in cash or credit card, and any other pertinent information for that tour. We also have a "comp column", where sales people can note CD's I might decide to give away free to someone. At the bottom is a space for the gross, another specifying the venue percentage, another for any city taxes we had to pay, and a final space for our net. At the end of the evening we count up the total, pay the venue, have them sign in the space provided, put it in an envelope, and turn the whole thing over to the business people.
Settlement sheets are good for a few reasons. They allow you to track, daily, monthly, yearly, what sells and what doesn't. Because the venue person signs off, the IRS has no choice but to allow you to deduct the venue percentage from your taxable income. If you operate on a profit plan with your staff, it keeps it cleaner. And it's a little bit of organization amidst the chaos. At the end of this article, you'll find a sample settlement sheet.
Safety and Sense: We play a lot of smaller gigs that are put on monthly by a local promoter or organization; they usually take place in a local church or public school. A lot of them are run entirely by volunteers, which is fine if they're trained. But if one more ostensible venue "merchandise salesperson" says to me "I do this every month, you know", I will go berserk. This seems to be the standard amateur's line when we get to a show and start discussing set-up - they know best, and we are supposed to be silent and let them do it the way they "always do it." That attitude drives me crazy. After all, we don't do this just once a month; we do it 200 times a year! Doesn't it occur to them that after all this time, we might have learned a few things?
I know that in a smaller crowd, one-third will stay after the show to get things signed. In a 350-seater, that's about 120 people crowded around the table. I also know that they're going to be excited, and worried that I'll leave before they get their stuff signed, and without meaning to be rude they'll start pushing. That can get dangerous, so it's imperative that our merchandise table be set up somewhere with a "clean flow" around it - in other words, we can line people up, and keep them organized. We also don't want to interfere with other folks who just want to leave the theater, or to block exit doors and bathroom access. I know my audience likes to take pictures with me, which means I have to be at the end of the table rather than the center. And there is the occasional weirdo, who wants to get right back there with me and "help" me sign, so I need a chair or a person on my open side. Really, we have a pretty good handle on what we need, and what the fire regulations are.
But for some reason, the people who "do this every month" for their organization often refuse to listen, and insist that we set up the way they prefer. This inevitably leads to a nightmare for us, while they stand back apologizing as we clean up their mess. This last year we've dealt with fire marshals closing us down because the exits were blocked (we finally convinced the theater manager to let us re-route the lines, and the marshals helped), a sudden gust of wind that blew an outdoor table into the crowd (because the organizers insisted we set it up in the middle of a field, rather than the side of the stage), several hundred very angry people who'd been given conflicting information about merchandise prices by theater management (who hadn't checked with us), a table we had complained about that finally collapsed (fortunately on our merch person, not an audience member), and batches of other silly problems that no one should have had to cope with.
It's not just the irritation factor that bothers me; it's the clear danger to audience and crew members in some of those situations. No one wants to contemplate what will happen if there's a fire, and people can't get out because our merchandise is in the way of the exits!
Now, I've gotten very hard-nosed about it. We begin by politely explaining what we expect will happen, and how we expect to run things. If the "regular" merch person from the venue won't work with us, we insist on doing it our way anyhow, or not doing it at all. We try to explain why we're being that way, but sometimes we still offend. At this point, I'd rather offend someone than take a chance. Believe me, once you've dealt with two hundred disappointed, angry fans, all of whom hold you personally responsible for the mess, you learn to force the issue.
Pricing your product: If you're headlining, you set prices, and your show contract usually states that no other act on the bill can sell for less than you're charging. In other words, if your CD's are $15 apiece, everyone else's must $15 or less. This can work for you or against you; I've done shows as an opener where they insisted my CD's be priced at $20, and my T-shirts at $25. I couldn't do it, so I just handed out newsletters.
