Stones, U2 Make Big Bucks on Tees

In the past two years, Lee Tepper, CEO of merchandise company MerchDirect, has noticed his rock-star clients paying much closer attention to their T-shirt designs. "They see that our royalty checks are more than they get for their records," he says.

As CD sales continue to decline, music merchandise is becoming an increasingly essential piece of artists' revenues: Arena headliners like Tom Petty and Motley Crue get multimillion-dollar advances for signing deals with companies to manufacture their items. Concert tees (black ones, in particular) remain the best-selling product, followed by hats and tour programs. "What's changed is there are fifteen different kinds of shirts now," says Dell Furano, CEO of leading merch company Signatures Network.

With shirts selling for thirty-five dollars or more (the Stones sell A Bigger Bang golf shirts for fifty dollars), top bands earn about ten dollars per head from merchandise sales, which can add up to a gross take of as much as $150,000 a night for U2 or the Stones. Artists have recently begun using their Web sites to sell bulkier and more expensive merch that would be impractical to take on the road; Jimmy Buffett offers dozens of items, from $20 beach towels to $250 parrot statues. But that approach doesn't work for everyone: "It helps if it's the kind of band where you feel like you're part of a club," says Rod Stewart's manager, Arnold Stiefel. "We haven't done that: No Rod Stewart cologne."