Music merchandise keeps artists afloat. But how does it work?

This article was originally published on Resident Advisor as part of Water & Music founder Cherie Hu’s guest-edited month of June, featuring specially curated content exploring new possibilities in music and tech.

The great promise of the digital music revolution was that it would democratise music for both artists and fans. But while fans have arguably never had it so good, the reality looks very different for artists. It has simply never been harder to make it as a musician: dwindling streaming income has turned the music industry into an oligarchy, with only 0.4 percent of artists on streaming services actually able to make a sustainable living from their streaming income.

And it feels like things are only getting worse: the increased accessibility of music making technology has meant that the number of new songs in existence has increased exponentially, oblique social media algorithms makes it harder and harder for artists to actually reach their fans, and that doesn’t even begin to cover the looming challenges presented by the rapid acceleration of AI. It’s clear that making music simply doesn’t pay anymore — but one thing that still does is selling T-shirts. For a long time now, artists of all kinds have relied on merchandise to help keep their careers afloat.

Music merchandise is a multimillion dollar industry in its own right. As Tersha Willis, founder of terrible, a boutique music merchandising company, told me, merchandise often makes up a significant portion of an artist’s revenue—usually around 70 percent.

The Covid-19 pandemic was a wake-up call when it came to merch strategy. With lockdown forcing artists to abandon their tours, many were left desperately casting around for a way to supplement their income—or, at the very worst—left in the lurch with bundles of unsold tour merch to deal with. Investing time into marketing and selling that merch suddenly became crucial. “When all other revenue dried up, merch sales meant that artists were still able to make a living,” Willis added. “The pandemic gave artists a reason to care, and time to focus on it.”

Rachael Scarsbrook, head of e-commerce at BSI Merch, which handles merch for the likes of Harry Styles, said that streaming economics have also played a role in the increased importance of merch in artist strategy: “Artists are paid less per stream than ever before, and the sale of one T-shirt can generate the same level of revenue as tens of thousands of streams.”

In a deeply volatile market, merch sales can represent a more predictable revenue stream for artists. While streaming payouts are notoriously oblique and the cost of touring has risen (especially in post-Brexit UK), there’s something pleasingly solid and time-tested about the profit margins on a baseball cap or a shirt.

For artists who have especially dedicated or specific fanbases, developing a merchandise line can also be a way of flexing their creative muscles, extending their artistic universes and connecting with their fanbase on a deeper level. One need only to look at Lady Gaga’s Chromatica jockstrap or Lana Del Rey’s cocaine spoon necklace to see how merch items can become in-jokes for fan communities.

According to Willis, there was a surge of pandemic-induced creativity in artist’s merch lines. “Instead of making basic posters, artists began to create colouring books and art prints,” she said. “Artists started investing in fully bespoke items—like figurines, embroidered jackets. Customised knitted socks were a huge pandemic item.” A particularly charming example of this was the bobblehead toy that terrible. created for Danny L Harle’s hyperactive, alien-like mascot MC Boing, from his album Harlecore.

Merch items can even be artistic statements in their own right. One of the most innovative merch examples of recent years comes from the late producer SOPHIE. To celebrate the release of her first compilation, PRODUCT, she created a mysterious silicone item which looked a lot like a sex toy—but which, according to several Reddit testimonials, did not function as one. It cost 100 USD and sold out instantly. In the intervening years, the object has achieved cult status, acting as a physical representation of the anxieties around sexuality, consumerism and unreality that proliferate SOPHIE’s work.

How can artists run a successful merch strategy?

Artists who make a killing selling merch tend to view it as another arm of their business, rather than something time-bound by a specific album campaign or tour. It’s all about commitment. As Willis told me, merch isn’t an instant moneymaker, but if artists take the time to develop a merch offering that really appeals to their fanbase, it can become something that ticks away in the background, steadily making artists money.

Timing is crucial too. For emerging artists, there’s a big difference between having an audience and having dedicated fans. As Scarsbrook told me, “artists entering the merch game too early can have a negative impact and can fail to appeal to fans. Don’t think that just because people are listening on Spotify means that they’ll necessarily want to buy a T-shirt.”

If you do have the fanbase in place, the cardinal rule of music merch is pretty simple: don’t make crappy products. We’ve all ordered a T-shirt online that looked great in the photo, only for it to arrive crinkled and flimsy. Music merch is a serial offender when it comes to low quality products, and the knock-on effect is that sometimes artists don’t feel confident promoting their own products.

Getting the artist to actually engage and promote their merch lines is crucial to success, but it can be a fine line to tread. “Artists don’t want to feel like they’re constantly selling to fans,” said Scarsbrook. Artists in constant sell mode can easily leave a sour taste in fan’s mouths, especially if their sales pitch isn’t particularly creative or enthused.

But there are ways to make it fun. “We saw lots of great engagement with a recent campaign by Black Honey, who organised a fashion-led photoshoot for their merch range,” Scarsbrook explained, “It made the photos of the product so much more interesting, and led to some great behind the scenes content they could reuse across their socials.”

Where should artists sell their merch?

