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The music merchandising sector is in rude health, but its growth comes amid a backlash against bundling and its impact on the US charts
By Jon Chapple on 04 Jul 2019
Sales of music merchandise were were worth nearly US$3.5 billion in 2018, IQ can reveal, as controversy continues to rage over bundling and its impact on record and box-office charts.
According to the Global Licensing Survey 2019, produced by trade body Licensing International (formerly LIMA), worldwide retail sales of licensed goods based on music properties were worth $3.48bn in 2018, up from $3.33bn in 2017 and $3.08bn in 2016.
Commenting on the growth in demand for music merch, the report says the move towards streaming (“low-margin digital distribution”) of recorded music has “prompted the industry’s largest companies to generate revenue through a range of artist support services that extend beyond simply generating income from music sales”, such as merchandise.
Overall, the licensing market – of which ‘entertainment/character’ is the largest sector, accounting for $122.7bn worth of revenue – grew 3.2% from 2017 to 2018, to $280.3bn, with royalty income for rightsholders climbing almost 4% to $15bn. (Other sectors include corporate brands, fashion and sports, while the largest product categories are clothing/apparel, toys and fashion accessories.)
“The 2019 Global Licensing Survey drives home the fact that licensing continues to be a vital part of the consumer marketplace,” says Licensing International president Maura Regan, “and a versatile tool for brand owners and licensees to creatively build their businesses.”
Billboard plans to tighten up the rules on bundling
Elsewhere, several artists and music brands place in Licensing Global’s most recent Top 150 Global Licensors report, which further illustrates the value of merchandising to the international music industry.
Notable music licensors include film/entertainment conglomerate Entertainment One, which sold $1.5bn in licensed products in 2017 (eOne’s artists include the Lumineers, Snoop Dogg and Crystal Castles, though its real rock star is kiddie phenom Peppa Pig); Margaritaville Enterprises, Jimmy Buffett’s clothing, restaurant and casino business, whose sales reached an estimated $1bn; and US rock legends Kiss, whose merch deal with Dell Furano’s Epic Rights was reportedly worth $150m.
While the merchandising sector is in rude health, its growth comes amid a growing backlash against the practice of bundling merch with tickets or physical music product, such as CDs or LPs, for its perceived distortion of traditional metrics of success. Recent examples include Jack White, whose third solo album, Boarding House Reach, became a US No 1 after selling 121,000 copies bundled with concert tickets, and Metallica, whose 2016 LP Hardwired… to Self Destruct, shot up from No 42 to No 2 in the space of a week on the back of ticket sales, falling back to No 43 the following week.
Madonna, meanwhile, debuted at No 1 with her new Madame X album, released on 14 June, which was bundled with 30,000 tickets for her autumn US tour – before dropping a whopping 95% in week two, selling just 3,600 copies.
Deanna Brown of Billboard, whose charts are widely regarded as the music industry standard in the US, tells the New York Times it plans to tighten up the rules on bundling, noting that artists and others in the business tell the company “they want us to occasionally throw a flag on the field [ie challenge the status quo] when necessary.”
In the UK bundles are only eligible if they have a “higher sale price than the price of the ticket alone”
In total, nearly half (18 of the 39) US No 1 albums in 2018 came with as part of a merch or ticket bundle.
While the outcome of Billboard’s chart overhaul remains to be seen – just last month, Jonas Brothers’ new album, Happiness Begins, debuted at No 1 after selling 414,000 ‘equivalent album units’, the majority of them part of a bundle – the company could look at its overseas sister charts, many of which have stricter criteria for which purchases count towards an act’s chart placing, for inspiration.
In the UK, for example, bundles are only chart-eligible if they have a “higher sale price than the price of the ticket alone”, per Official Charts Company rules, which exclude “album sales that are ‘baked in’ to a ticket sale” for a nominal, or no, additional cost; the same is true in the Republic of Ireland, while France’s SNEP has done away with album ‘equivalents’ altogether.
In the meantime, brace for more Billboard controversy, as arguably the world’s biggest artist bundles digital copies of her upcoming album with tween-friendly T-shirts, hoodies and baseball caps…
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