Concert economics
Kiwi “Swifties” flocked to Australia in February to attend her Sydney and Melbourne shows. Considering the expenses that come with international travel, many Kiwi fans will have easily spent an excess of $1500 on the endeavour.
Estimates for how much Swift’s Australian tour injected into the economy range from anywhere between A$10m ($10.8m) to A$1 billion.
Airlines put on additional flights to accommodate Kiwi fans, and Swift performed her three largest-ever sold out shows to more than 96,000 fans each night at the Melbourne Cricket Ground. By all accounts, it was a success.
The term “concert economics” refers to the economic impact of concerts and large events - Singapore has identified the phenomenon as its next economic growth driver.
It’s not just Swift in Singapore’s line of sight.
Coldplay’s six Singapore shows in January sold out in record time, with economists estimating the direct and indirect spending associated with the Taylor Swift and Coldplay concerts contributed around 0.25 percentage points to Singapore’s Q1 GDP growth, both year-on-year and quarter-on-quarter.
While large-scale artists and bands may benefit the tourism, retail and hospitality industries in the areas they visit, it’s not clear those benefits extend to other industries and benefit the economy as a whole in places like New Zealand.
Most consumers have a certain amount of discretionary spending put aside for entertainment. Therefore, the money they spend on concerts like Swift’s, the less they have available to spend on other entertainment.
When Swift announced dates for the Australian leg of her tour, airfares and hotels increased prices to match demand. This increases the cost to people attending those premier events, further reducing the amount they can spend elsewhere.
For a smaller economy like Singapore, the impacts of concert economics may be seen in more than just the tourism industry.
An international artist coming to a country will bring in money in the form of venue costs, accommodation for themselves and their crew, sound and lighting, promotion, tourism and spending in local venues.
Of course, some of the money spent by concertgoers goes back to the artist themselves, who then takes it back to their home country or elsewhere around the world. It’s estimated Swift’s profit after tax from her Australian tour was A$101.7m.
Swiftonomics beyond concerts
While the enormity of the Eras Tour on local economies has been dubbed Swiftonomics, it’s more than just her concerts generating revenue for local economies.
Take for example her relationship with the Kansas City Chiefs’ American football player Travis Kelce. Swift attending an NFL game on September 24 saw 24.3 million people tune into the Fox sports show America’s Game of the Week. The surge in viewers made the broadcast the most watched of the week on any United States network.
Kelce’s own star has risen thanks to being connected to Swift. Sales for football jerseys with the name “Kelce” on them are up 400 per cent, and his podcast the New Heights has risen up the ranks.
Swift’s ability to influence comes down to her business acumen and an innate understanding of the value of a meticulously crafted brand, personal or otherwise.
She’s the second-most wealthy female musician in the world and the first to reach billionaire status solely through her music. On top of that, the Eras tour in its entirety is projected to generate US$5b ($8.3b) - more than the GDP of 50 countries.
The tour is on a break until it hits Europe in May. But Swift isn’t slowing down, with a new album being released in April. This is set to catapult the tour into its next era and set off a whole new wave of Swiftonomic phenomena.
Implications for New Zealand
While New Zealand didn’t get to experience Swiftonomics this year, we still see some impact of concerts on a local scale through other artists.
Pink, who recently visited Auckland and Dunedin, and Coldplay performing at Eden Park in November are just some examples of hugely popular international acts coming here and providing a boost to industries in the local areas they visit. But even with international artists coming here, the benefit on New Zealand’s economy overall is not likely to be as great as the hype suggests.
The biggest impact will be on listed airlines and tourism operators that increase prices to meet demand. The flipside is that higher prices eat into consumers’ discretionary spending and potentially displace other tourists wanting to travel on the same dates as an international act, meaning the positive impacts may only be marginal.
Overall, the Eras Tour has been an incredible success for both Swift and her fans. Local communities where the concerts take place undoubtedly receive benefits. However, the overall impact of Swiftonomics on economies may not match high expectations.
- John Carran is a director of Wealth Research.
Jarden Securities Limited is an NZX firm. A financial advice disclosure statement is available free of charge at https://www.jarden.co.nz/our-services/wealth-management/financial-advice-provider-disclosure-statement/.
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