Counting in: Some venues like to count in; I don't like it, but I understand their concerns. Just as some promoters rip us off, some artists rip promoters off. Last year we played a big venue in Atlanta and sold a lot of merchandise. It was a long day and a longer night, and after paying the venue we got back on the bus and left. About an hour later we did a recount and realized we'd shorted them $38. I told the road manager to send them a check with a note of apology; but his reply was "Why? They'll never know." The road manager was fired shortly thereafter; the note and check went out, and we'll never have to count in for that promoter again. I like having a reputation for honesty - it saves time.
Space is sometimes a problem, particularly with two or more on the bill. General etiquette is that the closer, or headliner, can do what they want. We make room for other acts at our table when possible, with the understanding that after the show we might need some extra space for me to sign from. When I'm the opening act, I find the lead act is usually very generous, too. (I say "usually" with a wince here....) Space really has to be a case-by-case issue, dependent on availability of tables, personnel, room size. I allow my merchandise people to sell for other acts before and during their part of the show, but I don't require it of them - they're the only ones who can judge how busy they'll be that night. It can get messy if you're using credit cards, too; I insist that if my person is selling for another act, the sales be separate, and the other act's cash only.
If there are several people selling, or the venues has stuff of their own to sell, try to get your own separate table if you're planning to stay and sign - it's less confusing for the audience.
Speaking of opening acts, try to be clear with the opener if you're headlining, about everything from your space requirements to when they can and can't sign. (For instance, you don't sign while someone else is performing, unless it's at a big outdoor festival.) In the same vein, if you're opening, try to get a handle on what the other act expects of you.
Here is what we normally do: we choose a site as close to the stage as possible (though not so close as to interfere with load-out), or somewhere between the stage and the main entrance/exit. Ideally we have a six-foot, extremely stable table covered with a black drop-cloth. Behind it are two chairs, one for me and one for the sales person. The table must be somewhere convenient for gawkers, so people can see what you have for sale, but secure enough that theft isn't an over-riding concern -- I like to have a wall behind the chairs instead of open space. In an ideal world, there's enough room for people to exit the building and for us to form two lines; one for autograph-seekers (those who've already purchased or just want to say "hi"), and one for those wanting to purchase. In larger venues, we have a security person at either end. We hang our T-shirts on the wall behind, and either put up an easel with our display or hang that, too.
We try to set it up so people exiting the show will first see the product display, then the sales person, then me.
We also always put out a sign saying "Janis will be staying after the show to sign", because people don't believe it. No matter how many announcements they hear before the show, they still think you're going to run out on them. That's why, when possible, it's a great idea to walk directly from the stage to the merch area if you can.
A sales person needs a lot of patience, something I'm short on. I've found over and over again that venue representatives will blithely treat my sales person cavalierly, assuming I won't hear about it - then become sugar & spice when I show up! Audience members will do that, too, behaving in the most bizarre manner. At least once a week we get to hear these:
"How much does that $15 CD cost?"
"Who's singing on these records?"
"I know you said you only carry XL T shirts, but are you sure?" Yes we're sure, we only manufactured one size. "Oh, I know, but are you sure? Can I look anyway?" No, they're all folded. At this point the person dives for the T-shirt pile and tears through it, looking for non-existent sizes.
There's always at least one person who knows your catalogue better than the salesperson - in fact, they know it better than you. Last week someone insisted to me that I'd written Joni Mitchell's "Free Man In Paris," and I finally agreed just to get rid of him.
There's often a snob who stalks the table all evening muttering things like "How revoltingly commercial" and "This has gone too far". That can be irritating, but try to avoid the temptation to say "If you don't like it, don't buy it" or "Drop dead". It will only alienate other people waiting to buy.
Lastly, there's always one person who can not be satisfied. An overweight person last month kept yelling that I discriminated against fat people because we don't carry XXXL T-shirts. Folks, at a minimum of 250 per size, there's no way we can carry them!
