Soaring demand, limited supply, price gouging and monopoly categories. And a customer willing to pay almost anything.
Welcome to Swiftonomics.
Taylor Swift’s upcoming 52-date US tour has all the makings of a post-COVID-19 demand shock. Some resellers reportedly asked $40,000 or more for concert tickets after last week’s official sales, which left millions empty-handed and ready to pay whatever it takes to get a seat.
Swifties, as the pop star’s fans are known, aren’t necessarily your average American, but they capture the current moment in the economy after COVID-19. Even as the recession looms, many consumers are willing to sell off what they lost at the height of the pandemic — whether it’s travel or live entertainment.
Swift’s fans represent an extreme version of that supercharged consumer: millions of mostly millennials and Gen Zs who waited at least four years to see the superstar live again and emerged from the pandemic with historically high savings rates.
“Concerts are seen as an affordable luxury in times of crisis,” said Lisa Yang, a Goldman Sachs analyst who publishes the bank’s annual “Music in the Air” report on the global industry.
Swift’s ‘The Eras Tour’ tickets are currently only available on the secondary market and are far from cheap. About 2.4 million were sold last week before Ticketmaster suspended the official presale. The ticket company’s website crashed under the pressure of about 14 million people trying to get seats.
Among them was Melissa Kearney, an economics professor at the University of Maryland who is now experiencing firsthand the basic laws of supply and demand. The mother of two Swifties, aged 12 and 15, is determined to spend whatever it takes after failing to get tickets.
“There is nothing more than what they want in the world,” said Kearney, who heads Aspen’s Economic Strategy Group. “The pandemic has generally changed the way people think about what is really important to them and what brings them joy.”
Gustavo Coutinho, who has never seen Swift perform live, came up with a $2,000 budget after 10 months of saving. The 25-year-old consultant in Boston ended up spending about $1,500 to attend two concerts. “I’d pay $3,000 if I had to,” he said.
In the early 2000s, the late economist Alan Krueger came up with the concept of “Roconomy” to explain the economy through the lens of the music industry. Kruger often used Swift, who released her debut album in 2006 at age 16, as an example of someone who played with strategies that boosted concert and product sales, calling her a “financial genius.”
His students agree. “It almost becomes an entire category,” said Carolyn Sloane, who teaches a “Rockonomics” course at UC Riverside. “People don’t really see a great substitute for going to a Taylor Swift show. They really want to see her live, and I say that as a fan.”
Other artists, including Bruce Springsteen, have proven that fans are prepared to pay high prices for major live events post-Covid – recession be damned.
Meanwhile, Swiftonomics is a crack at another concept: monopoly. Politicians and attorneys general seized the moment to renew their criticism of Ticketmaster, a dominant player in the live music industry.
Even before last week, Ticketmaster and parent company Live Nation Entertainment Inc. are at the center of an antitrust investigation by the Justice Department into whether the platform is abusing its power, according to people familiar with the investigation.
Live Nation said Ticketmaster is a leader because of the quality of its platform and not because of any anti-competitive business practices. And Ticketmaster apologized to Swift’s fans, saying it would work on its system. Swift herself said it was “devastating” to see mistakes happen.
After all, the singer is the mastermind behind the offer. He has chosen to play in large capacity stadiums and has added new concerts. Despite this, there is a frenzy surrounding her tours. “Very often you get the sense that scarcity increases demand,” said Pascal Courty, an economist at the University of Victoria in Canada who studies ticket resale markets.
One of the biggest questions in the broader economy is whether consumers will continue to spend as interest rates and unemployment rise.
Swiftonomics probably won’t help with the answer. It’s its own financial microcosm and fans just rock it.
“I’m reluctant to read too much into people’s willingness to pay exorbitant amounts for Taylor Swift tickets in terms of what it says about the health of the US economy,” said Kearney, the Swiftie’s parent economist. “I’m more inclined to read into it that for die-hard Taylor Swift fans — of which there are many — the demand for tickets is almost inelastic.”