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Fact #191980

When:

Short story:

Just days after Universal Music buys the Sanctuary Music Group for $90m, it is announced that Universal is to close Sanctuary's UK record labels, but will continue to exploit its other assets including live agency Helter Skelter and merchandising giant Bravado.

Full article:

Johnny Black explores the reasons why recorded music is no longer - at least commercially - always the most important element in the recorded music industry.

Here’s a story I wish I didn’t have to tell. Unfortunately, not to tell it would mean ignoring the exceptionally disturbing truth that recorded music is no longer - at least commercially - always the most important element in the recorded music industry.

Way back in 2008, when I interviewed John Parker, an account director at the powerful M & C Saatchi advertising agency, he dropped the following bombshell into our conversation. "Free downloading means that the music created by artists is no longer the thing that earns them money. Tours, merchandise and other artiste-brand partnerships are where the money lies now."

I knew he was right, and the point was hammered home not long after when Universal Music bought the Sanctuary Records group. Talking to Rod MacSween, a co-founder of the music agency ITB, he explained why. "They’re not after the record company," he stated. "They want the Helter Skelter agency and the Bravado merchandising operation, both of which are owned by Sanctuary.”

So there was the M-word again - merchandise. It’s been around for years but, in the last couple of decades, merchandise has assumed a very powerful place in the music business hierarchy. Yes, music is still at the core of the business but to a large extent nowadays, its importance lies in the fact that it drives punters to buy other more profitable products.

One of the first moments when this change became apparent was at the start of the new millennium when it was reported that The Ramones (three of whom were already dead) had now sold more t-shirts than records.

No-one would be surprised to learn that Pink Floyd and The Rolling Stones sell t-shirts by the million, but The Ramones? They had never scored a gold disc during their entire career. Death has always been considered a good career move for a rock star, but that fact was rarely made clearer than when was reported that the day after Joey Ramone died in 2001, one American clothing chain put in an order for 10,000 units. By 2008, they had sold 1.5m t-shirts. And the t-shirts were just the tip of the iceberg. Other profitable Ramones merch includes hoodies, flip-flops, shower curtains, mugs and posters.

But just how profitable is this merchandising lark? The Licensing Industry Merchandisers’ Association reported in 2016 that the global music merchandise market (of which t-shirts are a considerable part) was worth $3.1bn, up 9.4% from the $2.83 billion generated in 2015. And consider this - in 2015 officers from the Police Intellectual Property Crime Unit arrested three people in an East London warehouse suspected of selling counterfeit t-shirts by Nirvana, Motorhead and others. It was estimated that they had netted £100,000 before the long arm of PIPCU nabbed them. And don’t forget, that’s just three people in one warehouse.

So how did it come to this? Before I reveal all, let me state that if I ever read one more feature claiming that merchandising started when The Beatles conquered America in 1964, I’m going to hunt down its author and bury him in a Kiss Kasket. (Yes, that’s a real thing. It’s a limited edition $5,000 coffin that was added to the Kiss range of merchandise in 2001.)

I’ll get back to The Beatles’ 1964 merchandising fiasco shortly, but let’s start with a potted history of music biz merchandising. The earliest instance I can find dates back to January 5, 1908, when Franz Lehar’s popular operetta The Merry Widow was playing at Chicago’s Colonial Theatre. The poster for this show states that the "Merry Widow Waltz in both disc and cylinder records for phonographs" is available at the theatre. In other words, the recorded music itself was the merchandising item.

As the decades rolled along, music stars found innumerable ways of enhancing their income which were not, strictly speaking, merchandising, but they did help establish the idea that the popularity they had achieved through their music was a marketable commodity in its own right.

Bizarre as the notion of a singer promoting cigarettes sounds to modern ears, The Bing Crosby Chesterfields Show ran on CBS in the USA from 1949 to 1952, and Crosby appeared in numerous magazine ads extolling the virtues of those gaspers. Bing also endorsed Mastercraft pipes, Zonolite insulation, and his own brand of ice cream, perhaps to soothe his throat after all those ciggies.

Early rock’n’rollers were no different. In early 1956, Elvis Presley had famously asked merchandiser Hank Saperstein "Can you really sell this stuff?" when Saperstein showed him a range of possible products which might be sold with his name and/or image attached. The answer was a resounding yes, so in late July, Elvis and the Colonel received an advance of $22,500 against 45 percent of royalties and licensing fees.

