What are merch cuts? Why should I care? What can I do? What’s next?

Since the inception of Rock ‘N Roll, the music industry in the United States has been building itself from the awareness that there is big financial potential in music. A lot of industry norms that artists are fighting against today such as label ownership of an artist’s music, and unfair contracts and percentage distribution, originated with the rise of major labels in the 70s and 80s.  Throughout the years performers from TLC, to Nina Simone, and Taylor Swift have taken to the public about how unjust these systems are in replenishing the artist(s) who created and/or performed the music. It’s common for mid to high level labels to not only own the artist’s music masters (the recording of your song) but take up to 90% of net sales on royalties. Even the most commonly used platforms for streaming music such as Spotify, Apple Music, and YouTube are paying bands less than half a penny for each stream. Therefore, to make $1 on YouTube the artist would need 1,500 streams. This disparity has in turn led artists to focus on increasing their social media presence and content delivery in hopes that it will result in a royalty check or a brand sponsorship. When a musician is  in the developing stages of their career,  they are often  the songwriter, the creative director, the designer, the marketing team, the content creator, the promoter, and the logistics operator. Sometimes even requesting invested labor from their  community.

I bring all of this up not to send a bolt of existential crisis down your back, but to put into perspective why a venue or promoter then taking a 30% cut of merch (on top of taxes) feels like the last straw for many touring artists across genres. As fun as it sounds to seemingly be getting paid to travel and do what you love—that’s the glamorization of it anyway—touring is extremely grueling work that often leaves even the highest paid artists deprived and depleted. 

In the last 15 years, I’ve gotten to tour and play venues around the United States in a wide range of styles. From DIY punk bookings and sleeping on dirty floors, to being a hired touring guitarist with Sleater-Kinney traveling on a tour bus, and most recently getting to support Sylvan Esso on their No Rules Sandy tour with my own band Reyna Tropical. Alongside being a touring musician for almost half my life, I’ve also gotten the chance to speak with hundreds of artists as the editor in chief of She Shreds Media. If artists like Santigold and Little Simz, who would be considered high level independent artists, are canceling tours due to financial unviability and exhaustion, imagine what bands at earlier stages of their careers are dealing with. 

Frankly put, the music industry is outdated. Today we are battling a decades old system founded by capitalist driven white men who literally built their foundations off the backs of Black, Brown and Indigenous musicians.

Excerpt from Under African Skies (Zaire, 1988) Congolese Rumba Documentary, Soukous, Ndombolo, Sebene, Champeta

So within this context, a venue and/or promoter taking a percentage of merchandise sales they had nothing to do with seems on par, although it makes no sense. Over the decades, we’ve gotten used to undervaluing and extracting from artists, brushing it off by saying “it’s just how it is”. The topic of merch cuts is the starting point for the many issues that we need to shift in the music industry. But first, let’s get to know what exactly is happening.

What are merch cuts?

According to American Economic Liberties Project, in 2022 touring made up 95% of an artists’ income, a lot of which is dependent on merch sales.

Merch cuts are when a venue and/or promoter take a percentage of merch sales from the band or artist performing that night. Both the venue and/or promoter can impose them but ultimately the venue has the power to say no. Typically, they can be as low as 10% and as high as 40%, not including the additional tax deduction of up to 10% in select cities, 5% credit card fees and any tips made. 

For some bands, these venue fees can also be in addition to percentages due to managers or lawyers ranging from 5% – 20%. At a 30% venue cut + 8% taxes + 15% management fees—that leaves the artist with 43% of gross profits, before deducting the expenses it took to design and create the merch.

Unsurprisingly, bands are now fighting against them saying that it’s morally unethical seeing as neither the venue or promoter have anything to do with the production of a band’s merchandise. 

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A couple of weeks ago, while on tour with Gillian Welch, Tomberlinn made a post that described why she wouldn’t be able to sell merch at their show in Virginia, hosted by the venue Wolf Trap. She described that doing so would have meant a 41% cut of “soft merch” such as shirts and tote bags, and therefore needing to charge $60 to the audience that night. This conversation resurfaced an issue that has been on the table since it became common practice in the 80s. The speculation is that merch cuts were introduced to offset lack of liquor sales during all ages or straight edge shows in New York and Los Angeles. Once word spread that this was becoming a lucrative revenue source for venues, it began to be nationally implemented. Naturally, it has become a point of tension between the venue and artist that gained national attention in 2018 through the metal scene, then again in 2020 when Live Nation announced new merch cuts and artists cancellation fees amidst the COVID pandemic, and again in 2022 when UMAW (United Musicians of Allied Workers) called for a ban on all merch cuts. This issue has since become dormant in the public eye until now. 

Why Should I Care?

Although this might seem small, it’s something that every aspiring touring musician and music fan alike should be aware of and invested in. Merch cuts are one of the many things affecting the ways that artists and audiences interface. Reminiscent of the backlash Ticketmaster (who’s owned by Live Nation) has been facing for their obscenely high ticket fees, such is the case when we’re unable to sell our own merch or forced to charge upwards of $50 for a shirt, making it inaccessible for a lot of working class folks to support the music they love. 

