[00:00:00] Welcome to episode 146 of the Bandhive Podcast. It is time for another episode of the Bandhive Podcast. My name is James Cross and I help independent artists tour smart. There's been a recent spike in mid-level bands, whining about venues, stealing money from their merch sales, and especially in the metal scene, it's become quite the hot topic. So what's the deal.

How are these venues stealing from artists? That's what I'm gonna talk about this week on the Bandhive Podcast. What these artists are complaining about is called a Hal fee though. You'll also hear lots of other names for it.

They all mean the same thing. There are different theories about where a Hal fee originated. The most common one though, seems to be that it comes from larger venues where they provide a merchandise seller or merchandise sellers, plural, because it's an arena or amphitheater and the artist can't possibly tour with enough people to support the sales for that artist.

That fee was used [00:01:00] to cover the pay for all the merch sellers that the venue, or maybe a third party contractor provided they were doing the job that typically the artist themselves would do or would have a seller doing for them. Over time, this also spread to smaller and smaller venues And frequently, you know, the seller will be the merchandise manager at these smaller levels. Whereas at larger venues, the merchandise manager will be interfacing with the venue sellers or the contracted sellers.

so if you're selling your own merch at a venue, that's not that large, but the venue still wants a Hal fee. It kind of feels like they're taking your money for nothing. here's where I don't always agree because in some instances, the hall fee is fair. If the percentage taken is considerably lower than it would be at a large venue where they provide sellers, it even makes sense because where you are set up in the venue, that's space that the venue can't sell tickets on, they have to pay rent on it.

They have to maintain it. [00:02:00] Whatever they're doing, they can't use it. So like I said, tickets, they could use it for a kitchen restaurant seating offices. They aren't able to use it for any part of their normal operations, because they always have to set it aside for a merge table when they have shows that means they have expenses related to that area.

why is it not fair that they get some form of compensation for your use of that area? Imagine it this way. If you set up a kiosk in a mall, which yeah, I'm that old, I'm talking about malls and kiosks, you would absolutely have to pay the mall for that space. you're probably selling t-shirts or electronics of some kind or whatever it is.

It's the same thing. If you're setting up a Mer table at a venue, except the mall would probably charge you a flat monthly fee rather than a percentage, which means. You're not gonna take a loss on a percentage if you do it right. Whereas with a flat monthly fee or a flat nightly fee, in the case of a venue, maybe you don't even sell enough merch to cover that flat fee.

my opinion, it's fair. As long as the fee isn't ridiculously high. Plus if the venue is any good, [00:03:00] they will give you a table, a merch rack, and maybe even something to sit on. I've seen this go all kinds of different ways. When I tour doing merch, some venues would have like an amazing corner with tables already set up great merch, racks, all that.

And others would just say, oh yeah, go set it up in the booth over there. Cuz it's. They had booths around the edge of the venue. It's like, okay, that's great. But can't even store boxes back here unless I slide through on the bench, cuz the table's fixed to the floor. It's like embedded in the concrete.

This is gonna be a pain. So depending on the venue, maybe it's great. Maybe it's not one other point is that if your fan base is younger or doesn't drink, I'm looking at you straight edge bands, the venue will wanna hire healthy because they won't sell as many drinks. That makes sense to me. If the venue is expecting to make their profit for the night on drinks and you're getting most of the door after expenses, the venue's not making money off of that then.

Yeah, it seems fair that because your audience doesn't drink and don't get me wrong. I'm straight [00:04:00] myself. I don't drink. that they take a cut of the merch sales, because venues typically aren't making much, if any money on ticket sales that mostly goes to the artist, unless you have a bad deal where they make their money is concessions.

So following logic, if they're not gonna make any money on concessions, because the audience doesn't drink, it's only fair that they say, Hey, we wanna negotiate a higher Hal fee. Now, I don't feel like any of this adds up to a venue taking 30% or more. That's just ridiculous, but 15% or so. Sure. Seems fair to me in exchange for not paying rent on that space.

Because like I said earlier, you wouldn't go set up a t-shirt kiosk in a mall without paying. That's just not how it works. you have to realize that these venues are paying bills for these areas that they can't use for anything else. So they're essentially saying we have expenses. We'd like those expenses to be covered for us.

