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Swiftonomics – The Global Phenomenon of Taylor Swift and Her Remarkable Economic Impact

BUSINESSSwiftonomics - The Global Phenomenon of Taylor Swift and Her Remarkable Economic Impact

The global concert industry is currently experiencing a true renaissance. This is not only thanks to record ticket sales but above all due to the engagement of fans, which is increasingly leaving a significant mark on the places where the artists perform. Some lucky ones still remember the iconic history of The Rolling Stones’ first concert in Poland, which they played in exchange for Polish specialties. Others had the chance to be at a typical Polish wedding where the rather atypical British band Iron Maiden played. Perhaps from the three August concerts of Taylor Swift at the Warsaw National Stadium, new folk legends will emerge, but one thing is certain – her visit will leave its mark on the local economy.

Taylor Swift, at 34 years old, is already a multiple record holder and an undeniable star. She has sold 50 million of her albums and 150 million singles, won 14 Grammy Awards, 23 Billboard Music Awards, and holds 6 records in the Guinness Book. At the end of February 2024, she surpassed The Beatles in terms of the most weeks spent in the top ten of the Billboard 200 chart over the past 60 years – her 3 albums have been in the top ten for 384 weeks, where the Liverpool quartet’s record was 382 weeks. Certainly, her successes translate into her financial success as well as that of her record label. However, as the experiences from her ongoing tour show, she also has a significant impact on the economy, clearly marking her influence in the various locations of her concerts, which has been dubbed Swiftonomics.

Swiftonomics

What does this impact entail? Taylor Swift’s fans, known as Swifties, are exceptionally engaged. This means they are willing to spend a lot to see their favorite star. Taylor Swift’s Eras Tour is, in almost every respect, the largest concert tour of all time. With revenues exceeding $1 billion in 2023 and another billion expected in 2024, the immense popularity of the beloved singer translates into a real influx of her fans at every concert location.

For instance, in Warsaw, Taylor Swift will be the first artist to occupy the National Stadium for 3 days. Media estimate that about 100,000 fans will visit the capital of Poland, which translates into a 340% increase in interest in flights, as estimated by the traveltommorow.com portal. Such a large influx of concert tourists has led to a full booking of accommodation places. These are the manifestations of Swiftonomics.

Swiftconomy is a term coined to describe the economic impact of Taylor Swift’s tours. The current Eras Tour, running until November 2024, has been described as the most profitable tour ever. Its effects are most visible in countries with smaller economies, where increased traffic and the accompanying price hike are most noticeable. The arrival of a famous pop star can cause a small economic “boom” in some cities or regions. Beyoncé’s last tour had a similar effect, even being blamed for increased inflation in Sweden.

Overall, the numbers are not large enough to impact economic growth but illustrate a tendency to spend and a general trend. This is encouraging as it suggests that people are still willing to spend money on the goods and services they need. This is particularly true for the services sector, where consumers are spending money on experiences and travel following limited demand in the wake of the pandemic. For example, it has provided a significant boost to the aviation sector – says Maxim Manturov, Director of Investment Research at Freedom24.

Gold Rush

The Federal Reserve in its June 2023 Beige Book highlighted Swift’s impact on hotel revenues in Philadelphia, comparing the economic impact of her concerts to the economic impact of the Super Bowl.

To predict the potential impact of the European leg of the tour, it is important to examine the patterns and trends observed during Taylor Swift’s previous tours. In the United States, her current tour has generated $5 billion in consumer spending, most of which is retail sales. At the same time, the U.S. Travel Association stated that this amount could be closer to $10 billion if indirect consumer spending, from those who may not have attended the concerts but participated in spending on related events, is considered. In larger European economies, such as the UK and the Eurozone, the overall macroeconomic impact may be limited. However, local effects may occur in smaller economies, such as Ireland, the Netherlands, and Austria. These effects may appear in sectors such as hospitality, transport, and retail.

