Sunday, January 29, 2012

Merchandising and the Arts

Good morning.
"And the beat goes on............................."

Merchandising the arts:
Long before Napster and the file sharing platforms and iTunes changed the revenue stream model of the music industry - moving away from record sales as the primary source of income for recording artists to touring taking that role - merchandising of branded products established itself as the third leg in the income stool.  Rock and roll early discovered that there was a market (and huge profits) for merchandise associated with popular artists - from tee shirts, tour jackets and baseball hats to posters and programs, from coffee mugs to backstage passes, from musical instruments to keychains.  And the merchandising segment of the industry has grown so large as to actually often surpass income from both the sales of recorded music and even touring income.  Product endorsement soon joined the lucrative income source as music was sold to hype and sell other brands (e.g., Bob Seeger's "Like A Rock" being used for years by GM as its theme song to sell GM trucks).

The music industry learned early on how to aggressively market its merchandise - first as a point of purchase thread at live concerts, then by mail and now online, in retail outlets and at trade shows.  Taking a cue from the music business, the film industry quickly followed suit marketing film studio products (e.g., the Warner Bros. and Disney retail outlets across the country) and, much more significantly, marketing specific movie products (from Star Wars to Transformers to Toy Story) - including apparel, action figures and other toys, and beyond.  The film industry also used branded products as commercial ties to promote a given film itself (e.g., the McDonalds action figure Happy Meals etc.), a relationship that worked well for both partners and not only yielded additional income to the film companies but became part of their overall marketing strategy to sell tickets.

Sports also learned from the music and film industries, and NFL, NBA, major league baseball and other sports now derive substantial income from their own merchandising efforts.  Lesser sports also jumped on the bandwagon - e.g., Golf - which not only merchandises product, but provides endorsement income to the players.

All of this activity comes under the heading of merchandising and it is big business - not just in America but now on a global basis.  Rock and Roll and movie tee shirts are ubiquitous across the planet worn by rich and poor alike.

While piracy and counterfeiting are a problem for merchandising efforts as they are for copyrighted music and film, legitimate merchandising for which income is gained continues to grow.

There are some efforts in the nonprofit arts to merchandise, but for the most part those efforts are ancillary and not thought of as significant.  We have given little thought to expansion of a product line, how to aggressively market "merchandise", how we might better cooperate in sales and distribution, and how such strategies might augment weak bottom lines.

Museums do the best within our sector.  Not only blockbuster exhibitions of Picasso, King Tut, Van Gogh or the like, but even lesser exhibitions are now routinely merchandised with coffee table catalog books, posters,  baseball caps and even mugs, keychains, mouse pads and so on.  Museums have an advantage in that they have permanent physical plants in which almost all include a Gift Shop.  To a lesser extent they market their merchandise online, and a few even venture into holiday (Christmas) marketing.

Performing arts groups more often than not share facilities and those facilities do not have a permanent gift shop on site.   A large percentage of those organizations market merchandise at their performances - again clothing and books, but also DVDs, calendars and other items.  Of the performing arts, dance seems at least slightly ahead of music and theater in merchandising - but all of the performing arts lag far behind what the potential of the market might be.  Most performing arts merchandising efforts are sort of "afterthoughts" and not really seen or treated as even potentially lucrative enough to qualify as a funding stream.

I think we are missing out on the development of a meaningful revenue source by our failure to develop the potential for merchandising within the arts.  There is really no reason why we should not be able to expand the market to significant levels.  We need to think more about how we might successfully first make our brands more marketable and then merchandise our brands and offerings more successfully.

More than likely, of course, we cannot simply try to replicate what the music, film or sports industries have done.  Those sectors trade on "celebrity" to an extent that may not be available to us.  We're not likely to soon sell Opera star action figures or Symphony Conductor bobble head dolls (though I would love to see that happen some day), nor are we likely to soon negotiate Burger King tie-ins (though perhaps that is not as far-fetched as some might imagine), but we can do some things to begin the process of making merchandising a meaningful source of income across the sector:

First, we ought to think broader in terms of marketing standard merchandise items - i.e., tee shirts should be branded as "fashion items" and seen as 'hip' for certain target demographics.  More thought should be put into at least the basic clothing items we might successfully brand and market.  We are simply operating on a primitive level in terms of the way we approach the limited merchandising we do.

Second, we need to figure out ways to expand the distribution of our merchandising catalogs at all purchase points - including at performances, online, via normal retail outlets etc.  As part of such expansion, we need to talk with each other as to how we might cooperatively market our merchandise so that we might benefit from the economy of scale.  There is no reason every city that has a Disney store ought not to also have an "Arts" store merchandising a range of items from a wide variety of organizations.   We ought to be able to develop at least a limited line of high end fashion apparel brands that might be created in conjunction with major designers and then carried by high end retailers from Macy's to Nordstrom's to Neiman Marcus etc.

Third, we need to think about how to more aggressively market standard and new merchandise.  We need to learn how to sell the idea that a branded arts product is essential to own - in the same way products are marketed not only by the music, film and sports industries, but by mainstream companies from fashion designers to Proctor & Gamble.

Fourth, we need to do some specific demographic target marketing.  Thus, for example, while tee shirts may be a hard sell to an older Opera demographic, fashion tee shirts aimed at the kids of that group might do very well with their parents.  In fact, we ought to have a whole segment of our merchandising industry directed at kids - from toddlers to teens to college kids.  Certainly fashion clothing and accessories, but also beyond that to such things as arts mobiles for baby cribs  We ought to also target niche markets - including multicultural groups and the LGBT community.  This approach ought to be a natural for us.

Fifth, we need to zero in on specific holiday marketing - from Valentine's Day to the Fourth of July, from Christmas to New Year's - including certain multicultural holiday niche markets.

Sixth, we need to put more thought into how to "celebritize" our major artists - particularly performing artists such as dancers, musicians, and playwrights - as part of a wider effort to brand the arts as 'hip' and 'cool'.  We need to target multicultural niche groups here too.  There is no reason African American, Latino, and Asian dancers, composers, musicians, actors, playwrights and visual artists should not be seen as 'heroes' in their (and the larger) communities.  Doing so will open opportunities for greater merchandising.

Finally, we need to begin the process of thinking about tie-ins for our merchandising efforts.

Of course this kind of thinking will be anathema to the purists.  God forbid, we sully the image with such pedestrian marketing - even if it helps us to survive.  To those I say "Get real already."

The point is that there are a lot of discretionary merchandising dollars out there that ought to be flowing into our coffers that are not.  At a time when everyone is talking about new revenue models and how difficult our income generation has become, we are missing out by our failure to take a more sophisticated, aggressive look at the potential for merchandising within our own field.  Moreover, merchandising is not only potentially profitable, it helps establish our brands and that ultimately helps garner increased audiences and more support.

Again, as in other suggestions I have made, this is something that will best be addressed (at least in part) by the sector as a whole and not just by each organization acting individually.

Have a good week.

Don't Quit.