The debate over venue merch cuts has been a hot topic in recent years. Independent venues are facing rising costs and looking for sustainable ways to keep their doors open. Some see merch cuts as a necessary revenue stream, while others believe prioritizing long-term artist relationships is the better play. But what if it’s not an either-or situation? Instead of viewing merch cuts as a battleground, a more collaborative, symbiotic approach could lead to a stronger live music ecosystem—one where both venues and artists thrive.

One thing is clear: merch policies matter in booking decisions. Agencies and artists absolutely take a venue’s stance on merch cuts into consideration when deciding where to play. In a competitive market, venues with artist-friendly policies often gain an edge, while those enforcing steep cuts may find themselves losing out on desirable bookings.

(Above): Rusty Sutton with The Glow Management shares how merch cut policies do impact booking decisions—and that they prefer working with venues focused on long-term artist growth, not just short-term gains.

Watch the full panel from our March webinar, "Merch Madness: The Merch Cut Controversy" here.

The case for merch cuts: A valid service fee that venues rely on

For many independent venues, operating margins are razor-thin. The costs of running a venue, from rent, staffing, utilities, licensing fees, to booking costs, continue to climb, while traditional revenue streams such as bar sales have become less reliable due to changing audience behaviors, including a rise in sober-friendly lifestyles.

For some venues, taking a small percentage of merch sales is one way to help offset those costs, especially when guarantees and production expenses remain high. Many venues also provide dedicated staff, credit card processing, and prime merch locations, framing their cut as a service fee rather than an arbitrary tax on artist earnings.

In markets where major promoters like Live Nation dominate, independent venues feel pressured to match financial incentives offered to artists while still maintaining a viable business model. For them, a small cut of merch can be the difference between keeping the doors open and struggling to stay afloat.

The case for a win-win approach that benefits all parties

On the other hand, many independent venues are rethinking their stance on merch cuts. Rather than seeing them as a necessary evil, they’re exploring models that focus on collaboration instead of a flat percentage fee. These venues believe that fostering strong relationships with artists leads to better shows, repeat bookings, and a more respected reputation within the touring world.

Here’s what a symbiotic approach to merch and venue sustainability can look like:

1. Shared Risk, Shared Reward

Some venues implement a system where merch cuts only apply when a show hasn’t yet broken even. If a show meets its ticket sales goal, artists keep 100% of their merch revenue. If a venue is struggling to recoup costs, a temporary, small merch percentage may be applied, ensuring both parties benefit in good times and support each other in tougher ones.

2. Revenue Sharing Beyond Merch

Rather than taking from artist-driven sales, some venues explore more equitable ways to generate revenue. This can include structured ticketing deals where both parties share a portion of VIP or add-on sales, or adjusting food and beverage partnerships so that a portion of bar revenue is earmarked to offset operating costs that might otherwise come from merch cuts.

3. Enhancing Merch Sales with Venue Support

Instead of a flat merch cut, some venues provide enhanced infrastructure to actually help artists sell more. Dedicated well-lit merch areas, venue staff assistance, and cashless payment solutions can improve sales efficiency. If an artist chooses to use these venue-provided services, a small service fee is applied—shifting the model from a blanket percentage cut to an opt-in support system.

4. Transparent Deal Structures

A major frustration with merch cuts is the lack of clarity. Some venues now communicate policies upfront, allowing artists to factor in potential costs before accepting a gig. When expectations are clear, negotiations become smoother, and both sides can find a fair agreement that aligns with their goals.

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With Opendate, build merch terms right into your offer so it’s transparent from the start.

5. Supporting Emerging Artists Differently

Some venues recognize that not all artists are in the same financial boat. To support rising talent, some venues waive merch cuts for smaller acts and openers, ensuring they keep every dollar they earn on the road while still structuring merch policies for larger headliners.

The Path Forward: A True Partnership

At the end of the day, venues and artists need each other. When venues provide great spaces, marketing support, and fair deal structures, artists are more likely to return, promote the venue positively, and build long-term partnerships.

The independent venue world thrives on relationships, not just transactions. For venues that choose to maintain a merch cut model, there are ways to do so with fairness and transparency. Being upfront with artists, offering value in exchange for a percentage, and adjusting structures based on ticket sales or show success can help foster goodwill.

There’s no one-size-fits-all solution. Some venues will continue taking a merch cut as part of their financial model, while others will move toward shared risk and reward structures. The key is finding a balance that allows both venues and artists to sustain themselves in an evolving industry.

By focusing on collaboration, independent venues and artists can work together to create a thriving live music ecosystem where everyone benefits.