How Taylor Swift’s Eras Tour boosted economies around the world
By Samarth Singh
It was June 2015. Apple had just announced a new plan – three months of free music on Apple Music. There was just one catch: Apple argued that since they did not charge the consumers, they wouldn’t pay the music artists either. However, they soon reversed the decision, and many say that was because of one artist: Taylor Swift.
The question is, why would a multi-billion dollar company reverse its decision for one music artist? The answer lies deep in economics. Each time Taylor Swift does a tour, it means a rapid spree in consumer spending. That isn’t shocking. A recent survey suggests that more than half of United States adults consider themselves to be ‘fans’ of Taylor Swift. 44% of them call themselves ‘Swifties’ – a name given to Taylor Swift fans.
The sheer scale of this economic boost is jaw-dropping. Recently, Swift completed her Eras Tour, and each ticket cost between 49 – 499 dollars. And they sold. In fact, many tickets were also up for resale. The average resale price for a Taylor Swift: The Eras Tour ticket was a whopping 2800 dollars. That is about ten times the average cost of tickets – around 250 dollars. Typically, Taylor Swift fans spend three times more than the ticket cost for hotels, restaurants, and other ancillary expenses. But this time, consumer spending has increased dramatically, with fans spending anywhere between 1300 – 1500 dollars.
The Eras Tour generated 2.2 billion dollars in ticket sales ONLY in North America. The economic impact is much more than just ticket sales. The Eras Tour alone is expected to generate about 5 billion dollars in consumer spending. The event even created supply shortages in the economy. In her song You’re On Your Own Kid, Swift mentions ‘friendship bracelets’, and the fans are very enthusiastic about it. Fans started acquiring friendship bands, and this brought revenue to several smaller local businesses. On the other hand, some businesses also mention bead and sequin shortages.
This impact is so huge that it can’t be ignored by governments. The Illinois Governor said that Taylor Swift had ‘revived’ the state’s tourism with her three nights in Chicago. Amazingly, she was also mentioned in a report by the Federal Reserve, which credited her for ‘boosting national tourism’. The Philadelphia Federal Reserve officials saw that hotel bookings rose on the nights of Swift’s show dates. World leaders are asking Swift to come to bring tours to their countries. This includes the Chilean President, the Mayor of Budapest, and the Canadian Prime Minister. Even the Federal Bureau of Investigation, or the FBI, tweeted a Taylor Swift pun in July. It had a subtle reference to Speak Now (a Taylor Swift album) and the rerecording of her albums.
The Bank of America calls this “funflation” (for Fun + Inflation). Consumers are spending more and more on entertainment and experiences, and this isn’t limited to Taylor Swift. In 2023 (this year), Greta Gerwig’s Barbie and Cristopher Nolan’s Oppenheimer were released. Barbie made more than 1.4 billion dollars at the box office, and Oppenheimer around 945 million dollars. Together, they successfully generated consumer spending worth more than 2 billion dollars. The phenomenon was so profound that it even got its own name: Barbenheimer.
But why is consumer spending important to an economy? First off, it generates jobs. Think of someone who wants to watch a movie. Indirectly, he/she is supporting the income of everyone employed in the theater. If consumers don’t go and watch that movie, the theater would not be able to employ that many people and unemployment, of course, is not good for individuals or economies. Mastercard says “Spending is positively correlated with upcoming job growth”. They found out that for every 1% year-on-year (yoy) increase in consumer spending, there was a 0.38% yoy increase in job growth. Second, consumer spending can tell a lot about a country's economy. If more people are able to spend more on their wants, it’s a great thing.
Coming back to Taylor Swift, one notable strategy that boosted her popularity is “parallel evolution”. Swift started her career at 14 years old. She understood the themes that would most appeal to young people and created songs about the same. As she grew, so did her themes. Her songs weren’t just songs, for her fans, it was a reflection of the time they were living in. This helped in growing Swift’s fan base and retaining existing fans. Despite spending more than 1300 dollars on Swift’s show tickets, 91% of fans said that they are willing to spend the money for another such experience.
Cut to the present, Swift has one of the largest fan bases. That is the power of parallel evolution. Products/services evolve with consumers, helping in consumer retention, which is especially important to a business. It is important to recognize the trends in consumer spending patterns.
A great example would be Nokia, for instance. Nokia’s market share in 2008 was 56.2%; however, in 2010, it fell to 32.9%. It can’t be a coincidence that Apple introduced its very first smartphone, the iPhone, in 2007. People started shifting to smartphones, and Nokia was a little too late. Nokia introduced its first Android phone in 2014, about seven years after the iPhone. Compare that to Samsung, which introduced its first smartphone in 2009, and today it holds the largest share of global smartphone shipments.
There’s a lot to learn from this case study. The Bank of America says that in the next five years, the following trends will be seen:
1. Consumer spending shifting to experiences
2. More opportunities for dynamic pricing
3. More supply and demand as artists use social media
4. Despite the boom in virtual events, live events are still ‘relatively disruption-proof’
5. Strong sponsorship and experiential marketing
Markets are an unpredictable place to be. Just a few months ago, experts warned of a recession, and now, people are spending more than ever. Economics is unpredictable, and that’s why, always watch out – the weather might change anytime.
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