SaskMusic

BY SKIP TAYLOR FOR SASKMUSIC


Things have changed drastically in the music business in the last 10 years. Physical CD sales have continued to spiral downwards and musicians have been forced to adapt and become smarter at how they handle all areas of their business to survive. More and more, merch sales have become a larger part of the average independent artist’s overall revenue plan.

Merchandise sales has become an area of great innovation and increased efficiency for those artists trying to maximize revenue. As the industry has gone through great transitions, many different business models have emerged. In this article I am going to be discussing some general “best practices,” but depending on your business model they may or may not be right for you. Ultimately, you will have to decide what is right for you and your business.

How Much and What Kind?

The first thing to consider is: do you even need merch? If you are drawing 30 people paying $5 each when you headline a show, you will probably not need much more than CDs and one T-shirt design. There is no point in having 30 different merch items in 12 sizes if you are only attracting 30 people to your shows. If you are in this camp, you should consider minimum runs for both CDs and T-shirts. Although you get a break on the price if you order 1000, having 900 CDs or T-shirts in your basement is not going to do you any good!

As your fanbase grows, you can certainly start to add merch items. Additional T-shirt designs and sizes can be implemented. If you are playing to 100-400 people, having additional sizes can start to pay off. More and more artists are starting to look for novelty items that have some connection to their band. I am not saying you should go out and be KISS and put your name on everything, but if your band name or album title lend themselves to a specific novelty item that you think will appeal to your fanbase, why not consider it.

In Venue Awareness:

Independent artists have become better at merchandising at their shows, but there are still occasions where I have seen a band hauling around a tub of T-shirts, CDs and key chains...and the only way the audience knows that tub exists is by talking to a band member. I suggest you take a page out of the greatest merchandising company in the world: Wal-Mart. Think about what you experience when you enter one of their stores. What is always at eye level? Price points. Every rack in their main aisle has a variety of price points. Consider yourself as the headliner of your very own Wal-Mart. There should be no doubt in your audiences’ mind that a) you have merch, and b) how much it costs.

The clearer you are with this message the better off you’ll be. Taping T-shirts up on the wall with hand-written prices may be fine for smaller venues, but as the venues and audiences grow, you should consider professional signage, banners etc. In-venue branding with banners, backdrops etc., continues to drive home the message of who you are. You want the audience to have no doubt about whom they are there to see.

In-Venue Competition:

Don’t forget that your merch is not the only thing competing for the audience’s money. Booze, VLT’s, cigarettes, and food are your competition! Every dollar the audience spends on these items is one dollar less they have to spend on your merch. If the audience is made aware of the merch costs as they enter the venue, that price will be stuck in their mind, and if they like you they will subconsciously do the math to try and keep that much cash available at the end of the night.

Keep in mind, though, that the later you perform, the more likely it is that booze is going to win out! You can use this to your advantage. If you can negotiate playing two sets (instead of one), consider doing your audience meet-and-greet and merch signing in between sets. The audience is likely to have money still available, and once they have met you and bought some merch, they will have a stronger connection with you…and will most likely be more engaged in the second set. This is not to say you can’t still go back after the end of set two and do it again.

Merch Table Strategies:

Merchandising basics have not really changed in years. Every artist is going to have a different core demographic. The trick is to understand who your audience is, and what they will respond to. Is your audience university students with no money? Better make sure you have $10 T-shirts. Do you play martini bars that are frequented by bankers? Maybe you can sell a framed autographed poster for $75. These are two extremes, but hopefully you understand my point.

Multiple Price-Points:

Having three or four different levels of price points is a good way to give audience choices. Experiment and track what your audiences respond to. This can also help you to identify super-fans. Super-fans can be critical to your longevity. If you see someone buying at the optimum level, you should make note of it and consider something special for these fans.

