Merchandise Marketing

All artists need to optimize all possible revenue streams and understand that although being a musician is at its core a creative endeavor, it is also a business with income, expenses, employees, and vendors. With all businesses, one has to spend money to make money. One of the most lucrative moneymaking areas for artists is merchandise. If you have the right demographic in your music and your merchandise is put together in the right way to serve that demographic, then it can become a very healthy and important part of your business.

If you are an artist just starting out, you are going to be handling your merchandising yourself, solely responsible for all creative and financial decisions. Artists can handle all the merchandising themselves by working directly with the printers and manufacturers. Artists that create their own merchandise have complete control of quantities and distribution. Creating merchandise is a time-consuming process, and many artists opt to receive a royalty from merchandisers and focus on other areas of their music and business. Artists can take a major financial hit if they overproduce items or create unpopular items that don't sell.

Many larger or more established  artists will work directly with a merchandiser themselves to license the right to use their image and create merchandise on their behalf. Merchandisers typically take a percentage of the total sales (usually around 30 percent) and provide an advance against projected earnings is recoupable from sales. Merchandisers also can provide a better margin on goods because of the volume that they create.

If you've provided your merchandising rights to your label to license out, or licensed the rights out to the merchandiser yourself, your involvement in the merchandise process might be limited. It's not unusual for a record label to request exclusive merchandising rights when negotiating a contract with a band. Usually a label that negotiates merchandising rights from a band will then work as the licensee with a merchandiser to manufacture and sell merchandise displaying a band's image and trademarks in return for a fee. The fee is then split between the label and artist in a predetermined manner. 

This type of arrangement is the least lucrative for a band. Other than the fact that the label is taking a cut of the merchandise sales in their "middleman" role, in many cases royalties from merchandise sales are cross-collateralized with record royalties, meaning you're not going to see any dough from merchandise until your record recouped. You'll likely be only working with the label and merchandiser to find artwork and products that you feel comfortable with, and collecting your royalty on items sold.  But, if you are going your own way, from item idea to manufacturing to keeping to a budget, you are going to need to create a plan.