DREAM THEATER Members Weigh In On Practice Of Venues Taking Cut Of Artists' Merchandise Sales

In a new interview with "THAT Rocks!", the weekly YouTube series hosted by Eddie Trunk, Jim Florentine and Don Jamieson, DREAM THEATER guitarist John Petrucci and keyboardist Jordan Rudess spoke about the growing demand among artists that music venues and promoters eliminate the fees they charge bands to sell merchandise at shows.

Many venues require bands to pay them a percentage of their merchandise sales. Commonly that split is 20/80, meaning for every dollar a band makes selling a t-shirt, the venue gets 20 cents. It's an accepted industry standard that understandably riles touring bands, especially those acts for whom merch income is still crucial for ensuring that a tour is profitable.

"That's a typical thing that venues will do," Petrucci said (as transcribed by BLABBERMOUTH.NET). "I think that if you're in the position, you should try to negotiate that as much as you can. I mean, 30 percent, that's way too high. I think it's more typical [for it to be in] the 15-to-20 [range]. And I think also it might be different for soft goods and physical things, like records and stuff like that. So there might be a difference there as well. But it's all reasons to be on top of your shit and your business and have people representing you that know what they're doing, because a young band might not know that they can negotiate that. They just kind of [go], 'Oh, I guess it is what it is.' And I guess in some circumstances, if you have no leverage, then it is what it is. But you can look at that and be conscious of that. Because it sucks. 'Cause then you're in that position — well, what are you gonna [do]? [Are you] gonna jack up the price of your shirt? Then somebody is paying 50, 60 dollars for a t-shirt? That's ridiculous. And you feel like you're gouging your fans, and that's not cool."

Rudess added: "And it's also sad, because a lot of these younger bands, they're working so hard to get out there and play, they finally show up at a venue and they stand a chance of making a little money maybe at the merch booth, and then you've got these venues — clubs, theaters, whatever — that wanna take money out of their pockets, basically. You see it all the time. It sucks."

In larger venues, it is often mandatory for a merchandise staff to be employed directly by the venue, meaning a percentage cut can be standard.

In recent months, some venues have said that they will do away with merch fees. Ineffable Live, which runs 10 venues, including the Golden State Theater in Monterey, California; the Fremont Theater in San Luis Obispo, California; and the Chicken Box in Nantucket, Massachusetts, got rid of their 20% merch fee in response to the testimony of Clyde Lawrence of the independent soul-pop band LAWRENCE, who spoke in front of the Senate Judiciary Committee this past January about the "lopsided deal mechanics in certain aspects of the live music industry." During his appearance at the hearing, Lawrence explained why venues taking a cut of merch sales is unfair, saying: Another pain point for artists is the significant loss of revenues due to promoter merchandise cuts. Typically, the promoter takes a sizable percentage (roughly 20%) of an artist's merch sales, and once we factor in our costs of creating and transporting the merch, it can be an even larger percentage (40%) of an artist's bottom line. The argument is that the venue is providing us the retail space for us to sell our merch. Sure. But we're providing all of the customers, and yet receive no cut from their many ancillary revenue streams. Live Nation getting around 20% of our gross merch sales while we get nothing on ticketing fees, bar tabs, coat checks and parking passes doesn’t make a lot of sense to me."

According to Billboard, Ineffable Music Group CEO Thomas Cussins said that on a good night, an independent touring band with a loyal fanbase can sell $5,000 to $10,000 in merchandise at a 500-capacity show. Eliminating the venue fee can save some groups $1,000 to $2,000 per night, he added.

"We are on the ground and hearing from artists every day," Cussins said. "We are seeing how much the costs of everything have gone up — from buses to hotels to flights. So even though the club business is a marginal business, any action we can take to help to insure a healthy, vibrant concert ecosystem is important. This industry only works if artists of all levels are able to afford to tour. When artists are able to tour sustainably and fans can afford to buy a t-shirt because the all-in ticket price is reasonable, everyone wins."

Ineffable head talent buyer Casey Smith added: "We've been able to make our live business work even with increased expenses by having a number of venues and being able to create routes for artists, offering them a number of shows in secondary and college markets between their big city plays. Since we've made it work for ourselves, we want it to work for the artists as well. This move is fully aligned with Ineffable's independent spirit, and in hearing the needs of independent artists, we believe it’s important to put them first."