Saperstein set to work manufacturing Presley-themed hats, T-shirts, blue jeans, bobby-sox, sneakers, skirts, blouses, belts, purses, billfolds, wallets, charm bracelets, necklaces, magazines, gloves, mittens, book-ends, toy guitars, lipstick, cologne, stuffed ‘hound dogs,’ stationary, greeting cards, sweaters, and soft drinks. A glow-in-the-dark picture of Elvis, whose image lasted for two hours after the lights were turned off, was also available. Later that year, a Billboard feature predicted that the Presley merchandising campaign would “eclipse sales of $20,000,000 before the end of the year.”

Come 1958 Jerry Lee Lewis participated in a promotional stunt with with Beechnut Chewing Gum whereby if fans sent Beechnut wrappers to the tv show American Bandstand, they would receive and autographed version of Jerry Lee’s latest single, Breathless.

A range of Cliff Richard merchandise, including necklets and heart-shaped lockets, went on sale in the UK on November 6, 1959, and less than two years later it was reported that Bobby Rydell had made a merchandising pact with the Ansonia Shoe Corporation, whereby their Pho-toes range of shoes would include a clear plastic pocket on the toe into which a picture of Rydell could be inserted. The marketing campaign featured window displays with life-sized cut-outs of Rydell.

So, by the time The Beatles invaded the USA in 1964, the business of merchandising rock music was already well established. Far from creating the market, Brian Epstein all but missed the boat. He allowed a Chelsea-based businessman, Nicky Byrne, to set up a company called Seltaeb Ltd to oversee Beatles-related merchandising. But Byrne cut a deal whereby he earned 90% of whatever profits ensued, leaving just 10% to be split between Epstein and The Beatles. Byrne negotiated deals in the USA to manufacture Beatles’ wigs, dolls, egg cups, T-shirts, sweatshirts, trousers, perfume, scarves, liquorice and even empty cans said to contain 'Beatle breath'. By the time Epstein realised his blunder, Byrne had raked in untold millions.

The lesson was learned very quickly by more astute music biz entrepreneurs like publisher Don Kirshner who, along with television producers Bob Rafelson and Bert Schneider, manufactured a Beatles-inspired tv pop band, The Monkees, in 1966. One major difference was that, for The Monkees, merchandising was part of the plan from day one. Disastrously for Kirshner and Co, the runaway success of The Monkees (they outsold The Beatles and Rolling Stones combined in 1967) enabled the group to wrest power from Kirshner. Undismayed, Kirshner next invented The Archies, a cartoon group whose songs were sung by session players and whose voices on tv were dubbed by actors. In this format, the band was unable to rebel against Kirshner, because it literally did not exist.

In those early years, profitable merchandise deals were generally limited to the world’s biggest artists but, as the years went by, that situation began to change. It’s generally agreed that AC/DC had the first tour which made more out of merchandise than it did from ticket sales. It’s also widely conceded that heavy metal bands (AC/DC, Iron Maiden, Motohead etc) blazed the trail for the classic rock t-shirt - logo on the front against a black background, ideally with tour dates on the back.

Even among metal bands, Kiss took merchandising above and beyond, starting by selling themselves as a comic-book band complete with a Marvel comic depicting their adventures.

One major change came in the 80s when rock band t-shirts started to be sold through retail outlets, and pop bands started to regain some of the merchandising ground they’d lost to metal. For example, in their 1983 video for Wake Me Up Before You Go Go, Wham! wore a Katherine Hamnett print, “CHOOSE LIFE”, prompting millions of fans to acquire similar shirts, which promoted an anti-drug and anti-suicide campaign. And, by 1984, it was near impossible to walk down any street in the UK without encountering at least one Frankie Says Relax t-shirt, popularised by Frankie Goes To Hollywood.

But the single biggest factor in the rise and rise of rock and pop merch was the change from physical recorded media, whether that meant vinyl, cassette or CD, to digital downloads. When Napster sprung into existence in 1999, its peer-to-peer MP3 file-sharing service meant that fans could acquire their music for nothing. This, combined with the onset of streaming giants like Spotify and Pandora, forced musicians to find new ways to make money.

Suddenly, live touring became more important and one significant element of that importance was that on a tour an artist can sell lots of merchandise, because hundreds or thousands of their fans are right there in the venue, and lots of them really want to take home a memento of the night. As Bob Mould of Husker Du astutely pointed out, "You can’t download a t-shirt." That, in a nutshell, is why it was possible in April 2004, to announce that Britney Spears had raked in $30m from merchandise during her Onyx Hotel tour.

