Backstreet opens German hub to beat Brexit ‘chaos’
Music merchandise specialist Backstreet International has opened a new European hub in Germany in a bid to alleviate the significant trade issues created by Brexit.
The London-headquartered company, founded in 1989 by industry veteran Andy Allen, offers a full range of services including tour merchandising production, design, e-commerce, warehousing, fulfilment, social media marketing and print on demand for clients including Idris Elba, Black Honey, Underworld, Placebo, Franz Ferdinand, The Damned, Jessie Ware, Joe Strummer Foundation, War Child, Andrea Bocelli, The Kinks, Public Service Broadcasting, Siouxsie & The Banshees and DJ Shadow.
Its new German operation, which is based in Berlin, will provide artists touring in Europe with local production giving a faster turnaround, no VAT restrictions, no customs challenges, lower shipping rates, faster delivery times, lower carbon emissions and chart registration in multiple EU countries.
“The trade issues surrounding Brexit have caused chaos to artists touring in mainland Europe and our mission is to help alleviate those problems”
“Our new office in Berlin reflects what we have built in the UK and US over the last three decades and is a continuation of the options we provide our clients from a sustainable range of products wherever they are in the world,” says Allen. “The trade issues surrounding Brexit have caused chaos to artists touring in mainland Europe and our mission is to help alleviate those problems while providing that badge of honour that a fan can wear to demonstrate a strong connection with artists who have real meaning for them.
“The clients we work with now have an experienced team on the ground in Germany who they can deal with directly and it’s an exciting new phase for our company.”
Yesterday, IQ reported that over 100 European summer tours put at risk by the post-Brexit trade deal will be able to go ahead, thanks to extensive lobbying from LIVE and others.
Under cabotage restrictions now in force across the whole of Europe following the UK’s exit from the EU, trucks carrying tour equipment over 3.5 tonnes are limited to just three stops before they have to leave the EU and return to the UK.
However, the British Department for Transport (DfT) has now agreed to bring in a short-term, temporary license that would allow the ‘big five’ haulage companies to operate their vehicles under both GB and EU operating licenses according to where their vehicles are needed for a particular tour.
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Silver Lake, Roc Nation invest in merch company Fanatics
Sports merchandise company Fanatics has raised US$325 million from investors including Jay-Z and his company Roc Nation, a joint venture with Live Nation, and private-equity company Silver Lake Partners, which owns shares in TEG, WME, Oak View Group and Madison Square Garden Company.
Headquartered in Jacksonville, Florida, and with international offices in Tokyo and Manchester, UK, e-commerce giant Fanatics sells officially licensed products for the National Football League, Major League Baseball, the National Football League, Nascar and more, and also operates several bricks-and-mortar shops.
The new funding will be put towards launching a non-merchandising division focusing on ticketing, gaming, media and sports betting, according to the Wall Street Journal. The company recently launched a company focusing on NFTs (non-fungible tokens), Candy Digital, and also has a partnership with leading esports competition Overwatch League.
The new investment values the company at more than $18 billion, the WSJ reports. The company expects to make $3.4bn in revenues in 2021.
Last week, the company hired Dan Goldberg, formerly of Warner Music Group, as senior vice-president for music and entertainment development, signalling its intention to branch out beyond sports apparel into music merchandise.
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Merch company Playbill expands in New York
Platypus Productions, part of Australia-based global merchandising group Playbill, has announced the appointment of Steven Downing as chief merchandise officer, live entertainment, based in New York.
Downing brings to more than 25 years’ industry experience, including from the Walt Disney Company and Warner Bros’ merchandising departments, to Platypus, where he will oversee creative, operations and strategic planning for the company’s theatre and live events merchandise division, reporting to Playbill managing director Michael Nebenzahl.
“Steven’s international reputation and successful history in the live entertainment merchandise field is a tremendous asset for us,” says Nebenzahl. “His creativity, dedication and hands-on collaborative approach in support of the world’s most beloved stage productions has earned him a reputation as a global leader.
“Steven has a wealth of knowledge, experience and a unique creative talent, which will support our continued growth in live entertainment merchandising around the world. We’re delighted to welcome Steven to our growing global team.”
The Playbill Group of Companies operates in ten countries, including Australia, New Zealand, Singapore, Hong Kong, Taiwan, Korea, South Africa, Germany, the UK and the USA. Merchandise clients include Les Misérables, Leo Sayer, Tina Arena, The Lion King, the New South Wales Waratahs, Mary Poppins, the Sydney Roosters, André Rieu, Diana Krall and The Phantom of the Opera.
“With live theatre reopening worldwide, I’m excited to work with Platypus during such an important time,” says Downing. “This opportunity allows me to develop new and innovative ways of partnering with producers, supporting each production and brand while elevating the theatre experience. I feel there are no limits to our potential accomplishments in this new era of live entertainment.”
