Ever wonder where the money goes when for those seemingly overpriced $40 T shirts at a concert?
The touring merch business reminds me of the where the record companies’ were in their distant glory days of 20 and 30 years ago. There was so much money flowing from fans to buy records the business models didn’t HAVE to be efficient. The demand from fans was a deep well of money from which the label could draw again and again by controlling the supply of the recorded music. When labels lost control of the recorded product starting with CD-R’s then Napster, et al. the well started to dry up. Now the labels are now seeking areas of the business where there is still control of supply. Those areas are the live experience, publishing, and merchandise.
These days there are as many as 6 different businesses that get a piece of the touring merch sale. If it were split evenly (which it is not) that $40 shirt would provide $6.70 in revenue or 17% for each hand in the pie. But it’s not split evenly. The share to the VENUE is as much as 30%… almost a double cut. POOF! There went the largest share of the merch sales to the venue. Venue, licensee/artist, manufacturer, tour manager, merch company, and label can all be involved for a piece of the merch pie.
The $40 price point could not be sustained without demand from the fans willing to pay it. Nevertheless I believe there are ways to keep a tighter reign on the number of hands in the pie and offer a better product and experience for the fan.
Mobile commerce (m-commerce) with innovative companies like shoptext are poised to improve the process. Their technology allows fans to buy merch from their seats, on their phones and avoids the expense of tour support (transportation, staffing, etc). M-commerce in-the-venue opens the door to a better fan experience with no lines, special offers and more efficient path from merch to fan. M-commerce also has the potential to reduce the number of “hands in the pie”. Add the potential for repeat sales, upsells and other opportunities afforded by CRM and it makes me wonder why we don’t see more of this already.