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The Independent Venues Hopping on the Merch Cut Reversal may Fuel a Live Music Renaissance

Evan Dale // Sep 30, 2023

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Margins are incredibly thin for independent artists, and that’s assuming that an artist is even in the black at all. Studio time is expensive, so why not make your music at home? Home equipment and software are expensive, as is taking the time to learn how to use them and produce to the quality that a modern ear knows. Getting paid off of music consumption requires a seemingly insurmountable peak of streams. Touring is a razor thin balancing act of the checkbook, ups for artist fees and back down again for traveling, lodging, eating, drinking, and experiencing just what it is that being on tour is actually supposed to mean for an artist - yet alone one that is wholly independent of a contract. So, why not sell merch on the road? Time-consuming to design, expensive to produce, and yet just when an artist thought they may have actually found some wiggle room to make a little profit with it, and make someone’s day with a tote bag, the venue takes a cut of that, too. But, there is light.

The venue cut of artist merchandising is indeed a niche issue, but it’s one that has all but eliminated the profit margins of so many artists on tour, who are simply trying to spread their music and fight for a wider geographic following in the process. In the wake of Covid, however, that has become even more challenging, not only for artists and their teams, but for venues, their employees, and the overarching infrastructure that frames the whole thing. But, along with LiveNation - who in partnership with Willie Nelson, launched their ‘On The Road Again’ initiative to simultaneously strip steep and unwarranted merchandising fees from artists at certain venues, along with financially supporting venue employees, touring artists, and their teams — local venues like Cervantes Masterpiece Ballroom — itself independent, and a stalwart of the wide-ranging live music scene in Denver — are making progressive headway, eliminating what is otherwise a staple thorn in the side of touring artists, and supplementing the live music industry with tremendous influence.

Let’s start with the basics. Since, in 2020, only 2% of all artists on Spotify made at least $1,000 in annual streaming royalties, they have to make their money through different methods. Even for an established artist, the average single stream on Spotify nets a musician $0.0004, so even those who have made it into a more mainstream circuit are supplementing their streams with other, much more lucrative streams of income. Touring can close the gap between expenses and income for independents, where artists take home their pay from a venue. But it’s been divided up between all of the teams involved, and pumped into the unpredictable economy of life on the road. Some venues will grant a bonus structure for drinks sold at a given show, incentivizing a larger crowd, but even so, margins remain thin. So, showing up with tour merchandise and setting up a table to sell it has always been a method to net even the most emergent artists working the smallest venues a pretty penny.

Let’s say an artist headlines a venue that caps at less than 500 people, which conglomerators like LiveNation have long called ‘Club Venues.’ The average artist fee for such a show is $2,100, which per the average is the equivalent of 545,000 streams on Spotify. The average merch tee shirt is $35, and to make it easy, let’s assume that the production of those tees cost $15 each. The profit margin on one tee shirt is $20. 105 tees sold - at the venue or otherwise — is the equivalent to booking and performing an entire club show. If an artist is on tour, they’ll likely have a dozen or more opportunities to unload their merch, and merch frankl, tends to be a sunk cost to artists and their teams — something they paid for and paid off long before they even start touring. Most of the time then, it’s a $35 profit, and therefore the sale of 62 tees is the equivalent of an entire club show. There is simply money to be made here with margins much better than other income streams provide. At the very least, it’s extraordinarily supplemental.

But, industry be damned, venues — especially steep when historically implemented by venues owned by the big three: AEG, AXS, and LiveNation, have traditionally taken a 20% - 30% cut of an artist’s profit on merch sales, even when the artist and their team are the ones running a booth after their set. So, to earn their money back, they need to sell 20% - 30% more merch. 105 tees becomes 126 - 137. 62 turns to 74 or 81, usually for no reason other than greed of an industry, and its giants, that have historically used and abused the artist they rely on.

Expectedly, it’s not just the work of LiveNation — but a collaboration with one of history’s great progressively artistic names — breaking down obstacles and making waves. LiveNation has taken down their merch fees — which should have never existed in the first place — at those Club Venues, but not the others yet. And evermore a landslide of the norm, independent venues, which boast more authentic roots and community and artistic connection than the big three, are joining in the effort to rethink the possibilities and the future of Live Music. It’s a trend that will only keep on trending, swallowing established expectation in its path and fueling a renaissance of live performance in the wake of the original pandemic lockdowns, and subsequent slowdown.

For its part particular to Denver, Cervantes Masterpiece Ballroom is no stranger to pushing the envelope, and being on the right side of history for artists and the community. Since the 1930’s, the Casino Cabaret - a name still proudly displayed out front of what has been Cervantes since 2003 - has been playing host to great musical acts, who couldn’t always find a willing venue for shows well ahead of their time. It’s brought names like Duke Ellington, BB King, James Brown, and Ray Charles to Denver. Just this year, GZA took the stage with a live band to play Liquid Swords from top to bottom, in a way that Red Rocks Amphitheater in all its splendor or The Mission Ballroom with all its tech-infused modernity could never bring to organic life. Joey Bada$$ extended his stay in town after playing a Red Rocks show just to spend an intimate evening with a much smaller, much more dedicated crowd at Cervantes. And just when you thought shows there couldn’t become any more unique and inclusive, they rolled out the black table cloths for a seated show with jazz pianist, Corey Henry. The venue is fluid with its artists, its fans, and its community. It’s a dynamic space building up music and the city around it. And now, it’s pushing the boundaries yet again to give back to the artists that have graced its stage, and made it a landmark in the city for more than 100 years.

No more merch cut. Thank you Willie Nelson. And thank you most to the independent artists and venues making such a monumental difference.

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