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Dice launches direct-to-fan merch platform
Ticketing and music discovery company Dice has launched Merch on Dice, a direct-to-fan merchandise sales platform for artists.
In the same way as fans can find shows and buy tickets through the Dice app, Merch on Dice will allow them to order limited-edition artist products to pick up at the concert or have delivered. Consumers will also receive notifications and updates about available merch in the run-up to the show.
“We’ve built a beautiful direct to fan, mobile-only shopping experience specifically for live events, making it easy for fans to quickly order limited-edition products that they can pick up at the venue or get delivered to their home,” says Phil Hutcheon, CEO of Dice.
“The success of live streams has propelled the demand for limited-edition, rarer apparel in particular”
For artists, Merch on Dice will enable them to create exclusive limited-run product ‘drops’ in the lead-up to a gig which are only available to fans attending the show and/or live stream.
“In an increasingly virtual world, the need for physical memories are more important than ever. The success of live streams has propelled the demand for limited-edition, rarer apparel in particular,” continues Hutcheon.
“Merchandise will always have a deeply emotional draw on fans – it’s intrinsic to the live experience – and we want to make it better. We’re bringing artists and fans closer through merch on Dice.”
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Sony Music to acquire merch company Probity
The Thread Shop, Sony Music’s merchandise division, is to acquire Probity Europe, a leading independent music merchandising company offering worldwide tour, retail, ecommerce and licensing services.
Probity’s roster of artists includes Metallica, Noel Gallagher, Oasis, Paloma Faith, Rage Against the Machine, Robert Plant and Van Morrison.
Following the acquisition, London-based Probity will become a new division of The Thread Shop, with the existing Probity team serving under company founder Mark Stredwick. Stredwick will report to Thread Shop head Howard Lau.
The takeover of Probity is the third merch-related acquisition by Sony Music since last summer, following similar deals with the US-based Araca Group and the UK’s Kontraband last year. The label’s in-house merchandising business is now home to the likes of the Beatles, Camila Cabello, Jimi Hendrix, Maluma, Led Zeppelin, Lil Nas X, Pink and Rosalia.
“Probity is an established independent leader in the European merch market”
“We are delighted to fully cement the organic relationship we had already developed with Howard and Sony Thread Shop,” comments Stredwick.
“The deal with Sony allows our growing roster to tap into more opportunities globally and benefit from innovative and creatively driven merchandising programs that The Thread Shop deliver with such passion.”
Adds Lau: “We are very pleased to be further enhancing the reach and competitive capabilities of The Thread Shop around the world with the welcome additions of Mark Stredwick and the Probity team.
“Probity is an established independent leader in the European merch market, representing some of the world’s most iconic music artists. Together we can offer our artist clients and the music community an even more robust set of merchandising opportunities to complement their music revenues, branding and marketing.”
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LiveXLive to acquire merch company CPS
Live music media company LiveXLive has agreed to acquire CPS, a leading merchandise personalisation firm, for an estimated US$6 million.
LA-based LiveXLive has seen its core business – livestreamed live music events – grow exponentially this year while concert touring is on hold, having streamed shows by more than 1,400 artists in 2020 alone. In a ‘normal’ year the company also streams content from a roster of partner festivals that includes Rock in Rio, Sziget, Paléo Festival Nyon and Electric Daisy Carnival Last Vegas.
It also owns PodcastOne, a leading podcast network home to more than 300 shows, React Presents, an electronic music promoter formerly part of the SFX network, and a number of other related businesses.
Following the acquisition of CPS, LiveXLive, which trades on the Nasdaq Capital Market, plans to “partner with the music and entertainment industry, as well as stars who have massive social media and marketing reach, to create and distribute unique and limited edition personalized [sic] clothing, jewelry, toys, as well as virtual goods,” according to a market note.
Founded in 2012, Addison, Illinois-based CPS (Custom Personalization Solutions) formerly operated multiple ecommerce businesses, including jewellery company Limoges Jewelry, gift seller Personalized Planet and toy retail business TV’s Toy Box.
“We intend to fulfil super-fans’ dreams with personalised merchandise from their favourite artists”
With over 70 full-time employees, it now focuses on creating an “assortment of personalised merchandise unlike anything in the market”.
“The global licensed merchandise market is expected to reach $400 billion by 2023. This acquisition presents an immense opportunity for LiveXLive to leverage its audience, platform and artist and entertainment-industry relationships to add commerce and specialised consumer product revenues to our music stack and help drive the transaction components of our flywheel business model,” says Robert Ellin, CEO and chairman of LiveXLive.
“By integrating social commerce into our live and original content, we intend to fulfil super-fans’ dreams with personalised merchandise from their favourite artists and shows, directly to the consumer.”
