Merch cuts have been a hot topic for musicians ever since the pandemic; namely in that everyone is sick of them. So I caught up with KW Campol of Mythos Management, Vile Creature, the Prepare The Ground festival to discuss the cuts and how his merch cut calculator (which you can access and use for free right here) will help you and your band get less ripped off.
What are merch cuts?
"So merch cuts have been part of the industry forever. Usually they were just for very large shows. Now they've been starting to make their way down to smaller and smaller capacity shows. A merch cut is exactly what it sounds like. It's the venue saying, 'okay, you're selling merch. We want 15% of your sales. So when you sell the merch, we're gonna take 15% of it for the house. You're sharing it with us.'
"The biggest argument people have is kind of a false equivalent, where people say 'if you're gonna take a part of the merch, bands should get a part of the bar sales.' Bands don't ever ask for bar sales. Venues shouldn't ask for merch sales. They should just be our own individual things.
"If you're Taylor Swift and you're playing at a stadium, it's the stadium's merch sellers that are selling merch and they're doing [hypothetically] $7 million in sales. I understand at that scope the venue has to take a cut to pay all of its staff. I kind of get that, it makes sense.
"But when you're talking about bands who are, let's even say in the thousand cap size – like playing to thousand or fifteen hundred people – especially if you're a support band, your merch is how you make a living. Bands are artists who sell T-shirts. That's how a band makes a living. It's unfortunate and it's a little dystopian to say out loud, but the truth is we are merch salespeople. That's how we make a living, and our art is the way that people connect to it. I hate having to say that, but it's just the bare bones truth. Capitalism is a monster."
What's the difference between paying merch cuts on gross profits vs. net profits?
"One thing I noticed in a lot of contracts that I see for bands that I work with is that the contract will just say '15% merch'. It doesn't delineate between gross revenue and net profits of merch. So every time I've seen that and been on tour, I have a spreadsheet that calculates what the cut is for a net profit.
"Gross revenue is the amount of money you take in. So if you're charging $50 for a shirt, $50 is your gross profit. That's just that without any costs being associated… but there's costs associated with making merch, right?
"Say you're selling a long sleeve for $50, which is a fairly accurate price for a band playing a thousand cap venue. First, if you're doing things legally, you're gonna have to pay tax on that $50. And that tax is variant based on what state you played in, as well as federal income tax. So your tax has to come off that cut. You never see somebody charge $50 plus tax. In Ontario, Canada, where I live, we have something called HST – Harmonized Sales Tax – which is 13%. So on a $50 shirt, you're paying $6.50 in tax on that.
"Then you also have the cost of the item. Let's say that shirt costs you $18 to make, that comes off the gross as well. Did you ship your merch from city A to city B to meet you on the tour? That shipping cost goes into your item costs, as well as the labor costs associated with selling it. Did you bring a merch person on tour? What are you paying them? Did the venue hire somebody to sell merch for you?
"So if you sold 65 items and you're paying your merch person $150 daily, that's $2.31 per item in labor that you're paying off of the item. So on a $50 shirt with all that cost taken off, you're actually only netting – your net profit, which is the actual money you make – is $23. Less than half. So if you're paying a 15% merch cut on gross revenue on a $50 shirt, that's $7.50. If you're paying it on the net profits, it's $3.45. That's the difference. That's a huge difference."
What is the merch cut calculator?
"I came up with the merch calculator because one of the artists that I manage was at a venue in Texas, and the venue was very strict about their merch cut. They were saying 'we will count every item in, every item out, you will pay us every dollar.' I took a look at the contract. It just said 15% of merch. It did not specify net or gross. So as they counted out the merch at the end of the night I quickly made this spreadsheet to calculate the net profits of each item.
"When they asked me for $150, I showed them, 'no, I owe you $53.80.' And they go, 'what are you talking about?' And I showed them my calculator. They started arguing with me and I said, 'guys, you can look at the contract. The contract doesn't specify.' We would never have agreed to it. Not that we agree to merch cuts anyway, but it's a part of the business. They couldn't argue with it. I gave them the money and left, and I've done it ever since."
On sharing the knowledge of the merch calculator
"I'm a big fan of the idea that knowledge is something that should be spread around. I think that music is an insular community, and we fall into the trappings of capitalism in a way where we can feel like everybody is competition. And the information we hold so close is because we feel that if other people get it, they'll have a leg up. I think in general we should all just be a community and move towards doing things together. Everybody benefits that way.
"I just did a recent tour with another one of the artists that I manage and used the merch calculator and another band was asking me about it. And I realized like, 'oh, I should just share this publicly.' And I did. And people seem to enjoy it.
"I will say this calculator is great and it's probably meant for smaller bands or support bands. A lot of larger bands will use something called atVenu, which is a POS [point of sale] system that's made for touring merch, which will do this math on its own. But if you're on a DIY scale, if you're first of three on a bill, if you're at a 200 cap venue and for some reason that venue is trying to take 20% of your merch, this will help you save a shit ton."
