Inside Music's Merch Gold Rush

As album sales have tanked, labels are creating everything from $1,000 artist-branded jackets to punk-rock board shorts

Read what's behind the recent music-merch boom, including pricey branded clothes and splashy pop-up shops. Credit: Suzanne Kreiter/Getty Images

Three years ago, Fall Out Boy opened a pop-up store in New York, selling T-shirts in a space that resembled a punk-rock club. When the band revisited the idea at stores in New York and L.A. this past fall, the vibe and decor were noticeably upgraded. Purple-tinted windows made fans feel as if they were walking into the cover of the band's new album, Mania, and among the items on sale were hand-painted $150 denim jackets. "It's bigger now, and more money is coming through," says Chris Cornell, whose merch company, Manhead, works with Fall Out Boy, Shania Twain and other artists. "It's amazing how far it's come."

Music merchandise (T-shirts, posters, etc.), once an ancillary part of an artist's income, has become a booming business. In 2016, sales of music merch hit $3.1 billion, a 10 percent increase from the year before, says the Licensing Industry Merchandisers' Association. Retail-analytics group Edited claims that the sheer volume of music-related items on the market has tripled in the past two years. "Music has migrated to being more digital," says Mat Vlasic, who runs the merch company Bravado, "so fans are craving something physical."

At artist-affiliated online stores, retail outlets, pop-up shops and concerts, fans are now confronted by an increasingly high-end variety of consumer choices: $240 denim sherpa jackets (the Weeknd), $1,050 thigh-high boots (Kanye West) and $1,095 Canada Goose bomber jackets with collars made of coyote fur (Drake's OVO line).

As this new profit center has taken off, artists themselves are getting more involved in day-to-day operations. Taylor Swift and Morrissey opened pop-up stores in the fall, and Iggy Pop made color suggestions for his new line of Billabong board shorts. Recently, Beyoncé and Jared Leto both invested in Sidestep, an app that allows fans to buy concert merch online and pick it up at the venue prior to a show. "Some people like standing in line," says Jesper Poulsen of the licensing firm Epic Rights. "For me, personally, it's a buzzkill."

Although some in the industry question West's claim that he sold $1 million in merchandise in two days during a pop-up-store event in 2016, there's no question that profits can be sizable. Drake's pop-up events have brought in six-figure sales numbers. According to Panic! At the Disco's manager, Bob McLynn, 30 percent of the band's profit on its most recent tour came from merch. "Ever since CDs started going by the wayside, everyone was like, 'How are we going to make more money?' " says Cornell.

In a sign of the merch world's flourishing success, a secondary market has emerged at its margins: Fans are scooping up items at pop-up stores and reselling them online at pumped-up prices. "They're getting a couple of hundred dollars for a T-shirt that cost $25," says Frances Wong of Sony's Thread Shop merch agency. "After our Tribe Called Quest pop-up, people were selling the shopping bags online for $25. It was hilarious."