This article will show you everything that record labels don't want you to see. First off, what is a merch deal? A merch deal is
a contract usually signed by a band and their record label which gives the record label exclusive rights to the band's
merchandise. You heard that right, exclusive rights. This means that the record label becomes the band's exclusive merch
company for an extended period of time. This scenario is almost always fatal for the band, and this is why:



Record Labels Are Not Merch Companies.

Record labels are record labels; they don't know the first thing about custom merchandise. For the past five years, record
labels have seen a dramatic drop in CD sales due to iTunes and online downloads. Record labels are selling less and less
music. So to keep profits up, they're going after their band's merchandise, which is where the real money is. Labels know
that bands make most of their money with merchandise. With the record business on its deathbed, labels want a piece of the
lucrative merch pie. Record labels and A& R guys will be nice to you at first, but what they ultimately want is...you guessed
it, Money.



How They Get You To Sign Your Merch Away.

The way record labels get you to sign their merch contracts is by giving you a cash advance. A cash advance is money that
the label puts up as an incentive to get you to sign their contract. Listen very carefully; a label giving you a cash advance is
a joke. You have to pay that cash advance back to the record label. So really, you're paying yourself the cash advance.
Record labels entice bands with very large “cash advances” to get them to sign. Don't fall for it.

So here's a scenario; your label wants to give you a cash advance for $35,000 (of your own money) for a five year contract.
You sign, because $35,000 is a lot of money and you would be stupid to pass that up, right? Wrong. Let's say you have five
guys in your band and so you split the money five ways. That's only $7,000 per band member. You may still think that's a lot
of money when in reality it's not.

Here is a break down of how much money your band can make selling merch for five years (without a merch contract):


Say you play 4 shows a month for 10 months and you tour 6 weeks out of that year.

That's 64 shows a year x 5 years = 320 shows

Now, say you sell 25 t-shirts a show (a small amount), because you'll draw more fans as time goes on.

25 t-shirts per show x 320 shows = 8,000 t-shirts sold

Your profit on each t-shirt is about $10.

Your total profit would accumulate to $80,000.

What sounds better? $35,000 of your own money that you have to pay back or $80,000 of pure profit? You also have to factor in the other items you will be selling, like buttons, patches, lighters, hats, bags, guitar picks, etc. When you add all of these items together, you have the potential of making a fortune.



Record Labels Tweak Your Sales Numbers, and Give You a Hard Time About It.

Not all record labels are bad. Some really care about the bands they sign. But if you find yourself in a situation where things
start going south, make sure to keep track of your sales numbers. Record labels will tweak your numbers to make more
money if they find themselves in a tight financial spot. It's the sad truth. Merch deals are tricky because record labels will
find ways to bill you for other charges, like:

Lawyer Fees
Airline Tickets
Dinner Meetings
Hotel Rooms
Car Rentals
Shipping
Press Meetings
Advertising
A Website
Their Hourly Time

You name it, the list goes on. The record label will tack on any expenses that they feel helped in the production of your merch.



Here's a Dollar For Your Troubles, Kid.

Record labels dictate your merch contract, not you. So how much money do you think you'll get back per t-shirt sold?
(Remember, you get $10 profit per t-shirt if you do it yourself). Did you guess $5-$6 dollars per t-shirt? Guess again, try $2
dollars a t-shirt. No joke. The record label will give you $1 - $2 dollars on a $15 sale. Here's why: In a merch deal the record
label buys all of your merch for you. You don't pay anything up front to your label or a merch company. This sounds good at
first, but you'll regret this decision for the rest of your musical career.

Here's where the profits from your sales go:

30% of each sale goes to reordering more merchandise.
2% goes towards your cash advance repayment.*
10% goes to you.
58% goes straight to the record label.

Good deal, huh?

*The record label pays back the cash advance as slowly as possible so you will always owe them money.


Miss a Payment and You're Dead..

Record labels expect their merch payments on a regular basis. If you miss a payment, you're dead. Let me explain. After
every show you play, your record label wants to know how much money you made that night for accounting purposes. Once
they know how many shirts were sold, they send you a bill. You don't have to give them all of your money from that night,
just most of it. But, say you're on the road and your van breaks down. It happens. So what do you do? Do you use some of
your merch money to fix your van? Not if you have a merch deal with your record label. Your label might lend you some
money to fix your van, but if you use your merch money, forget about it.

I went to a show awhile ago and saw an old customer of mine. We started talking and I asked him why he and his band had
not ordered any merch. This customer said, “Oh, we signed a merch deal with our label.” I wanted to ask so many questions
at that point, but I just asked, “How's that working out?” He said it was the worst experience he had ever had. Turns out his
band missed a merch payment to their label. So the record label stopped sending them their merch. This band was a pretty
big band and was selling a minimum of $1,000 a night in merch. They lost out on about $8,000 in sales because their label
didn't get paid in time and stopped sending them their merch. Don't let this happen.



Be Smart About Your Merch. Get It Yourself.

The best way to get the most out of your merch is to get it yourself. Don't let your record label dictate your merchandise.
After all, record labels sell records, not merch. Merch deals only benefit record labels and not bands. If you want to make
money selling merch, get it yourself. Find a good company you can trust and build a good working relationship with that
company. That's all you need. Don't get caught up with smooth talkers and cash advances. When it comes to your
merchandise, you have more power than they do. Use it.



Things To Remember:

Merch deals only benefit record labels and not bands.

A cash advance is money you have to pay back.

The record label will give you $1-2 dollars on a $15 sale.

Your total profit for five years of merch sales would be $80,000 (without a merch contract).

You are not tied down to your record label for merch if you don't have a merch deal.




If you follow the steps outlined above, you’ll have no trouble buying and selling merch and stretching your merch budget
at the same time.

If you have any questions about the topics discussed, feel free to send me an email at info@curlyandspike.com.


Good luck!


Patrick Chakmakchian
Curly & Spike
www.curlyandspike.com