Call it “Swiftonomics” or “Taylornomics,” the 33-year-old American superstar is not only breaking records in the music industry with her Eras tour, but also boosting the economy and opening up new expectations for work compensation.
“She’s a very talented artist, but at the same time a savvy businesswoman,” says Alicia Mondestino, associate professor of public policy and urban affairs and economics at Northeastern University.
On her latest tour, Taylor Swift is capitalizing on the spending power of women who have seen higher wages due to the COVID-19 pandemic and are keen to indulge in travel and seeing their idol perform live. The singer-songwriter, who was named the second richest self-made woman in the US music industry by Forbes, will perform more than 140 concerts on five continents in 2023 and 2024.
But it’s already clear that Swift’s tour will break all sorts of records, says Mondestino, in terms of ticket prices, crowds and revenue.
An average of nearly 54,000 fans attended each concert on the tour’s first American leg, which ended August 9 in Inglewood, California. The average ticket price fans paid at Ticketmaster was $254, while resale prices rose to thousands and tens of thousands of dollars.
Each Eras show grossed around $13 million
According to Bloomberg, each Eras show grossed around $13 million, earning Swift more than $300 million after its first 22 concerts.
“She writes songs that bring people to tears. It’s incredible and people want it,” said David Herlihy, teaching professor in the music industry bachelor’s program and master of science in the music industry leadership program at Northeastern. “So what are you willing to pay for something that makes you cry?”
Herlihy believes Swift earns more than 100% of a ticket’s face value. In addition to concerts, the tour earns money from sponsorship and merchandise sales. Many fans who love Swift want a keepsake that reminds them of the Eras experience, according to Herlihy, so they buy every utensil available.
“It’s a strange intersection between emotion and capitalism,” says Herlihy.
Swift’s expenses include things like paying for lavish productions, costumes and venues, compensating the crew and sharing earnings with the songwriters, and could be around 25 cents on the dollar, if not more, according to Herlihy.
She’s still making “huge money,” he says, and according to Forbes, she’s on track to beat Elton John, who grossed $939 million on his Yellow Brick Road farewell tour, a previous world record. Swift global ticket sales are forecast to exceed $1 billion.
Such is the power of the Swift Supernova that its own economic gains also have a positive impact on cities and the livelihoods of other people (besides ticket sellers). The influx of visitors means they spend money on hotels, restaurants, taxis, Uber/Lyft rides, hot dog vendors and other businesses.
$140 million in consumer spending
According to a study, two Swift performances in July could boost Colorado’s GDP by $140 million in consumer spending. The Federal Reserve Bank of Philadelphia said Swift’s tour helped boost travel and tourism in the area, making May the city’s strongest month for hotel revenue since the pandemic began.
Chicago’s Bureau of Tourism and Conventions announced that the city set a record hotel room occupancy rate — nearly 97 percent — in June, thanks in part to the three nights that Swift played at Soldier Field multipurpose stadium. Cincinnati’s economy also took off when the singer brought Eras to the city. And in Las Vegas, it was Swift’s presence, not gambling, that drove the highest post-pandemic tourism spending.
According to Fortune, fans spent an average of more than $1,300 on tickets, travel and new outfits for the night of the concert. A survey company, QuestionPro, estimated that the Eras Tour could generate up to $4.6 billion in total consumer spending for the US economy.
Swift exists against a contrasting backdrop, Herlihy says. Most talented emerging artists will never make it big. The music industry, he says, is made up of several different branches and professions such as music directors, sound engineers, booking agents, broadcasters, journalists, graphic designers, songwriters, publishers, radio stations and record companies. Companies in these vertical industries make money off artists, but humble workers don’t make as much money. A crew on a tour consists largely of gig staff and private contractors such as catering staff, roadies and stagehands who may not be in line for the next gig once the tour is over.
Swift stunned everyone in late July when she decided to share her winnings with her Eras crew, spending $55 million on rewards for everyone from backup dancers to sound engineers to truck drivers. This generosity is further proof of the singer’s disruptive power, says Mondestino.
Semi-truck drivers received $100,000
It was widely reported that each of the 50 to 80 hard-working semi-truck drivers received $100,000 from Swift, and there could have been multiple motivations behind this generous gesture, Northeastern experts say.
“I think Taylor is doing what she thinks is right while also polishing her image,” says Herlihy.
Swift has been able to dish out big bounty, he says, because she’s the one calling the shots in her business empire. She is the CEO of several companies, including “Taylor Swift Galaxy,” and does not have to answer to any management company or shareholders for her decisions.
Their decisions may reflect the trend economists are seeing at other employers, Mondestino says.
“Corporate profits due to COVID are up about 25% right now, wages are up about 14%,” she says. “So what we see is that employers share some of those profits with their employees.”
At the same time, the US job market has been incredibly tight, Modestino says, and the unemployment rate has fallen to its lowest level (3.5%) since 1969. Employers are wary of losing workers or firing someone because turnover is very costly and they want to make sure they keep their workers.
According to Mondestino, turnover in trucking is particularly high, averaging 55-60%, sometimes even 100%, largely due to the fact that most truck drivers are away from their families for long periods of time. The crew touring with Swift have been separated from their families for 24 weeks.
Additionally, North America faces a massive shortage of truckers and some companies have had trouble negotiating with the Teamsters Union, Mondestino says. For example, the 99-year-old trucking company Yellow Corp. ceased operations in July after failing to reach an agreement with the Teamsters union, which represents some 22,000 of its workers.
The Taylor Swift brand cannot allow disruption
“The Taylor Swift brand cannot allow for a break in the tour,” said Nada Sanders, distinguished professor of supply chain management at Northeastern. Every concert is a great feat of supply chain management, she says, and every piece has to arrive on time.
“You basically have a kind of small town with all these different crews and different categories, from catering to different stages and lighting and guitars to mics and LED screens,” says Sanders. “The problem is that it has to be coordinated. It’s not about getting them to one event at a time, it’s also about coordinating the movement.”
To coordinate the arrival of dozens of articulated lorries at one location, such a complex operation relies on real-time metrics from radio frequency identification and GPS, as well as predictive analytics to estimate when each truck will arrive.
“By the way, that doesn’t mean I’m cynical, but she’s going to provide really great service and great people as she does more tours in Europe and South America,” says Sanders.
Will anyone in the industry match Swift’s generosity? Herlihy sees that some entertainers do this mainly to not appear greedy in comparison.
Mondesino says employers in industries that compete for labor often pursue dramatic changes in compensation. For example, when Walmart raised the minimum wage to $15 an hour before the pandemic, Target and other big stores did the same to stay competitive.
“The advice I’ve always been given is to be generous when you can be generous,” she says. “And I think we see her doing that. But it will also ensure that she is incredibly successful and keeps the show going for as long as it takes.”
Alena Kuzub is a reporter for Northeastern Global News. Email her at [email protected]. Follow her on Twitter @AlenaKuzub.
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