If you are going to give your company a name like Terrible Merch, it’s going to attract questions. Is it a post-modern double bluff? Is it a ‘get out of jail free’ card? Or is it a sly dig at the competition?
For Terrible Merch founders Tersha Willis (a streetwear designer) and Jack McGruer (a musician who has been through the major label machine) it’s all three.
Willis, coming from the fashion business, was appalled at how shoddy a lot of artist merchandise is while McGruer has first-hand experience of how shoddy artist deals can be in the worst examples of labels taking control of their merchandising.
They decided to do something about it, setting up Terrible Merch to raise the standards in a $3.1bn business that they feel too often takes its customers for granted, and short-changes both them and the artists whose names they put on T-shirts, mugs and tote bags.
The company has now taken to equity-crowdfunding platform Crowdcube to take the company to the next level, and give independent acts an affordable entry point into the merchandising gold rush – it claims that it’ll be a £3m revenue business within three to five years “with an exit to a major recording label, entertainment company or ticket provider” within five to eight years.
“We took a look at the merchandise market and realised that the quality was really poor,” says Willis on the impetus for setting up the company. “Bands also didn’t really know how to sell it. When we deliver them the merchandise, we also gave them everything you need it to sell it.”
Terrible Merch’s co-founders feel that the merchandise business is stacked against the customer and the artist and, if it is to grow further, must change this. Plus, it is primarily about super-serving bands of a certain size while small acts – who desperately need new income streams just to keep going – are being locked out.
“There’s no merchandise companies that really helped small bands with that,” argues Willis. “There are plenty of places like Bandcamp and Music Glue – but you still have to, if you want to make money out of it, source the products yourself. And the quality is normally terrible.”
There is also some personal score-settling at play here. “Jack was a major label-signed artist so he went through all the terrible things that happens to bands with their merchandise and how little money they say at the end of it,” she says. “We set up to solve all of those problems and the market was hungry for it.”
For now, Willis and McGruer are handpicking the acts they work with, focusing on emerging acts and those just on the cusp of breaking through, helping them create new means of income when they most need them.
“We have what we call our roster, which runs a bit like an independent record label where we A&R bands that we like,” explains Willis. “And if we like them, we will invest in a merchandise range, helping them to set that up and helping them to start making revenue. Once they get to a certain point, they can move over to our private label side and start to make good money from it. Everyone that we take on on the roster will grow into the private label side.”
The pair have several issues with some of the more established artist merchandise brands, particularly how narrowly selective their rosters are and how the quality of the end products is being compromised in the stone-faced march towards profitability.
“They only work with artists at a certain level,” suggests Willis. “The ideas, are great but the execution – and this is very typical in music merchandise – is never perfect. That’s because it doesn’t have to be [perfect] because fans will just buy it because they want to support the artists that they like… I recently met with the manufacturers for [major music merchandise brand]. Quality isn’t something they think about when they are manufacturing. They told us that straight up.”
In the 1990s, the record business was accused of taking its customers for granted, regarding them as walking wallets and squeezing every penny they could out of them in CD sales. This is partly why, when the CD market started to implode in the wake of Napster, the public had little sympathy for labels’ plight. In recent years, the live industry has started to be accused of similarly poor treatment of their customers through escalating ticket prices, transaction costs, charging to print tickets and home and being complicit in the secondary ticketing market.
The merchandise business, if it’s not careful, could be facing a consumer backlash of its own, suggests Willis.
“Fans are consumers in their everyday life as well and they do understand quality,” she says. “Coming from a fashion background, quality is really important for us. And we can get the margins good [for acts]. Our whole idea really is to help them build a business out of it; whereas I think other merchandise companies are helping themselves build a business; they are not really helping bands.”
The bigger merchandise companies will argue that economies of scale will give them a competitive advantage over startups in this space. As they will be ordering product runs in the thousands or even tens of thousands, the unit costs are going to be incredibly low. But this really only works for big acts who can sell lots of products.
Willis feels her company can step in here for small acts – who are deemed commercially unviable for the bigger operators – and offer them competitive rates.
“Because it’s the same supply chain we used when working in fashion, we have the same price per unit for runs of one to 500,” she explains. “So if you ordered 500 t-shirts, the unit price you would get for that is the same as if you ordered 100. We will find the magic number for the band.”
By taking a more hands-on approach, the company claims that it can advise new acts of their market potential and define both product ranges and product runs for them.
“We will look at their fans, we will look at the reach, we will go to their shows, we will advise them on exactly the right amount of merchandise that they need,” says Willis. “We have a minimalist approach to it in that we don’t over stock them. We want them to make money. Because our supply chain is so effective and efficient, we can give them the [best] prices.”
She adds, “We look at the band’s fans and what they are likely to buy. Some bands are just T-shirt bands. We also do pin badges, we do bags, we do caps; there is really no limit to what products we are going to do. We are even working on getting 3D-printed figurines. For instance, in Germany, tote bags sell like crazy. So if a band is touring in Germany, we make sure they have tote bags. We monitor everything that happens with our bands on the road by their sales as they have an app that tracks all of their stock.”
Terrible Merch sees concerts and merchandise as concentric circles in an act’s revenue-earning potential. and is moving beyond the traditional merchandiser role of product design/manufacturing/fulfilment to expanding their live appeal.
“We help artists develop their live brand and the products that go with that,” says Willis. “We help them with merchandise and take it in. If they are a smaller band, we do some live sessions [for them]. We have previously gone down to the Lightship – a boat in East London – where we have filmed acts like Childhood, Shame and Dead Pretties. It helps them develop their profile which, in turn, helps them book more live shows which, in turn, helps them sell more merchandise.”