Now here's the catch [00:05:00] over the years, the hall fees at small and mid-size venues have been creeping up and becoming more and more predatory. So a standard hall fee is somewhere around 10 to 20%. Typically I try to shoot for 15% on soft goods and trinkets and 10% on recordings and media. The. difference that it's a little lower on recordings in media is because you might have higher costs. You might have royalties to pay to other people. Like if you have cutter songs or if you have co-writers and maybe you're just not earning that much on the media. Anyway, if you have a label dealer to something you might only be getting a few cents per copy.

You have typically a lower cut on the recordings in media, if you can negotiate that in. But some venues, like I was mentioning have decided that they're gonna charge 30% or more the earliest instance. And this is just from my recollection. So there are probably other people who have done this earlier was back in 2009, galls was opening a tour for AFI and on the Detroit stop.

Gallos was not allowed to sell their own merch because the venue [00:06:00] had union sellers and they wanted a ridiculously high cut. Now don't get me wrong. I'm all for unions. If they actually provide a benefit, but I would not call taking money from independent bands who aren't taking union jobs, a benefit. Now, if it was non-union sellers versus union sellers, by all means, but this was the band themselves.

They didn't have a merch seller on that tour. So they weren't taking jobs from anyone. They couldn't afford a merch seller for any of their shows. Let alone one with such a high fee. I believe they were looking for 35% if I recall correctly. So what did Gallos do? Well, they're British hardcore punks. They did what they know best and said, screw it.

They tweeted saying, Hey, we're not selling merch at this show, but if you want something, come meet us outside by the van. And it worked, they sold out of, I believe their fitted hats or something like that. They had some limited item. that they were only doing a few of, at each show and they sold out of it.

that is obviously taking it to the extreme where you say, we're not even [00:07:00] gonna sell any merch, come meet us outside. But if you're in a bad deal like that, Absolutely do it. If you think you have the fan base who will follow you to go somewhere else to buy merch without that whole fee, that is one option.

Not that I necessarily recommend it. and even when I would say, Hey, go ahead and try it. I would only do that for egregiously high merch fees. If it's something like 10, 15, 20%, it's not worth the hassle. And you're gonna end up earning less money because not as many people are going to buy Mer.

Now that all said for a club show, which this was a club show, a large club, it was at the Fillmore. There's absolutely no reason a venue should force their own sellers on an artist. They can offer them, but it's really unethical to insist that a band must use that venue seller at an incredibly inflated rate.

If there's no need for multiple sellers. So if you typically only have one seller or that seller is yourself, which is the case for most club shows, the [00:08:00] venue should not be saying you have to pay this person that we are providing you, at least as far as merch. That is a bad deal. Obviously, if the venue is providing security or production staff or anything like that.

Yeah. Those are positions that are needed, that a band typically would not cover themselves, but a merch seller, the band typically has their own person doing. Now here's the good news about all of this. You, as the artist control the whole fee, it is something that is in the contract. You sign to play a show, and if it's not there, if there's no whole fee mentioned in your performance agreement, then you don't have to pay it.

If somebody is asking you to pay a whole fee and they say, that's how we always do it here, you just say, Hey, I'm really sorry. Take it up with our agent and whoever signed the contract on the venue or promoter's behalf, because this isn't in our contract. So we're not legally bound to pay it. Now, even if you're acting as your own agent, if you book your own shows, you can still say this.

What it does is say, Hey, [00:09:00] This doesn't apply to us. Now, if you are gonna say this though, you wanna be sure that you have a copy of the contract available. And even if that contract is just an email confirming the details. If nowhere in that email, a whole fee is mentioned, then you are not obligated to pay that whole fee because it wasn't explained to you and you never agreed to it.

If they try to push the issue. Well, that's theft, they're trying to steal money from you because it's not money that they are legally entitled. Next thing is if there is a healthy fee in that contract, it's absolutely negotiable. If you do negotiate, it expect other things to change in the contract as well.