“The worlds of custom merchandise, real-time fulfilment and social commerce driven by celebrity and influencers have collided to create a perfect storm” adds Scott Norman, CEO of CPS. “LiveXLive represents the perfect partner for us to take advantage of this next wave.”
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Face masks become must-have music merch
Music and sports brands are capitalising on the growing popularity of face masks, with bands including My Chemical Romance, Korn and Megadeth, and the US’s National Basketball Association (NBA), among those to have begun producing their own cloth face coverings.
Though the WHO says face masks only need be worn by those symptomatic with Covid-19, or caring for those who are, many countries, including the US, are now recommending non-medical face coverings be worn in public. Among those responding to the demand are the NBA and its sister league, the Women’s NBA (WNBA), which announced on Friday it would donate all proceeds from its new masks to charities Feeding America (US) and Second Harvest (Canada).
“As a global community, we can all play a role in reducing the impact of the coronavirus pandemic by following the CDC [Centers for Disease Control]’s recommendation to cover our nose and mouth while in public,” explains Kathy Behrens, the NBA’s president of social responsibility and player programmes. “Through this new product offering, NBA and WNBA fans can adhere to these guidelines while joining in the league’s efforts to aid those who have been directly affected by Covid-19.”
In the music world, thrash metal act Megadeth are sending their fans face masks featuring the band’s Vic Rattlehead mascot, while post-hardcore band Thursday are repurposing existing merch to create masks, the sales of which will go towards making more. Nu-metallers Korn, meanwhile, created masks featuring their logo in early March, which quickly sold out. Fans can now pre-order a new batch set for release on 8 May.
According to trade body Licensing International, the NBA “opened the licensing floodgates” to branded face masks
Recently reformed emo heroes My Chemical Romance will release their masks – originally created for a show in the desert that never materialised – on 29 May, donating all proceeds to the Covid-19 relief fund established by Grammys charity MusiCares.
“We are living in strange times, alienating times, scary times,” reads a statement from the band. “These masks were the brainchild of our beloved Lauren Valencia, who died before this madness, not of the Covid-19 pandemic, but the older evil that is cancer. We had these masks made to keep you dust-free in the desert, a show that never happened, never will – a protection that then seemed timeworn.
“And here we are, with these masks, as though Lauren was prescient or we were unknowingly waiting for the right time…”
Valencia, the band’s longtime manager, died last year.
According to US trade body Licensing International (LIMA), the NBA/WNBA masks – along with the launch of MaskClub.com, featuring masks with the Batman logo, Hello Kitty, Care Bears, Scooby-Doo and others – “opened the licensing floodgates” to branded face masks, with more launches expected in the near future.
LIMA’s Global Licensing Survey 2019 found music merchandise sales were worth nearly US$3.5bn worldwide last year.
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Universal reports merchandise boom in 2019
Universal Music Group (UMG) has revealed that its revenues from merchandise sales nearly doubled in the first nine months of 2019, boosted by strong demand and a healthy global touring market.
According to UMG parent Vivendi’s third-quarter (Q3) 2019 financial results, merchandising and other related revenues increased by a whopping 82.4% year on a constant-currency basis compared to the first nine months of 2018, “thanks to increased touring activity and growth in retail and D2C (direct-to-consumer) revenues.”
In total, UMG grew turnover 17.5% in the nine months ending September 2019, to over €5 billion (€1.8bn in Q3). France-based Vivendi is currently in the process of selling a 10% stake in UMG to China’s Tencent for €30bn – as well as, potentially, “other partners”, according to its latest financials, “some of whom have already expressed an interest in investing at a similar price level”.
The growth of the music merchandising sector has accelerated in recent years, with merch sales totalling nearly US$3.5 billion in 2018 (though the impact of Brexit is cause for concern in Europe).
Universal’s merchandising division is Bravado, which earlier this year expanded its footprint by acquiring rival operation Epic Rights. Its major-label rivals are also increasingly making inroads into the merchandise space, with Warner Music last year acquiring EMP Merchandising and Sony Music investing in the Araca Group and Kontraband.
Merch grew “thanks to increased touring activity and growth in retail and D2C revenues”
Elsewhere in the Vivendi group, Vivendi Village – the business unit that includes its live entertainment and ticketing activities – grew revenues more than 50%, to €108 million, in the January–September period, bolstered by a strong festival summer and growth for See Tickets in North America.
“Live activities, which include Olympia Production (France), U Live (Great Britain) and venues in France and Africa, recorded very strong revenue growth at €56 million, a strong increase (x2.4),” reads the Q3 financial report. “Vivendi Village now produces 12 festivals that experienced a significant increase in attendance this past summer, especially Garorock in France and Sundown in the United Kingdom.”
Vivendi’s other festivals include Les Déferlantes Brive Festival in France, the UK’s Love Supreme, Poptopia in the US and Universal Music Festival in Spain.