On merch cuts and the differences between venues
"My whole view is the venue doesn't share in the cost of the merch. They didn't pay for the design of the merch. They didn't ship the merch, didn't unpack all of it, didn't set it up, and they didn't sell it. The venue did hopefully provide a fee for the bands labor (playing), and they provided a place for the band to play.
"They made bar sales. Bar sales is how a venue survives. Merch sales is how a band survives, and those things should be left separate. Again, if you're talking about a band the size that would use this merch calculator… let's just say you sold $1,000 in merch. If it's a 15% merch cut, $150 isn't gonna sink the venue if they don't get it, but it could sink the band.
"There are some venues that are phenomenal. I've had conversations with people at venues on tour. The first thing I always go up is when I know there's a merch cut that night, I go to the venue, I ask who's the person who's doing the merch settlement. And I go to them and I say 'how strict are you with your merch cut?' Just straight up with them.
"I say, 'do I just need to give you some money? Do you not care if I have a bad night? Are you not gonna take anything? Or are you very strict?' And they're generally upfront about it. I've had some phenomenal venues where they're like, 'I hate this. So I'm not gonna look at your numbers, just give me something or tell me you didn't do anything.'
"I've also had venues that go, 'we're gonna count in every piece of merch.' So it just depends on the venue, what their motives are, why they're doing it, and then I go from there. But in general, venue staff hate doing this. Bands hate doing this. Since the pandemic, it's something that has been more prevalent. Bands are talking about it a lot more because we have less avenues to make money now. Merch is how they all survived during the pandemic and now merch is how they survive on the road."
On merch cuts destroying someone's livelihood
"The industry at large is set up to reward the top 3% of bands and punish the 97% of us that are not in there. Listen, there are people who are not in that top 3% that make a living playing music. And it's a wonderful thing, but it's not a comfortable living. And it's usually based on merch sales from tour and merch sales from merch drops online.
"Merch cuts for bands of a certain size is taking food out of people's mouths and making the dream of playing music completely unviable. So whatever we can do as musicians who give a shit about community, or managers who give a shit about their musicians, we should. All we can do is find any way to help increase the profitability of the band without doing harm to them or their fans. And paying your merch cut out of net sales as opposed to gross, as long as that's what's contracted or left out of the contract, is smart.
"My advice to any band that's talking to their agent, or any manager who's talking to a band's agent would be to specifically say, 'we don't want merch cuts. And if we have to have a merch cut, make sure that if you get that contract and it says just 15% of merch, leave it. If it says gross, change it to net before you sign the contract or make us sign it.' Make sure that the merch cut is off net instead of gross because that at the very least is equitable. All we want is equitability."
On selling merch outside the venue & keeping revenue streams separate
"I guess it won't necessarily get you into trouble most of the time; but one, there's a good chance that the venue will never have you back if you do. And that's a thing that some bands just don't give a shit about. Two, your merch sales will be impacted heavily by not being in the venue.
"When you go to a gas station, you have candy bars under the register because it's a quick add-on sale. They want you to see that and go, 'oh shit, there's a pack of M&Ms. Yeah, I'll get this two for $2, no problem.' But if the M&Ms are instead outside on a rack next to the dumpster, there's a significantly less chance you're ever going to go find a pack of M&Ms or consider it as something to get.
"The same logic can be applied to buying merch for a band. You see an opening band, you think they're rad. Between bands, you take 20 steps and you see their merch there – you're more likely to spend $20 than to go outside of a venue, around the corner, and find the merch guy. You lose out on so much merch just based on visibility.
"Some people will use that as a means to say, 'okay, well then you should pay the merch cut because they're affording you the space to sell merch.' I would say that that is just a part of the deal. Bands come, they play, they sell their merch, they leave. The venue exists, provides a space, sells its alcohol, advertises its upcoming shows, and then closes up for the night. That's our delineation and we should all be staying in our own lanes. You see people in bands always saying 'if you take a part of the merch, we should take a part of the bar.' No, no one should take a part of anybody's anything.
"I want the venues to survive because they are vital. Listen, venues had a fucking horrible time during the pandemic. They had to shut down, they couldn't do anything. Some of them switched to live streams. We lost so many venues, but the bands shouldn't be punished because of it.
"We should all be working harmoniously and not against one another. And the rise of merch cuts has created a really contentious environment for all of us as opposed to working together. We're working against one another."
On venue staff
"People who work at the venues, 99.9% of the time, are not to blame. We are all working towards the same goal of loving live music and presenting it for people. Most of the people who work at a venue are also musicians who work there when they're not on the road. None of us want to work against one another, and the industry has pitted a lot of people against one another.
"You don't need to take sides to see that merch cuts are stupid, but there does need to be recourse for it. The way that that would take place, most of them are not feasible, unfortunately. It seems to be out of the realm of ability for all of us to deal with it. And that's really unfortunate.
"But this message can't come from tiny bands like mine, or me as a boutique manager. This has to come from that top 3% of bands."
