If Taylor Swift is coming to a town near you this summer, consider yourself lucky, at least if you’re in the hospitality industry. Taylor Swift and her legion of fans, known as Swifties, are moving across the country bringing economic joy wherever they go. Tickets for the sold out ERAS tour are in hot demand with fans willing to spend thousands of dollars just to get in the door. What’s more, Swifties are willing to travel, often hundreds of miles by car or plane, to see their idol. When they get to their destination, they’re willing to splash out on hotel rooms carrying new, higher prices for concert nights, buy food and drinks that are also specially priced for the concert, and spend money on outfits bought specifically for the occasion. Indeed, a visit by Taylor Swift can be a financial bonanza for a host city.
What’s going on? Well, it’s been dubbed Swiftonomics, a take on Rockonomics, the term coined to describe how we can use the music industry to explain economic principles. As demonstrated by the swift sellout of the tour, for Swifties, there are no substitutes to seeing their idol perform live. In this instance, pandemic induced pent up demand is likely at play as is the post-pandemic focus on living more in the moment. The inflated prices being charged by hotels, bars, and restaurants, not to mention prices for resale tickets could be viewed as gouging or simply a reflection of capitalizing on a unique opportunity. In the end, for some, the sky high price of the ‘Taylor Swift Experience’ might be pushing the envelope when it comes to affordable luxury, Swifties, though, seem to be able to shake it off. As for the performer? Well, she’s likely to soon hold the reputation of having the top grossing tour of all time.
Discussion Questions:
1. How has the pandemic reshaped buying habits? What does your response tell you about discretionary spending and the economy in general?
2. The lipstick index refers to the idea that even when times are tough, buying a small luxury item like lipstick can generate happiness and optimism. Discuss the economics of affordable luxury. Has the definition moved from relatively low priced items like lipstick to much higher priced experiences like going to a Taylor Swift concert?
3. Taylor Swift is just one option in what promises to be a busy summer for music lovers. Consider consumer psychology as it relates to substitute products and music. Why are fans willing to travel to see their favorite performers? Can you think of another product for which consumers display similar behavior?
Sources: CNN: https://www.cnn.com/videos/world/2023/04/29/exp-swiftonomics-taylor-swift-04292pseg01-cnni-world.cnn; Bloomberg: https://www.bloomberg.com/news/newsletters/2022-11-23/what-s-happening-in-the-world-economy-welcome-to-swiftonomics; LA Times: https://www.latimes.com/business/story/2022-11-23/what-taylor-swift-reveals-about-us-economy; Photo by Chaz McGregor on Unsplash