There has always been a strong connection between music and merchandise, but the relationship between the two is intensifying and broadening of late. Musicians continue to look for ways to strengthen their revenue streams from licensed products to help compensate for the album sales that used to be their bread and butter but have plummeted.
Here are a few of the trends:
• Streaming platforms are making it easier to seamlessly purchase merchandise while listening to music or watching music videos. Earlier this fall, YouTube partnered with Merchbar, a purveyor of music merchandise, allowing artists who have an official channel on the site to sell their branded products to fans from a link directly underneath their videos. This is similar to the deal Spotify has had with Merchbar, the largest source of music merchandise online, since 2016, enabling customers to purchase products from a musician’s Spotify artist page.
• Artists are bundling merchandise with albums, boosting their position on the charts while bringing in revenue from the products. Often the bundle is priced to reflect the value of the clothing or other items, with the album parceled in for free. Rappers have been particularly active in the use of this strategy: Lil Pump included The Harverd Dropout, a mixtape, with items from his limited-edition Unhappy clothing collection, and Travis Scott paired merchandise and concert tickets with his LP AstroWorld, to name two examples. The practice has become prevalent enough that Billboard changed its rules to make it more difficult to move an LP higher on the charts through the use of merchandise bundles.
• Music labels are buying merchandising companies. Warner Music Group acquired European merchandiser and e-commerce company EMP last year, while Sony Music U.K. purchased British merchandise company Kontraband in September of this year, with plans to have the new arm work with all of its labels and artists. Kontraband is coordinating its activities with Sony’s existing merchandise division, The Thread Shop.
• Musicians are signing more multifaceted deals, sometimes of the 360-degree variety (or nearly so) with music labels. In such deals, the labels and their various divisions manage and share in revenues from merchandise activities, performances, endorsements, entertainment, and/or publishing, as well as sales of recorded music. In 2018, Universal Music Group and its Bravado division signed The Rolling Stones as a client for merchandise, brand management, and archive, adding those functions to UMG’s oversight of the band’s recorded music and audiovisual productions. Also last year, UMG and Bravado added Elton John to their roster for merchandise, branding, and retail licensing, as well as recordings and music publishing.
Most of these strategies and techniques are in no way new to the music business, but all have become more frequent over time, thanks to the need for artists and their representatives to adopt new economic models to survive in an era where streaming has replaced more-profitable album sales.
Raugust Communications’ monthly e-newsletter comes out next Tuesday, December 17. The Licensing Topic of the Month will take a look at trends in subscription retail and etail models; the Datapoint research spotlight will analyze how the experiential licensing landscape has changed over the past two years. If you have not yet subscribed to this free publication, you can do so here.