It is no surprise then that much suggests that the invasion of Swifties will be a harvest time for Warsaw’s hoteliers and restaurateurs. But can an ordinary investor feel the spirit of Swiftonomics and benefit from it? Absolutely, by considering the purchase of assets of companies that benefit long-term from Taylor Swift’s creativity.

Spotify

The first company responding to this demand is Spotify (SPOT). It is the dominant force in the music streaming industry, holding a significant market share compared to its competitors, with a 31% market share. The next in line, Tencent, has a 14% market share. Taylor Swift’s presence on the platform has been a crucial factor in its success, and her popularity helped Spotify reach 100 million monthly listeners. The potential impact of Swift and her concerts on Spotify’s future prospects cannot be overlooked.

The company recently announced impressive first-quarter results, exceeding revenue expectations and achieving record profits. Despite some fluctuations, the company’s shares have performed well, indicating favorable investor sentiment. Spotify’s competitive advantage lies in its innovation and diversification beyond music streaming. Investments in podcasts, highlighted by extended deals with the most popular shows, such as The Joe Rogan Experience, and the development of audiobooks have expanded its content offering – Maxim Manturov of Freedom24.

Disney

Investors welcomed the news of a strategic partnership with Taylor Swift and Epic Games, as well as improved financial performance. Disney’s (DIS) CEO, Bob Iger, announced that Disney+ will exclusively stream the concert film Taylor Swift: The Eras Tour starting March 15. This partnership underscores Disney’s position as a media giant still offering content unavailable on other platforms. Although Disney manages a diverse business portfolio, the company’s success relies on the synergy between its segments. The company leverages its extensive content library, creative talents, and iconic franchises to drive the growth of media channels, theme parks, and feature films.

Despite past challenges and investor skepticism, recent financial results indicate progress, with streaming-related losses significantly reduced. While these changes represent potential rather than certainty, investor confidence in Disney’s leadership and strategic direction is high. Although Disney shares are trading below previous highs, Disney’s long-term prospects remain promising, especially if the company implements further innovations. For investors, Disney shares offer the chance for sustainable growth and value creation for shareholders – states Max Manturov of Freedom24.

Booking

Eras Tour profits are already being recorded by Booking Holdings Inc. (BKNG), which represents an attractive investment opportunity due to its dominance in the online travel industry, solid financial performance, and potential benefits from significant cultural and sporting events. BKNG operates several leading online travel platforms, including Booking.com, Priceline, Agoda, and Kayak, collectively serving millions of travelers worldwide. A diversified portfolio provides BKNG with a competitive edge and allows it to capture a significant share of the global travel market, which has changed post-pandemic. It is expected that the Eras Tour featuring Taylor Swift will attract hordes of fans from around the world to various cities in Europe and beyond. As a result, it is almost certain that BKNG will benefit from this increase in tourist traffic, as fans will book accommodation, flights, and other travel-related services through its platforms. Importantly, beyond the Eras Tour, BKNG remains well-positioned to capitalize on long-term trends in the travel industry, including the growth of experience-based travel and the increasing popularity of alternative accommodation options.

With a global presence and strong track record of innovation, BKNG is poised for sustainable growth and value creation for shareholders. Investors looking to gain exposure to the travel industry and the potential benefits of event tourism, such as the Eras Tour, may consider adding BKNG shares to their portfolio – says Maxim Manturov of Freedom 24.

Taylor Swift’s European tour is more than just a musical event, not only for her fans. The Eras Tour is a catalyst for economic activity and investor interest. As Swiftonomics continues to be a certain economic trend, we can optimistically assess the tour’s potential to stimulate sectors such as tourism, retail, and entertainment. Although the macroeconomic impact may vary by region, local effects offer investment opportunities for seasoned investors attuned to the rhythm of pop. As always, it is worth remembering that investing involves risks, and before making decisions, it is necessary to conduct an independent analysis, considering various options.

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