Bundling:

Putting a couple of items together can be used in a variety of ways. You can bundle to create one of the price levels discussed above. You can bundle a fast-moving item with a discounted, slower-moving item. This can be especially useful as you are approaching the end of an album cycle. Package those items together to blow them out, even if it’s at cost or a slight loss. Once you release a new album with new images and branding, the previous merch becomes almost impossible to sell. Blow it out by bundling! I mentioned booze is a competitor for audience money. If the venue and local laws allow, why not bundle your CD with a shooter? Keep your friends close but your enemies closer!

Impulse Items:

It is not a bad idea to have an impulse item available for $5 or so. The only thing I would caution is to make sure it is too small/awkward to put an autograph on. Guitar picks, key chains, etc. are good choices. If the audience wants your autograph, it is a good idea to make sure the only items that can be signed are of a minimum price that you are comfortable with.

Artist Interaction:

I have mentioned autographs and meet-and-greets...the assumption being that you are already meeting those that are buying your merch. Connecting with fans is the most important thing you can do, especially if they are willing to pay out money for merch. True fans take pride in having that personal connection with an artist, and the more fans you can personally connect with at the club level, the better off you will be in the long term. Be sure to announce from stage that you will be at the merch table.

Payment Methods:

Cash has been the preferred method of payment at merch tables for decades. Most venues now have ATMs right inside them, meaning there is little barrier to people getting cash. The barriers to accepting credit cards and debit have come down in recent years, and there are even machines you can connect to your iPhone to accept credit cards. It is important that you understand the spending habit of your customers, and the availability of cash machines at the venues you play. It might be a question you ask a venue during the booking process. If they don’t have a cash machine inside and you are expecting a large crowd, it may be worthwhile to set up credit card capability. Understand that whatever service you choose for credit and debit, you are going to give up a percentage in service fees. You may have to do the cost-benefit analysis to decide if it makes sense for you!

Track It:

Whether by spreadsheet or napkin (I suggest spreadsheet!), keep track of what is selling and where. The more data points you keep track of, the better decisions you will be able to make when returning to a venue or when it is time to order more merch. Things worth keeping track of are: venue, date, day of the week, items sold, non-selling items, pre show sales, post show sales etc. There are many variables that might reveal themselves with the more data you collect. Some venues might be better for girlie T sales. Some might suck altogether. Perhaps buck-a-draft night means you sell nothing. The more data you keep and track, the more tendencies will emerge and the better decisions you will make!

Above I talked about credit cards. This is another data point you can track - How many people ask if you take credit? How many ultimately did not buy merch because you didn’t? Track these lost sales. If the evidence overwhelmingly points to an increase in merch sales on this data point, it will give you greater confidence to take the plunge and accept credit cards.

There are other important benefits to tracking your sales. If you plan on applying for funding to FACTOR or most other funding agencies, they will want to know your sales. Official records will be required and certainly, the better records you keep the more reliable the funders will feel your data is. FACTOR has a Merch Tracking sheet on their website (www.factor.ca > Documents). This may not be the most robust tracking sheet out there, but it should certainly give you some data points to consider.

Reporting your sales to Soundscan is also a very important step to consider if you are serious about legitimizing your venue sales. Most of the big digital distributors (CD Baby, Tunecore and ReverbNation) all include Soundscan reporting for your digital sales, but venue reporting is a completely separate matter. Soundscan requires independent artists to pay an annual fee of $500 to report venue sales. This is a serious barrier to reporting, so you definitely have to weigh the benefits. If you are on a label, the label can pay that fee and cover off several artists. More info on Venue Sales tracking with Soundscan can be found here ( www.nielsen.com).

Conclusion:

The suggestions listed above may seem like a lot of work. The reality is that merch sales will become an ever-increasing revenue source for independent artists. The better you get at doing it now, the more it will pay off in the long term. Maximizing your merch may make the difference between just breaking even, and turning a profit for an independent artist.


Skip Taylor has been involved in the music industry for over 20 years. Until recently, he was the Universal Music Promotion Representative for Saskatchewan, holding that position for 14 years. He was responsible for promoting, marketing and securing publicity for the entire Universal Music roster in Saskatchewan, including The Tragically Hip, Sam Roberts, Hedley, Buckcherry and many more. Recently he launched SKIP: Artist Services, a music business and career planning company.