In July of the same year, merchandising company Signatures Network revealed that Ozzy Osbourne had passed the $50 million mark in merchandise sales - a record for a heavy rock performer - much of it derived from sales at his annual Ozzfest events.

But it’s not all plain sailing. Robert Smith of The Cure revealed to that during their Curiosa Tour in 2004, "We each got to think up a merchandising item to sell, and I came up with the idea of a water bottle on a belt, but it turned out we couldn’t sell it with water in, because if the water was contaminated, we’d get sued, so it had to be sold as a container with a belt and a separate bottle of branded water so you fill it up yourself."

That kind of complication is one reason why the tried and tested t-shirt remains a perennial sure-seller. Kanye West and Justin Bieber are among the elite cadre of artists who are known to have sold t-shirts for up to $200, often via one-off boutique pop-up shops rather than off a table in the vestibule of a gig venue, but even at the lower end of the chain, if a small indie artist or band can shift twenty or thirty t-shirts at a show, it can make the difference between survival and extinction.

We’ve already seen that merch doesn’t have to be just t-shirts, and the Kiss Kasket probably takes the biscuit for the weirdest example, but it’s worth mentioning that many bands and artists have launched their own branded alcoholic beverages, from Iron Maiden’s Trooper beer to Carlos Santana’s Supernatural Rose wine. Ghostwave, a New Zealand, went one step further in 2013 when they launched the world’s first playable beer bottle in Auckland. Using Edison’s cylinder recording system, the band’s single Here She Comes was etched around the surface of the bottle.

Earlier this year, Rihanna launched her own Parisian fashion house, Fenty Maison, with a lavish bash in Paris, but the fact that made it obvious that merchandise could be more significant than music came in 2012 when Forbes magazine declared Dr. Dre, with his $110m income, to have been the year’s most successful musician. What made this statistic so significant was that Dre hadn’t actually released any music in that year. His millions came largely from sales of his Beats Headphones brand, and he raked in a bundle more two years later when Apple bought the company for an ear-watering $3bn.

In the early days of rock’n’roll, it was not unknown for unscrupulous managers to exploit young hopefuls, even taking the shirt off their backs when they fell from grace. Anyone starting out in music now would be well advised to hang onto that shirt at all costs. It might just be their salvation.

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BOXOUT : AN INSIDER REFLECTS ON THE MERCHANDISE EXPLOSION

Steve Parker is uniquely placed to look back on how merchandising has impacted the face of the music business. As well as having been a manager and agent for artists as diverse as 10cc, John Martin and Uriah Heep, he now owns and edits Audience magazine, a globally distributed publication for the live music business.

Steve Parker : When I started out managing bands in the early 70s you virtually had to pay people to wear a t-shirt with your artist’s logo on it. In those days, wearing a band’s t-shirt was a real sign of allying with the band, because you could only get the shirts at gigs. By the 1980s, however, retail clothing shops were starting to sell artist t-shirts. That meant teenage girls who knew nothing about the bands could buy the shirt because they thought it looked cool.

Nowadays, it’s about building your artist into a brand, and there’s money in it if you do it right, but there are significant costs involved getting the items manufactured and, in the case of t-shirts, printed. Then you have to package them, transport them, and pay a commission - maybe 20% - to the venue. You need to create a space in which to sell them, and pay people to actually sell them, maybe another 10%. So the margins are tight, but if you carry right merch - t-shirts, tour programmes and so on, it can be profitable.

With t-shirts, one vitally important factor is having the right design. Arguably, Che Guevara showed what could be done with t-shirts, but the shirts that sell well have always been the one with striking designs, like The Ramones, Motorhead and Iron Maiden.

You can also have a live LP available for sale at concerts. We do it with 10cc by recording one of the early shows on a tour, and we can have it ready for sale in the venues ten days later, with the tracks in the right order, and a message from the band, which is what the fans want.

A word of warning though, if you over-order on tour merchandise you can be left with a ton of stuff you can’t get rid of when the tour ends, because you have to create new merch for every tour. People come to a show and they want to take a souvenir away with them, even if it’s just a keyring or a lanyard. With the rise of online, however, you can have on-demand t-shirts so you don’t have to store them anywhere. Also, t-shirts can now be sold online even after the tour has ended, because there are fans in Japan, Russia and elsewhere who will buy them.

(This feature by Johnny Black first appeared in HiFi News in 2019)