The classic makeshift table set up at the back of a venue is still the gold standard of merch sale opportunities for artists—buying a T-shirt after a great show allows fans to take a little of the magic of the night home, and allowing them to connect to the artist in a way that lasts far beyond the show.

But even then, this lifeline for artists is often undercut by the all-too-common practice of venues taking huge percentage cuts of artist merch sales while they’re on tour. We’ve seen plenty of examples of artists rebelling against these trends over the last several months, like The Big Moon, who hosted a pop-up store at a nearby pub to circumvent the crippling 25 percent cut (plus VAT) enforced by their venue, the O2 Kentish Town Forum. Other work arounds employed by artists include QR codes or simply directing their fans to their websites.

Conversely, festival appearances don’t usually present huge opportunities to sell merch. One remarkable exception to this is Coachella—partially because it’s such a huge cultural event, and partially because the sort of fan who can blow $500 on a festival ticket isn’t going to think twice about shelling out a little extra for a T-shirt or baseball cap.

2023 was the first year fans who missed out on tickets and stuck at home could get their hands on Coachella-specific merch. The festival rolled out a merch integration alongside their YouTube livestreams, allowing viewers watching at home the opportunity to purchase some limited edition merch. Willis sees these exclusive sales tied to online events as great news for artists. Even if their livestream doesn’t net the kind of audience they’d hoped, the sales tend to be done on a preorder basis, so they’re risk-free for artists to try out.

As Scarsbrook would have it, exclusive, time-limited merch drops will only become more common in the future, perhaps in a direct mimicry of the sales techniques used by luxury brands to create a sense of urgency and scarcity.

While historically large-scale merch sales have (understandably enough) been associated with superstars like Taylor Swift or Harry Styles, genres outside of pop are increasingly becoming growth areas in the merchandising landscape. “Drill and rap are genres to pay attention to,” Scarsbrook said. “We’ve seen more acts in this genre willing to take risks, test out new releases, and be disruptive when it comes to making their presence felt. Balaclavas have become a significant item over the past year or so, as drill music has become more mainstream.”

What could music merch look like in the future?

For artists, it’s important to think outside the box. Even for those who haven’t traditionally associated themselves with merch lines, there are still opportunities. While DJs may have traditionally struggled to sell a T-shirt, Scarsbrook explained that there’s a gap in the market for DJs offering branded equipment or stem sample packs, for example. While DJs might struggle to sell a T-shirt, their fans are likely to be interested in equipment, especially since many of them are DJs themselves.

It’s likely this won’t remain the norm for long, though—we’re already beginning to see instances of the fashion world blending with DJ culture, exemplified best by Peggy Gou’s KIRIN line and VTSS’s capsule collection with Italian high fashion label A Better Mistake. Platforms like Boiler Room have done plenty to bring the cult of personality to DJ culture, and it’s likely that bespoke merch lines won’t be far behind (Boiler Room themselves, of course, already have a booming merch store).

In the future, tapping into fan-led creativity could prove to be a profitable—and rewarding—area for artists to mine. While major labels have been notoriously litigious about fan-made merch, some artists have begun co-creating with fans, either through designing merch lines with their fans, or promoting fan-made merch lines in exchange for a small stake in the profits. This strategy has the dual benefit of generating incredible goodwill from superfans, as well as resulting in merch lines perfectly tuned to their fan’s interests.

We’ve seen several direct-to-fan start-ups launch over the last few years which explicitly facilitate cooperation between fans and artists, including Fave (which has tapped into Swifties and the BTS Army to allow fans to sell their own homemade merch through the app) and SOFTSIDE (where fans can create posters and designs with indie artists like Indigo DeSouza).

In the digital sphere, we’ve seen gaming platforms like Fortnite and Roblox collaborate with artists to bring artist merch into the virtual world, as well as custom skins of trademark features, often tied into in-game concerts—like Lil Nas X’s signature red cowboy hat being for sale on Roblox. This trend will only heighten the need for artists to develop simple, trend-agnostic brand identifiers, to facilitate their representation across a variety of media types. This makes sense to Willis—although she reckoned that it’s likely that virtual merch will exist in tandem with physical merch, rather than replacing it entirely. “I think most people who are gamers want to be who they are in real life within gaming environments, but I think it extends both ways,” she said.

The worlds of music and fashion have always been closely interlinked, but with merch as a quietly foundational part of many artist’s careers, it’s likely that we’ll see the boundaries between artists and fashion brands begin to blur. Fashion brands like Carhartt and Desigual already have major presences and sponsorships at festivals like Rewire and Sónar, and are increasingly branching out into fashion collaborations, like Desigual’s official Sónar bumbag. Elsewhere, Carhartt WIP has tapped iconic labels like Ninja Tune and Public Possession for brand collaborations, while designer label Maharishi created a capsule collection in collaboration with XL Recordings and D&B label V Recordings.

It’s easy to see why fashion brands might covet an association with the electronic music industry—as Willis notes, the organic enthusiasm and dedication shown by fans is the sort of positive brand association many luxury names could only dream of. “Having come from a fashion background myself, the hardest thing is to grow a captive audience for a brand and make them loyal,” she said. “Artists simply don’t have that problem.”