Like almost all countries in the world, Sweden has experienced high inflation in recent years. Consumer prices increased 9.7% during 2022, reflecting multiple factors: large spending to support households during the pandemic; Covid-related supply chain disruptions; the invasion of Ukraine by Russia; and the Beyoncé factor.
Oh really. Beyoncé kicked off her latest world tour in Sweden last month, and it has been widely argued in the Scandinavian country that the large influx of visitors to her first two concerts caused a significant, if temporary, rise in hotel and restaurant prices. , large enough to have a noticeable effect on overall Swedish inflation. And the same effect is pointed to Taylor Swift, producing a consumer boom in the cities where she performs, which immediately impacts prices.
global phenomenon
Live music has been big business since the days of big festivals like Woodstock. And it impacts beyond the tickets, drinks and meals, and the merchandising tied to the show. It has an impact on tourism, on airlines, hotels and restaurants, and on the general value of cities that receive certain stars. Something that is evident with Taylor Swift’s tour in Latin America: it will be presented in Mexico, Brazil and Argentina, but not in Chile, leveraging the trip of numerous trans-Andean swifties to Buenos Aires: even Gabriel Boric himself, president of the neighboring country, He dealt with the issue, writing to the singer to try to convince her to add a date in Santiago. Which in turn sparks a debate: Maybe Taylor isn’t earning enough.
Swift earns a lot of money. Many believe that it is an oversized musical product and its fame the exaggeration of marketing. But regardless of whether the composer is very talented or very talented, the undeniable fact is that she is a real deal. One of epic proportions laid out in a famous article by economist Sherwin Rosen, “The Superstar Economy.” Rosen argued that modern technology meant exponential reach for artists, far greater than it had been when live performance was the only way to entertain an audience, which is why a musician today is perceived as a 360 phenomenon, and not just as someone who sells records and tickets. It is what is happening with Taylor Swift and Beyoncé. This is what happened in Buenos Aires in October 2022 with the Coldplay concerts in River (which three quarters of a million saw). And what happens, for example, with the arrival of Lionel Messi in Miami, where tickets for Inter multiplied by 10, but hotel reservations also grew for the dates on which the Argentine star is present.
millionaire tours
As Krueger explains, musicians have always made their money primarily from touring. This was true even during the CD era, when record companies made bucketloads of money but gave artists very little. And it’s even more true now, in this era of streaming songs.
And there are live performances and live performances: Ticket sales for each of Swift’s concerts are expected to be $12 million. What technology explains that? That of stadiums and arenas, which have improved the experience and consequently raised costs. Marketing has turned it into a life experience, a night that will mark the year.
Hugely lucrative tours by music superstars are not a new development. They date back at least to the 1950s: the 1850s, when Jenny Lind, the “Swedish Nightingale,” toured America under the auspices of none other than PT Barnum (portrayed in “The Greatest Showman” by Hugh Jackman).
Lind performed 95 concerts, with cumulative ticket sales of more than $700,000. That may not sound like much, and Lind got considerably less than that: Barnum got a big chunk. But if the figure is updated, it is millions by modern standards, and taking into account that today the world, although enormously unequal, has many more people willing to pay for cultural consumption.
In dollar terms, GDP per capita is currently about 600 times greater than it was around 1850. Adjusting for income per capita, each of Lind’s concerts grossed the equivalent of about $4.5 million today. Swift’s concerts are absorbing more than double. But why not more? If Swift is filling stadiums with a capacity of 50,000 or more people.
360 experience
One answer might be that the sheer size of the venues where she performs means that Taylor Swift tickets aren’t as scarce as Lind tickets: Law of Supply and Demand. Another explanation is that live concerts have more competition today than 170 years ago. Not just with other artists. Back then, they were the only way to listen to music, or at least professionally performed music. Today, music, including videos of live performances, is universally available.
The unchangeable: live shows remain a special experience. One capable of transforming with its circus, like Barnum’s, the city that receives them. A theory that explains the business behind Lionel Messi in his arrival at Inter Miami. The Argentine left Paris Saint Germain, and the French club’s Instagram account (@psg) lost four million followers in less than a week, from 70.4 to 67.7. In opposition, that of Inter went from 1.5 million followers on Wednesday June 7 to having 5.7 a day later.
And they are not just followers: the cost of tickets for the debut on July 21 against Cruz Azul went from $29 to more than $500, and then to almost $30,000 on resale. The messimania that is reflected in hotel restaurant reservations at par. And it revitalizes the entire MLS, replicating the effect that David Beckham’s landing on the league had at the time: in 2009, the English midfielder earned $33 million in endorsements, on top of his $7 million salary from Los Angeles. Galaxy.
Super stars
In 1982, the top 1 percent of pop stars, in terms of pay, earned 26 percent of concert ticket revenue. In 2003, that percentage of first-time stars, where names like Justin Timberlake, Christina Aguilera or 50 Cent signed up, took 56 percent of the concert cake.
Twenty years later, those percentages are close to 70%. Stars like Swift or Beyoncé can bill annually like an American SME and more than a first-line Argentine company.
A phenomenon identified almost 30 years ago by University of Chicago economist Sherwin Rosen, who proposed an elegant theory to explain the general pattern: “The superstar economy.” He argued that technological changes would allow the best in a given field to serve a larger market and therefore earn a larger share of their revenue. But this would also reduce the loot available to those less gifted in the business.
In both sports and business, pay has skyrocketed at the top of the scale. Soccer superstar Cristiano Ronaldo earned about 15 times as much as Pele in 1960 (see sidebar), adjusted for inflation. The reasoning fits the revenue dynamics of the music industry, which has been rocked by many technological disruptions since the 1980s. First, MTV put music on TV. So Napster brought it to the Internet. Apple allowed fans to purchase individual songs and take them with them. Each of these breakthroughs allowed top acts to reach a larger fan base.
And the superstar effects also apply to European soccer, which is broadcast around the world on cable TV and streaming. In 2009, the top 20 soccer teams had revenues of €3.9 billion, more than 25 percent of the combined revenue of all teams in the European leagues. They play in another league.
by RN
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