It's all about a give and take. When you're negotiating, you're not just trying to get what is best for you. You're trying to find a deal that is mutually agreeable. One thing though that you absolutely wanna be a certain amount is that the contract states very explicitly, that the whole fee is based on the net income from your merch sales at that show.

specifically at that venue, because if you go out to the van to sell, [00:10:00] you don't want to have to pay. any merch fees on that, even though you're technically still at that show, be because you're outside, you're not in that venue.

And this is why you should have a lawyer look over all your standard performance agreements. It comes down to very. Specific words. For example, if you say in the venue, you have to be in the venue to O aha fee. Whereas if you say at the venue, maybe you're just on the premises, you're outside, but it's still their property. Well, you're still at their venue technically. So you might still owe a healthy on. No matter what though, having that net income language is extremely important because it prevents you from losing money on merch sales.

So so let's jump into some definitions and bear with me here, because this is a little bit of accounting jargon, your total income from merch sales, whatever you take in cash card, whatever it is that is your revenue. You never want haul fees to be based on your revenue.

It should always specify what it's based on, but if it's not specified, it's gonna be your revenue. Your [00:11:00] gross income is revenue minus the cost of goods sold, which is what it costs to produce the items you're selling. So just as a quick example, and I'll go into more detail later, but if you have a $30 shirt and it costs you $7 to make your cost of goods on that shirt is $7.

That means if you sell one shirt, your gross income is $23 net income, which you're trying to get in the contract as the basis for your merch cut or the Hal fee. is your gross income minus any other expenses could include taxes, credit card processing fees, what you're paying your own merchandise manager, the list goes on and on even things like the daily cost of your me app, which is just your monthly subscription fee divided by 30 can be subtracted because that is an expense for your merch.

But if your contract doesn't specify that the haul fees to be calculated on net, then you're probably, like I said, gonna end up paying off of your revenue and you might actually lose money [00:12:00] because you're not even deducting the cost of goods sold. this means that if your contract doesn't specify, the whole fee is to be calculated off of your net income for merchandise sales and the venue or promoter refuses to add that language.

It's time to walk away from that offer and book somewhere else. That is a bad deal. let's run through a more detailed example and I'm still gonna keep this pretty basic with nice even round numbers, but let's say you sold 10 shirts at $30 each. That means your revenue, which is the total income before any deductions is $300.

Then $7 per shirt to print resulting in a cost of good sold of $70 and a gross profit of $230. Next we deduct all your expenses. So let's say standard credit card fees of 2.9% plus 30 cents per transaction. We'll say that each transaction was only one shirt. So that means 10 transactions. Okay. That gives $8 and 70 cents on the percentage and $3 on the per transaction [00:13:00] fee. So total that is $11 and 70 cents to your card processor. So let's say that you use merch cat and it's $10 99 cents per month. That means roughly 37 cents per day. You didn't have to charge sales tax for this show. So there's no deduction there, but you do pay your merchandise manager, $50 per show. So all those expenses totaled up are $62 and 7 cents. Let's deduct that from the gross profit, which if you recall was $230, that leaves us with a net profit of $167 and 90, 30 cents.

If you have a 15% Hal, and that was taken on the revenue of $300, you would be handing over $45 to the venue at the end of the night. But if it's on the gross, then your whole is only $34 and 50 cents.

And if you put that on the net, then the venue just gets $25 and 19 cents. So you can see how important it is to make sure that everything is calculated on net, [00:14:00] because this is only $300 and you've cut down your healthy from $45 to just over $25. Now imagine that your revenue was $3,000, your healthy would be about $450 at that level, but if you calculate it on the gross, then you're probably gonna be looking more around $345. Or if you do it on net, it's gonna be around 200. Maybe a little more, because you're not gonna have expenses that scale the same way.

Like you're not gonna be paying your merch manager nearly as much relatively speaking, but in general, your expenses will also scale with your revenue. so no matter what, using that net income as the basis for your whole fee will result in a smaller payment to the venue.

Now I should say with all of this, sometimes hall fees are just beyond your control. For example, if you're opening for another artist, chances are that the hall fee that they [00:15:00] agreed to will also apply to you. The only exception to this is if you have your own contract or agreement with the venue, which means you weren't a package deal with a headliner.