While promoters and venues argue that this long standing tradition helps offset financial losses from shows that don’t do so well, keeps their production running, and even assists with venue maintenance and staff payroll, it puts the added pressure on the whole touring team and dilutes fan experience in a segment of the industry that strictly relies on audience connection to ensure future tours. It forces the practice of offering low quality goods at high prices and extracts from what could otherwise be an unforgettable experience for both audience and artist.

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“If all the venues continue this, it’s just going to lower merch sales and make the merchandise sold at shows not worth the price,” says Orion. “A lot of bands will say they then deserve a cut of the bar’s alcohol sales in exchange, but I believe these should be separate; the venue sells the alcohol, so they keep the money from those sales, the merch money stays with the band and the ticket money should go to the promoter.” – Jason Netherton, formerly of Dying Fetus and presently of Misery Index for WhiskeyRiff.com

Financially, the margin for what an artist actually gets to take home continues to get smaller and smaller. While shows and touring are the most lucrative source of income for bands, it still takes a team of managers, bookers, crew, and label support to make it happen, all of whom are taking a cut as well. Strategically, an artist can only tour so much before saturating their markets. This means that whatever money is made on a grueling 6-week tour is what an artist has to live off of until the next tour (usually the next year) or hope for a slew of high paying one-off shows. 

For up and coming acts, it’s rare to make money on tour. If given the chance to support a high profile band and play to a bigger audience, the industry guarantee for a supporting act can be as low as $250 a night. I know this because I’ve had to do it. In these cases, the only hope for breaking even is merch sales. 

Inevitably, the costs that venues and/or promoters are not willing to take on themselves trickle down to the artist, which trickles down to details such as raising ticket prices, fees, and turning a $20 shirt into a $60 shirt. 

Live Nation Announces Ending Merch Cuts From 77 Venues

On September 26th, 2023 Live Nation, one of the largest promotional companies for music entertainment in the world, announced the On The Road Again artist program in partnership with Willie Nelson that would:

1. End merch cuts across 77 of their club-sized venues across the United States 
2. Offer artists playing these venues $1,500 in touring expenses including gas and hotels 
3. Offer unspecified bonuses to crew members (not specified whether that is crew specific to each venue or traveling with the band) 
4. Contribute $5 Million to the Crew Nation fund founded by Live Nation during the pandemic to provide global relief for crew members

Images from Live Nation’s website

While on the surface this seems to be an amazing step towards a direction that provides care and support for artists on the road, and at the very least an example for other promoters and venues implementing merch cuts today, it’s also important to keep in mind Live Nation’s history and position within the rest of the industry.

Over the last decade, Live Nation has been under repeated scrutiny and even lawsuits for their growing monopolization of every corner of the music industry—owning 338 venues worldwide, managing over 400 bands including acts such as U2 and Madonna, and in 2010 merging with one of the highest selling ticketing platforms, Ticketmaster. With that in mind here are just a few of the higher profile cases they’re involved in:

• 2020: Live Nation declares new merch cuts at venues, and rewrites performer contracts requiring bands to pay double their performance fee to Live Nation for canceled shows, including cancellations associated with COVID.
• 2022: Live Nation accused of shutting out venues that don’t use ticketmaster
• 2023: Biden Calls for Limits on Ticket Fees for Concerts and Sporting Events From Tickrtmaster

To put all of this into perspective, a critical analysis written about Live Nation explains that there are four segments that build the bridge between artists and fans: Artist — Management — Show Promotion — Venue Operation – Ticketing – Fans. Live Nation holds over 50% of shares within each segment. Meaning that while they maintain the most control over venue ownership, ticket sales and artist management, their lack of competitors strengthens their ability to implement any rules they want at any point. This is especially critical to keep an eye on, because as a seller and buyer of music, Live Nation gives us no other choice but to play by the rules that they impose.  

What Can I Do?

While this is not the first time the industry has presented the case of whether or not merch cuts are morally wrong, it is the first time this topic has gained such national discourse. Artists from Willie Nelson to Laura Jane Grace, and all throughout the community of independent artists, are sharing their experiences dealing with merch cuts on the road. 

Here are 4 ways that artists, fans, and venues can keep this conversation moving and make a difference:

1. Add your venue: UMAW launches #MyMerchCampaign,166 venues sign on to give artists 100% of merch sales
2. Sign the petition: Laura Jane Grace creates petition to end merch cuts worldwide for artists and fans
3. Download and post: Free badge download declaring that your venue let’s the artist keep 100% of merch sales
4. Add your experience: A spreadsheet to keep venues accountable. Artists and bands can add which venues take merch cuts and how much.

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Almost five months into the film industry’s strike over issues including job security, fair pay and regulating the use of artificial intelligence, it bears the question “what about the music industry?” How can fans and artists work together to create a level of transparency that reduces the dependency that we end up having on corporate stakeholders, and the ways that they dictate how we experience music? At the very least, if the audience is going to be paying up to triple the price of a shirt, how can we ensure that 100% of that money is actually going towards supporting the artist? My hope is that these questions propel us—regardless of our proximity to music—towards a more equitable exchange for both fans and artists alike. One that invites equity, not extraction. We will continue to keep an eye on how this issue develops and any further resolutions that are presented.