“Ticketing activities are now all grouped under the same See Tickets brand,” continues the report. “Ticketing revenues amounted to €48 million, an increase of 19.5% compared to the first nine months of 2018 (+8.5% at constant currency and perimeter), due in particular to the robust growth of the activities in the Unites States, where revenues doubled in one year.”
In total, Vivendi turned over €4bn (+7.2%) in Q3 2019 and €11.3bn (+6.9%) across the year to date.
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Sony expands merch presence with Kontraband deal
Sony Music UK has acquired London-based, full service merchandise company Kontraband, as the company continues to strengthen its foothold in the music merch world.
Kontraband has operated in the merchandising industry for almost twenty years, under the leadership of Paul Entwistle and Justin Smith.
The company works with clients including Iggy Pop, Kylie Minogue, Bombay Bicycle Club, Maximo Park, the Streets, Enter Shikari and Broadwick Live-promoted festival Field Day.
“We’re hugely excited about joining the Sony Music family,” says Entwistle. “From the very start of our conversations, there was a very clear vision about the role merchandise would play alongside their other services, so it’s a massive opportunity for us to be able to integrate as part of this.
“Kontraband’s reputation was made by approaching merchandise in an innovative and creative manner and we’re looking forward to continuing to deliver this for artists on the Sony Music roster,” adds the Kontraband director.
“Kontraband’s reputation was made by approaching merchandise in an innovative and creative manner and we’re looking forward to deliver[ing] this for artists on the Sony Music roster”
“We are continuously looking for ways to diversify our business and the acquisition of Kontraband allows us to help our artists enhance their brand and deliver new and exciting commercial opportunities,” comments Sony Music UK and Ireland chief operating officer Nicola Tuer.
The move is Sony’s second in as many months in the merchandise sector, following the acquisition of the music division of US entertainment merchandising company the Araca Group.
The music merchandising sector has boomed in recent years, with sales totalling almost US$3.5 billion in 2018. Sony’s major-label rivals Warner and Universal have also their staked their claim in the merchandise space, in the form of EMP Merchandising and Bravado/ Epic Rights respectively.
Kontraband will relocate from its office in Finsbury Park, north London, to the Sony Music headquarters in Kensington.
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Proposed Brexit merch tax will ‘harm grassroots sector’
UK artists travelling to Europe will have to pre-pay import duty and value-added tax (VAT) on all merchandise they bring on tour with them in the event of a no-deal Brexit, according to new UK government guidelines.
European artists entering the UK would similarly have to pay taxes in advance for any merchandise they planned to sell while touring.
Under the regulations, artists would have to complete a long administrative process before embarking on tour with merchandise.
“If you bring goods into or take goods out of the UK in your baggage or a small motor vehicle, and you intend to use them for business, you must declare your goods and pay import duty and VAT before you move them across the border,” reads newly updated government no-deal guidance.
Industry professionals have raised concerns over the impact that such regulations would have on grassroots musicians.
According to Kelly Wood of the Musicians’ Union, the changes represent a “significant problem for touring musicians”.
“It’s a fundamental lack of understanding of the economics of grassroots touring”
“Merchandising is essential for artists, as it can help to balance the books on tours with tight profit margins,” Wood tells IQ. “It’s also an essential ongoing part of an artist’s branding, which can help to grow a fan base and launch and sustain a career.”
Merchandise sales have boomed in recent years, with music merch sales worth nearly US$3.5 billion in 2018.
Merchandise is especially important for the grassroots sector, accounting for an estimated 30–40% of income generated by emerging artists touring in Europe.
“It’s a fundamental lack of understanding of the economics of grassroots touring to imagine that this process is remotely deliverable by new and emerging artists, either practically or economically,” says Mark Davyd of Music Venue Trust (MVT).
“One t-shirt sale is equivalent to 5,000 streams on Spotify, and band merchandise is the most direct way of supporting new and emerging artists,” says Davyd, adding: “We strongly urge the government to think again.”
“Artists are already having to piece together complex travel arrangements, itineraries, contracts and budgets”
The new regulations requires artists to apply for an EORI number, calculate the correct tariff, weigh goods, work out the value of the merchandise and decide on how to declare the goods to customs officials.
“The level of administration that these changes involve will prove problematic to artists who are already having to piece together complex travel arrangements, itineraries, contracts and budgets,” explains Wood.
The taxes on merchandise are not the only additional fees predicted to negatively affect musicians in the case of a no-deal Brexit. The UK’s Incorporated Society of Musicians has calculated that artists will face extra costs of up to £1,000 per year for customs documents, visas, medical insurance and more.
Industry associations, including UK Music and the Musicians’ Union, have repeatedly pushed for a ‘touring passport’ which would allow musicians and their crews to move freely post-Brexit.
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