So So you're the local opener, for example, and you are able to negotiate your own agreement with the. Which one thing I wanna mention too, is that some headliners will have minimum merch pricing, which I think is ridiculous. The headliners are worried that if their openers charge less for merch, then fans will buy the openers merch instead, which for me, I only buy merch from artists. I like. So even if it's cheaper, I'm gonna pay more for the artist I enjoy. And if I enjoyed the opener and I'm only gonna buy one shirt, I might be buying it from the opener anyway, even if it's the same price, but if somebody's on the fence, maybe they go with the headliner where they would've bought a $30 shirt from the headliner and a $20 shirt from the opener, but they only had $50 in their pocket.

So to me that doesn't seem fair. And if anything, that's [00:16:00] worse than a standard 15% Hal fee, because that is really malicious. It's saying we're worried about you taking our sales. So we're gonna make you charge just as much, even though there's not as much demand for your merch and of course, supply and demand.

If people don't want a $30 shirt, but they might buy a $20 shirt. You're losing a sale because there's not enough demand to maintain that $30 level for an opening act. In all cases. So to recap, all of this hall fees probably originated in larger venues where the venue provides the sellers. And then those hall fees spread down to smaller venues, potentially because bands with straight edge fans or younger audiences who don't drink.

And the venue said, Hey, why don't we adopt this model to make up for the lost sales in concessions? and while Hal fees can absolutely be predatory, that's not always the case. You have to keep in mind that the venue has expenses too, and if you're selling merch, they're letting you use an area that they have to pay bills on, but can't use for anything [00:17:00] else.

Next thing is keep in mind that haul fees are negotiable. So try to negotiate a lower fee. And if you don't and choose to sign that offer anyway, don't complain about it later. You could have walked away from that offer, but you agreed to it. That means that you, as an artist made that decision.

Again, the caveat is if you're opening a show and it was part of a package deal and you had no say in it, but If you didn't have a say in it, be thankful that you're on a big tour and somebody decided to bring you along because that takes a lot to do.

So if you're at that level good for you above all, make sure that you understand how to pay the whole fees properly and only pay what is explicitly required by the contract. Again, ideally you've negotiated for net profit, but if it doesn't specify, expect to pay on revenue without deducting cost to get sold or any expenses.

If you find yourself in that situation, it can be really painful because you might take a loss on those items. But again, if it's not specified in the contract, you kind of walked into that. I'm not saying don't [00:18:00] try to give them anything based on net. If it doesn't specify, you can try to do that, but just expect that they might say, no, we don't agree with that math.

You owe us this much. And if it doesn't specify, then you probably do owe them. One last thing is always be respectful. If you sign a contract that agrees to a high Hal fee, sucks, but you have to take it again. You could negotiate it down to 15 to 20% of net profit before signing.

Or you could book a show somewhere else. By maintaining respect for all the parties you're dealing with and not getting into shouting matches or calling names. You're not gonna burn bridges and you never know who you might be Burning bridges with, if you're trying to back out of deals that you've signed.

So always be respectful and understand that, Hey, you know what? We sign this. We have to stick to it. Even if we don't necessarily like it, that all said, the way most artists make money is merch. So, yeah, it's frustrating if the venue is taking a cut, but you can go out [00:19:00] there and make a killing on your sales, if you do it right.

That does it for this episode of the Bandhive Podcast. Thank you so much for tuning in and listening. I really appreciate it. And I hope that you learned a lot about hall fees or merch cuts in this episode because it's really a very misunderstood topic. And I agree that in most cases there shouldn't be a super high fee, but I can also understand why, you know, a 15% fee or so exists, all that.

You can pay a lot less if you know what you're doing. And that's why understanding hall fees properly is really important. If you have any questions about hall fees, we do have a thread for this episode over in the Bandhive group on Facebook. You can find us there by searching for Bandhive that's B a N D H I V E on Facebook.

Just go down to the group. Or you can go to Bandhive.rocks/group to be automatically redirected. Again, that's searching for Bandhive on Facebook or going to Bandhive.rocks/group. Find the thread for this episode and ask away any questions you may have about hall fees. I'm all ears. Let's [00:20:00] chat about it.

We'll be back with another brand new episode of the Bandhive Podcast. Next Tuesday at 6:00 AM Eastern until then. I hope you have a great week stay safe. And of course, as always Keep rocking.