Tour Merchandising
A concert merchandiser operates much the same way a record company does.
It manufactures the concert merchandising, sells it at the concerts, and pays
the artists a royalty rate based upon the gross sales. Royalty
rates around the world are usually based upon 80% on rates in the United States
and the rates in North America are anywhere from 25% to 33% of the concert
selling price. Superstar attractions often times demand, and receive, a
50/50 split with the merchandiser.
Whenever a merchandiser advances artists money upfront for a tour, the
artists must guarantee the merchandiser that they will perform in front of a
minimum audience and/or perform a certain number of concerts. The reason
for this is very simple: merchandising companies calculate their nightly
gross on a per head basis. That is, the merchandiser tries to
figure out their gross profit, break even point and eventually, net profit based
upon concert ticket sales forecast. For example, if 10,000 people attended
a concert and the merchandising gross for the evening was $50,000, then the
gross per head for the evening was $5. Most merchandising contracts are
for one year or until the advance is recouped, whichever is longer. If an
artist is on tour while her contract is expired or the merchandiser has
recouped, the merchandising company will insist upon completing the tour.
But, if the tour is completed and the merchandiser has recouped all of their
money, then they will have the right to be the merchandiser for your next tour
with no advance for that tour. The best way to avoid this is to have an
option clause inserted into your contract that stipulates that you at least have
an option paying the merchandiser back whatever monies that may not have been
recouped.
You have been given the basics and a starting point, go from there!
™ Digital & Electronic Music Organization, Inc. 
