Dr. Mike Carr

Musicians Save Big at the Merch Booth with Sky!

The music industry has never recovered from Napster and file sharing. Due to the rise of high speed internet and file sharing, revenue in the music industry dropped by over 68% between 1999 and 2014! While the industry has seen some recovery with the innovation of streaming… musicians have gone from making $20 per CD to 99¢ per download to .0038¢ per stream (industry average) over the last 20 years. That means the band needs about 6600 streams to pay for a $25 Crave Case from White Castle on the way home from a gig.

Remember the smash hit by Pharrel Williams, “Happy”? He received 43M streams on Pandora and made under $3000. Last time I checked, $3000 isn’t paying for mansions, parties and fast cars! Imagine if he would have sold 43M downloads?! So if consumers are not buying CDs anymore how are musicians making money? Bands are going back on tour, playing live shows and selling a whole lot of merch at the merch booth.

Don’t Tread on Me, or My Merch Booth

The merch booth, in some cases, is all that is saving local and regional bands from starvation. As venues are still recovering from shutdowns due to the COVID-19 pandemic, many are struggling to pay the performance fees they could have just two years prior. Once again, musicians are being asked to take a pay cut due to something completely out of their control. If they aren’t making any significant income from streaming, are making less money playing shows, their last line of defense from giving up is investing in the offerings at their merch table. But even so, the merch table for signed bands has become a new source of income for venues and the record labels.

A significant number of recording contracts now are ‘360 Deals’, meaning that in trade for financial support musicians will give the record label a percentage of revenue from live performances, merchandise, endorsement deals and songwriting royalties. Let’s assume that labels take a standard 20%. If a band performs for a $5,000 fee, the label gets $1,000, leaving them with $4000 to pay wages, travel expenses, hotels and meals. Oh, and 20% of the merch…

Now enter the venues with their hand out (and maybe rightly so). Medium to large size venues have usually taken a percentage of merch sales, traditionally between 10-20%. The logic behind this, $20 to a t-shirt is a loss of 4 beer sales to the venue. A 20% fee recoups a beer sale per t-shirt sale. As of late, some bands are reporting the venue percentages going up to 50% of merch sales! When you consider the venue front the band’s fee, provides the room, electricity, the staff and $100k sound system it’s understandable they might need to rely on more than beer sales to break even.

Liliac – The Family Who Rocks Together, Saves Together with Sky!

“At a recent festival, we were told that in order to sell merchandise we had to agree to give 50% of our revenue to the festival. Some of our t-shirts have up to 30% cost of the sale price invested in printing them. Is it even worth the effort to sell at those festivals because we will make the least out of everyone involved in the process.”, says Papa Liliac, founder and manager of the internet sensation Liliac.

With everyone’s hands in the musicians’ proverbial pockets, it is important to save every penny when possible. Sky Systemz, not only offers the lowest rates in the industry, but we also offer the ability for our merchants to ‘pass the fee’ when they sign up for service. The industry average for credit card processing fees is about 3%. Let’s say… Merch Cost (25%) + Record Label (20%) + Venue (50%) + Credit Card Processing (3%) leaves about 2% left for the band… 

Papa Liliac says, “We switched to Sky Systemz because we had the ability to pass the fee. It shows up as a small surcharge to the buyer, but at the end of the night it could add up to being able to pay for a hotel room or gas to get to our next gig. It makes a big difference at the end of the day.”

As you can see passing the fee can make a big difference for artists on the road. Luckily for Liliac, they are an independent band so they do not have to pay the record label a cut. However, as an independent artist they are self-funded, like the majority of artists out there. Only 1% of bands are actually considered mainstream

So for you independent artists, Sky Systemz is the answer for your payment processing and eCommerce. Not only can we help you save money at the merch booth, we can also build a custom website and web store (or add a webstore to your existing site to replace Shopify). Sign Up today and start processing payments in as little as 5 minutes! For more information, reach out to us at contact@skysystemz.com!