The Economics of the Eras Tour

Taylor Swift’s ‘Eras Tour’ kicked off on 17th March 2023, with the first show taking place in Glendale, Arizona; aptly renamed ‘Swift City’ for the duration her concert played in the city. The impact of Taylor Swift on the music industry itself is huge - she has won countless awards, and is one of the most popular music artists of this time. In this post I want to explore the economic effects of the Eras tour.

This image is from the Eras Tour in London, during the song All Too Well (photo taken by me).

Acquiring Tickets

Tickets for the Eras tour have been in unprecedented demand ever since Taylor Swift announced her tour, to the extent that fans attempting to get tickets caused a crash of the website Ticketmaster. It is said that 3.5 million fans registered to get tickets for the tour; this is the highest number of fans in the website's history. Whilst the average ticket price was $254, many ended up buying tickets at a much, much higher price - some paying upwards of thousands of dollars for tickets. This was due to the bulk-buying of tickets to be resold for a much higher price on other unofficial websites. Tickets for the concerts were extremely scarce, and the buying process complex.

It is likely that the demand curve for the Eras Tour tickets is nearly perfectly inelastic, as fans are willing to pay huge amounts of money just to go to the concert.

This diagram shows the effects of the high resale prices on the demand for tickets. Despite the price increasing tenfold, from Pe to Pr, a proportionate drop in demand is not seen - the demand only drops by a small amount, from Qe to Qr.

As the supply of tickets is perfectly inelastic (there is a set number which can be sold), it means that there will be a shortage, even at the higher prices.

Ticketmaster and AXS have near monopolies over the sale of the tickets, being the only official companies selling the tickets to millions of fans. Whilst they are the only official lines, many unofficial companies resell the tickets. These providers are able to resell them at a much higher price than the official market price, as they know it will not cause a proportionate drop in demand and they will still make a large profit (as a result of the elasticity of the demand curve for tickets). This is a form of arbitrage, and caused outrage on social media following the general sale of tickets, especially in the US. Fans took to platforms such as TikTok and Instagram to share their experiences of this, with people sharing how they paid thousands of dollars for resale tickets after finding the official websites sold out within minutes.

Attending the concert

This is an image from the Eras Tour in London (taken by me).

An estimated 54,000 fans attended each concert in the American leg of the tour, and with a total of 151 show dates, it is obvious that her tour will have a huge impact. The tour has now passed the $1 billion mark, and, according to the concert data tracker site Pollstar, is estimated to have gross revenue of $1.4 billion.

In relation to consumer spending alone, the tour is expected to generate $5 billion in the United States; this number doesn't even include the consumer spending it has caused during the ongoing international leg of the tour.

Taylor Swift fans, known as 'Swifties', have been spending huge amounts of money on the event, with the average fan in the US spending $1,300, and some spending as much as $1,500. They're spending money on a huge variety of things, from extravagant, creative outfits and costumes, to dining, travel, and merch. In the UK, fans are expected to be spending on average £848 each on everything for the tour (according to Barclays).

Over the course of the tour, trading friendship bracelets became a staple part of the concert experience. This took off so much that several cities experienced supply shortages, with some businesses reporting bead and sequin shortages.

The tour has also been credited for reviving or elevating the economies of the cities it stopped in, with Swifties helping to revive tourism. For example, the governor of Illinois gave credit to the Eras Tour for reviving tourism in the state after the concert spent 3 days in Chicago.

The effects of the Eras Tour were even highlighted in the Federal Reserve's Beige Book for July 2023 - in relation to consumer spending in Philadelphia. It was highlighted that May was the strongest month for hotel revenue since the start of the year, and accredited this to Swift's stadium tour, claiming the reason for the uptick was "in large part due to an influx of guests for the Taylor Swift concerts in the city".

"In large part due to an influx of guests for the Taylor Swift concerts in the city"

In summary, the potential economic effects of Taylor Swift's 'Eras Tour' are large. However, despite the boost she gives many cities, is this a short-run boost only? It is likely, as most of the demand generated in each location was around the concert - which once over will probably dwindle. Even though the boost in demand was short-run in many places, only time will show the extent of the effects.

References

CNN (2023) First on CNN: Taylor Swift's Eras tour could become the highest grossing tour of all time. Available at: https://edition.cnn.com/2023/08/17/business/taylor-swift-eras-tour-two-billion/index.html

Federal Reserve (2023) Beige Book July 12th 2023. Available at: https://www.federalreserve.gov/monetarypolicy/files/BeigeBook_20230712.pdf

Newsweek (2023) Taylor Swift's Eras tour broke these five records so far. Available at: https://www.newsweek.com/taylor-swift-eras-tour-records-broke-1818205

Time (2023) The Staggering Economic Impact of Taylor Swift's Eras Tour. Available at: https://time.com/6307420/taylor-swift-eras-tour-money-economy/

Verified Visitors (2023) What does Ticket Scalping mean?. Available at: https://www.verifiedvisitors.com/blog/what-does-ticket-scalping-mean-what-are-scalp-tickets#:~:text=Ticket%20scalping%20is%20a%20form,price%20than%20the%20face%20value.

Wikipedia (2024) The Eras Tour. Available at: https://en.wikipedia.org/wiki/The_Eras_Tour

BBC (2024) Swift tour to boost UK spending by £1bn - report. Available at: https://www.bbc.co.uk/news/articles/czd88lxe8p2o