But there's something horrible about turning bands into t shirt merchants.
Tours and associated merch do earn money and the internet is the thing that facilitates that.
Its the reason why smaller bands are so intertwined with their fans. They use twitter, myspace, youtube and their own sites to give people a sense of ownership and the fans then go out and buy all the hoodies and posters they can lay their hands on.
You have to be at the beck and call of your fanbase or someone else will. So, yeah, its a bit of both.
SOURCE: a few friends in A+R and various bands.