Nine months before Live Nation made the headline-grabbing decision to cut merch fees at 77 of its clubs and theaters across the country, Ineffable Music Group did it first. Now, the company’s CEO, Thomas Cussins, has a piece of advice for other independent venue owners and operators concerned that the concert giant is using this tactic to curry favor with artists and agents and squeeze out their businesses: Everything will be OK.
“Merch money is not what is going to keep us in business,” says Cussins, whose company oversees 10 venues across California, including The Catalyst Club in Santa Cruz, the Ventura Music Hall in Ventura and the Golden State Theatre in Monterey. “What causes independent venues to go out of business is the one in 10 shows where venues pay way too much relative to the draw and end up losing everything they made on the previous nine shows.”
Cussins made the decision to stop charging acts performing at his venues a cut of their merch sales — a standard industry practice — while watching a Jan. 24 Senate Judiciary Committee hearing about Ticketmaster. Cussins says it was members of the band Lawrence’s testimony about how much bands rely on merch money for touring that moved him to change the company’s policy: “It is money that most directly gets into the band’s pocket and the idea that we were taking away from that did not sit right with me.”
Since then, he says the decision has not hurt his business “at all.”
Still, independent venues remain concerned about what Live Nation’s new “On the Road Again” program will mean for them — how can they compete with the deals Live Nation is offering? The National Independent Venue Association (NIVA) released a statement on Wednesday (Sept. 27) following the news, saying, “Temporary measures may appear to help artists in the short run but actually can squeeze out independent venues which provide the lifeblood of many artists on thin margins.”
The statement continued, “The initiative announced yesterday may seem like a move to follow the lead of some independent venues. It is not that. Instead, it appears to be a calculated attempt to use a publicly-traded conglomerate’s immeasurable resources to divert artists from independent venues and further consolidate control over the live entertainment sector. Such tactics threaten the vitality of small and medium-sized venues under 3,000 capacity, many of which still struggle to keep their doors open.”
A NIVA member since 2020, Cussins says he understands why some NIVA members may be upset that Live Nation’s policy might put pressure on their businesses. But, he adds, eliminating merch fees is a net positive for the entire live music ecosystem — one where everyone is benefiting.
“It’s difficult to operate a single venue in a market against Live Nation,” says Cussins. “Venues are low-margin businesses. I’m not here to say that no one should charge merch fees. What I am here to say is that it is my opinion that if you waive those fees, it is an overall healthier ecosystem and you will actually do better in business because you are doing something that makes the process easier.”
What was your reaction when you heard the news that Live Nation was going to waive merch fees for artists?
I was ecstatic. It’s something I’m very passionate about because it fosters a healthier concert ecosystem.
Were you worried about the financial hit Ineffable would take when you decided to eliminate merch fees at Ineffable venues?
No, because merch money is not what is going to keep us in business. What causes independent venues to go out of business is the one in 10 shows where venues pay way too much relative to the draw and end up losing everything they made on the previous nine shows. I think it’s more productive spending one’s time fostering a healthier ecosystem where everybody has a chance to make money. To me, that means not taking artists’ merch money and artists taking more door deals, where the artist has an opportunity to make the most money.
But is that realistic? For many artists, taking a door deal with no guarantee is too risky.
Correct. Some can’t take that risk. But many other artists understand they can make more money on a door deal and lower the risk the venue faces. For independent venues to be healthy, we need volume, which means we need bands to be healthy and touring and making enough money to support themselves. And the money made from merch most directly affects their ability to be out on the road and do well.
What is your reaction to the statement NIVA issued, saying the On the Road Again program is just an attempt to squeeze out indie venues?
They’re doing what they think is in the best interests of their members. We’re members of NIVA and they have done an incredible job for our business. I’m a huge fan. But my take is that merch money is not what’s going to keep these independent venues in business. What’s going to keep them in business is a healthy concert ecosystem, where we’re keeping the bands healthy and keeping them on the road with deals that are fair so that everyone can make a few bucks and eat at the table together and nobody is gouging the other person.
What is the biggest challenge facing artists on the road right now?
It is the travel costs — the price of gas, vehicle rentals, the price to pay crews. If you are going out there and you are doing the same business and your costs have increased 30%, how can you possibly make that up? You might just not tour. I know a lot of bands that have told me they were doing 80 dates a year and now they just want to do 40. They just want to pick the 40 best markets. That hurts independent small businesses. I’m seeing that firsthand. Artists that are in the prime of their career saying, “I want to work less, but each one has more meaning.” And I can’t blame them. But if they can do a longer tour and amortize those costs and play those small secondary markets, then I can be their partner on the ground in markets where I operate venues and keep my hands out of their merch money.
What advice do you have to other venues considering dropping their merch fees?
It’s not one-size-fits-all and it might not be the right solution for everyone. But I am so happy that we made that move — not only from an ethos standpoint, financially as well. It has not hurt me at all.