Sunday, July 15, 2018

Merchandising - the Untapped Arts Cash Cow

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

When I was in the music business in the 70's and 80's, it was called the Record Business, because record sales were where the money was. Tours were done to support the release of records. Merchandising was kind of an afterthought in support of the artist's brand.   Napster changed all that, and shifted the income to touring, as music downloading and streaming dried up the cash cow of record sales - for the artists anyway.  And now touring is increasingly becoming not just a revenue source, but a tool in support of where even more money is today - in merchandising.

Touring income is still (especially for the larger stadium acts) a substantial source of income.  But merchandising is growing. Everything from the old staples of Tee Shirts and Tour Jackets, to mugs and pens and books and posters and you name it - rock and roll, as a generic form, is a merchandiser's bonanza.  The group KISS has taken merchandising to dizzying heights and their reaping untold dividends from savvy marketing and merchandising has educated the rest of the industry and likely has had an impact on the growth - industry wide - over time.

Professional athletes, at the top, have always made more money from their endorsements than from their contract salaries.  Today, some of those endorsements  (as for example, the major basketball stars athletic shoe tie-ins) are tied in to a percentage of sales and constitute major sources of income.  And all teams make money selling merchandise. The winning teams with the biggest stars do extremely well.

Not so in the nonprofit arts, where ticket sales is still the primary source of earned income (but not, in many cases, the equal of philanthropic support).  Merchandising?  Virtually non existent but for a few big museum gift shops that contribute something to the bottom line.  Many organizations make a half hearted attempt to sell shirts or calendars with the organization or artist logo at live performances, but it is an anemic exercise at best.

What about those few big organizations that do earn measurable, if not truly meaningful, income from merchandise?  As noted, the major players in this game are the big museum gift shops.  Take the Met for example.  They have multiple gift shop locations in New York and New Jersey, including at the airports.  They also, surprisingly, have locations in Australia and two in Thailand - both in Bangkok, both at high end luxury hotel branches. Museum gift shops like the Met stock all kinds of art items, and not just their own logo branded stuff.   Because their own branded stuff wouldn't fill more than a couple of shelves.

There are many other Museums across the country that have similar gift shops attached to their locations, but not multiple locations.

The same option hasn't really existed for other types of art organizations in the dance, theater, music or other disciplines - though I'm not convinced that the option isn't viable.  Take Dance - there is all kinds of dance stuff that could fill the shelves of a gift shop at the local dance venue.  And if the enterprise is really too much for a single dance company, then what is stopping a dozen or more dance companies from working together in the launch and ownership of such a retail outlet.  Not enough money if you split it so many ways?  I don't know.  I think it might be substantial.  We ought to find out.  Theater companies might have a harder time making it a go, but in addition to books, posters, CDs, and memorabilia, each company could market their own logo branded items - e.g., the traditional Tee Shits, Polo Shirts, mugs, posters, wine paraphernalia, scarves and scores of other products that might appeal to people who frequent the theater. And maybe someday we could have a chain of arts gift shops across the country that sold dance, theater, music, visual arts, film etc. etc. stuff, including locally branded logo items,  all under one roof with shared income; stand alones at venues or in malls or downtown shopping areas; cooperative stores within larger name stores; holiday pop up stores; massive online operations and more.

And individual artists might contribute signature items to supplement the inventories.  Certainly our creative artists could create beautiful, desirable, iconic products for us to market - fashion, home, educational, and more.

Yes, of course, bricks and mortar space is a critical consideration, but if the enterprise was a money maker, I'm sure the space issue could be addressed - and that public or private funding support for an answer would be possible.  Funders are always interested in supporting ways for nonprofit arts organizations to expand income, particularly on a sustainable basis.  Big lobbies of performance venues easily lend themselves to carving out enough space for a gift shop on site.  And cooperation and even partnerships with local transitional retailers could very well be do-able to put arts retail sites within their walls.  Empty malls are looking for tenants.  There are lots of possibilities.

To be sure, rock and roll and sports merchandising is built, in part, on the fanbase that sees the artist, athlete, band or team as emblematic of their beliefs, lifestyle and culture.  And that adoration is, in part, one of the drivers of their successful merchandising efforts.  The arts lack that celebrity cachet, and arguably their merchandising efforts can't match that of the music or sports merchandising industries.  But I think that argument too is built on false assumptions.  While our performers are not household names; not celebrities with huge fan bases - nor do our organizations command the intense loyalty of sports teams, there is great affection for, pride in, and goodwill towards the arts and specific arts organizations - large and small; new and established - all over the country.  The aggregate arts audiences are huge.  Arts organizations have a certain legitimacy and place in the lives of countless people across all age groups, income levels, geography and more.  I think we haven't yet made even cursory attempts to exploit the potential to merchandise the arts.  To ignore the potential is to underestimate and undervalue what we have to offer and how people think of us.

And successful merchandising is a prime component of effective branding.  For us, it could be a tool to both brand the arts generically and countless specifics arts organizations specifically.

As I have suggested before, this is the kind of thing that we might experiment with by organizing and funding a couple of pilot retail experiments during the holiday season, when many of out seats are sold and people are looking for unique gifts.  There is, I believe, a false narrative out there that holds that nonprofit arts merchandising is small potatoes and not even potentially a source of real income.  I think that is categorically wrong, myopic and costing us a potential source of a revenue stream.  We ought to find out.

But the effort has to be more sophisticated than just laying out some logo imprinted tee shirts and calendars on card tables at performances.  It has to be packaged and marketed professionally and on a sophisticated level, including being continuously sold and pre-sold at every level of the organization, including communications.  We have to create a culture wherein nonprofit arts merchandise is sought, is coveted, is regarded as cool.   That's largely marketing.  And we need to enlist some help from those who already occupy cultural adoration - and who may be arts friendly.   So if Beyonce were to wear a dance organization Tee Shirt - watch the sales go up.  There are all kinds of ways to tap into the potential of marketing merchandising for the arts.

Such an effort will take time to really grow.  But it could ultimately generate tens of millions of dollars in revenue across the sector. The money is out there.  Waiting to be spent.  We have a really good product with great potential.  We talk about income sources.  We ought not to squander the opportunity merchandising may present.

Christmas seasoning planning begins now - in July.  Maybe somebody, somewhere will pick up on the idea and interest a funder and some participants.

Have a great week.

Don't Quit