My current rule of thumb is that in any venue under 1,000 people, and at most outdoor gigs, I will stay to meet & sign. It creates a more loyal fan base, allows people the joy of meeting someone they admire, and gives me feedback. There are times I regret doing it, like when I caught a 6 am flight to sit in a van four hours to make a show and then drive another four hours to the next town after spending two hours signing, but in general I enjoy it. I like my audiences, and the thrill it gives them is considerable, at little cost to me. And frankly, I operate on a pretty low profit margin as a touring artist, so those sales really help.
I try to do my part to help sales, announcing from the stage that I'll be staying. I also stress that they don't have to buy something for a signature - my feeling is that with ticket prices $15-$55, they shouldn't have to buy anything else! I've found over and over again that people from my last gig in that area show up again with friends in tow, having promised their friends they'd get to meet me. Sometimes it feels pretty mercenary to push it from the stage, but I try to make a joke of it, and I'm also aware that no matter how many announcements they've heard, they only believe I'm staying if I say it.
Once I'm at the table, I stay right out of the business end. For instance, many artists take checks. Every time we've tried it, we've gotten badly beaten, so now we only take cash or credit cards. At least that way, if the credit card's overdrawn we can just call it in every few days until they make their next payment, at which point we're first in line. With a check, we're just sunk. Audiences never object to this, but sometimes the "regular merch person" at the venue does. When they do, we have a standard offer - if the venue will give us cash for all the checks at the end of the night, we're happy to do it. So far we've had no takers. But if someone approaches me directly trying to pay that way (or get a discount - you'd be amazed at what people try!), I politely refer them to the sales person. It avoids me being the bad guy, and lets me concentrate on what I do well, which is chatting with fans.
It's terrible to say this, but the ideal audience for merchandising sales is probably comprised of long-time fans who'll buy one of everything, and slightly drunk people who will do anything to impress their dates. We try to talk drunks out of large purchases, since they just wake up mad the next day. In fact, we try to talk them away from the table, since once they get hold of your hand to shake, it's difficult to make them let go.
The main problem I have is being squeezed to death. For some reason people think guitarists appreciate a firm handshake. After a two hour show of steady playing, the last thing I want is someone mistaking my hand for a pump-action rifle. People will also hug too hard, which I find uncomfortable, or get all "touchy feely", which really irritates me. I don't have a problem posing for pictures with my arm around a fan's shoulders - in fact, I like it - but I really loathe it when some complete stranger starts rubbing my back or fondling my forearm, commenting on my muscles or explaining that they're a massage therapist.
By the way, massage therapists seem to offer their services free to performers a lot; I'd be a little cautious before taking them up on it.
Still, there aren't too many problems if you set limits. Limit your time, your space, and guard them. If someone begins telling you their life story, don't hesitate to say "I'd love to hear it, but I have all these people waiting and they're going to get angry... I read my own email, would you mind sending me a long letter I can read at my leisure?" This usually works; when it doesn't, ask them to wait until everyone's left, then tell them you have to go soon. Also, let the security people or sales people know what you're willing to do, and what you won't do -- eg I'll pose for photos right near the table, but I won't leave it. I'll sign T shirts, pants legs, hands, but I drew the line at body parts when a woman came up and tore off her shirt for me to sign her right breast.
Remember that people are scared you'll leave before they get a chance to meet you - if it's a long line, have someone go up and down the line reassuring them.
Be prepared to spend a little money to generate goodwill. We often give T-shirts or key chains to kids and birthday people; when one woman drove seven hours to see my show, we gave her a bunch of souvenirs.
Ask them to spell their names; we have a little sign requesting that, with "Susan" spelled out "Susan, Suzanne, Suesanne, Suisanne, Soozen" just to make the point.
Above all, enjoy yourself. Fans love to see you having a good time, and it leaves everyone better off for it. If nothing else, it keeps us humble, and reminds us that we are, in fact, lucky enough to be in a business where in addition to being a commodity, we're allowed to be heroes to many of the people who come to hear our work. That's pretty cool.
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