Taylor Swift gen­er­ates bil­lions in spend­ing, but new study chal­lenges the idea of new eco­nom­ic mech­an­isms

When Taylor Swift plays a concert, the effects can be felt far beyond the stadium.

Tens of thousands of fans need somewhere to stay. They eat at restaurants, travel by train and plane, buy merchandise and spend money in the city. During the much-discussed The Eras Tour, the economic activity surrounding the pop star reached a level normally associated with much larger events.

The tour generated around USD 2.07 billion in ticket sales alone, making it the highest-grossing concert tour of all time. In the UK, it was also estimated that the concerts could generate almost EUR 1 billion in total spending.

Figures like these have helped popularise the term ‘Swiftonomics’, a blend of Swift and economics that has been used in the media and economic analyses to describe the major economic effects surrounding the superstar.

But is Swiftonomics actually a new form of economics?

CBS Professor Trine Bille has explored this question in a new study with Steven Hadley from De Montfort University and Professor Mark Taylor from the University of Sheffield.

According to the researchers, the scale of Taylor Swift’s success may be extraordinary, but the economic mechanisms behind it are not new.

“What is new about Taylor Swift is primarily the scale. She is extremely successful, which means that the effects are also very large. But the fundamental economic mechanisms are not new. We have known about them and studied them for a long time,” says Trine Bille, Professor of Cultural Economics at Copenhagen Business School.

The researchers examine three key elements of the Swiftonomics narrative: Swift’s economic impact, her business strategy and her distinctive relationship with her fans.

They find the same pattern in all three areas.

“Taylor Swift did not invent these mechanisms. She has taken them to a scale that very few other artists can match,” Trine Bille emphasises. 

A billion in revenue does not mean an equivalent increase in economic growth for a city or region

When a Taylor Swift concert in a city such as Liverpool is described as generating an economic gain of hundreds of millions for the region or even for England, there is a crucial question that also needs to be asked: how much of that money would have been spent anyway?

Imagine a fan from London who buys a concert ticket, books a hotel room, eats at a restaurant and takes the train to the concert.  The entire amount can easily be counted as economic activity generated by Taylor Swift.

“But if the concert had not taken place, the money might have been spent on something else in England, such as a festival, another concert or a meal at a restaurant. In other words, no new revenue has been generated in England. It has simply shifted from one place to another,” Trine Bille explains. 

The geographical scope is therefore crucial when measuring the economic effects. In Liverpool, the increase in revenue is primarily generated by visitors who travel to the city specifically to attend the concert. For local concertgoers from Liverpool, the money they spend in connection with the Taylor Swift concert is simply shifted away from other consumption that would also have generated revenue. Similarly, the economic effects for England are primarily generated by international tourists who travel to England specifically to attend the concert. 

In economics, this is known as the substitution effect. It is important when assessing how much additional economic impact an event actually generates.

“That is why you cannot simply take all the spending that takes place around a concert and say that the entire amount is an additional gain for the economy.  You have to ask what people would otherwise have done with the money,” Trine Bille says.

The researchers therefore point to problems with some of the very large figures associated with The Eras Tour. In several cases, estimates have also been based on small or skewed samples and on assumptions about how much additional money concertgoers spend.

According to Trine Bille, however, this does not mean that Taylor Swift does not generate economic activity. 

“She does. But the revenue generated around a concert is not the same as its net contribution to the economy. And that distinction can easily disappear when a billion-dollar figure makes the headlines.”

Taylor Swift fits an established economic theory

Rather than speaking of an entirely new ‘Swift economy’, the researchers point to a concept that economists have known for decades: the superstar economy.

The concept is particularly associated with economist Sherwin Rosen, who described in 1981 how a relatively small number of superstars in certain markets can end up capturing a very large share of both attention and income.

This fits the modern music industry well.

Streaming and social media mean that, in principle, an artist can reach the entire world at the same time, but this does not necessarily mean that the market becomes more evenly distributed. On the contrary, digital platforms can help concentrate attention around the very biggest names.

Taylor Swift does not therefore necessarily break with the established rules of the music economy,

she just shows how far they can be stretched.

“Taylor Swift is a very clear example of a superstar economy.  She is extremely good at capitalising on mechanisms that already exist and she does so on a truly exceptional scale, but that is different from saying that she has created new economic mechanisms,” says Trine Bille.

Why does it matter what we call it?

You might ask why it matters whether Taylor Swift’s economics are new or simply very large in scale.

According to the researchers, the question matters because the Swiftonomics narrative also influences the way we talk about the value of culture.

To investigate whether Swift has actually revolutionised the music economy, the researchers draw on economist Joseph Schumpeter’s theory of creative destruction.

“For Schumpeter, genuine economic innovation is not simply about selling more within an existing system. Innovation changes the system itself and can displace established ways of producing goods and doing business,” says Trine Bille. She emphasises that by this standard Taylor Swift has not created a new economic model.

“Instead, she has been exceptionally skilled at capitalising on a music industry that had already been transformed by streaming, social media, digital platforms and the growing importance of live experiences.”

And that is exactly what makes her interesting to study.

“She demonstrates in an extreme form what happens when very large shares of attention, money and market power become concentrated around a very small number of artists.”

When culture is measured in hotel stays

This is also where the question of Swiftonomics becomes a cultural policy issue.

If the success of a concert is measured in hotel stays, restaurant visits and tourist spending, the largest events become highly visible in the spreadsheets,

but other parts of cultural life can be much harder to measure.

Local music venues, smaller concerts, talent development and music communities may not generate billion-dollar headlines, however, they help create the ecosystem in which new artists can develop and find their first audiences.

“We need to be careful not to focus solely on major events and their short-term economic impact.  If cultural policy becomes exclusively about how much tourism and revenue a major event generates here and now, we risk overlooking the broader cultural ecosystem that artists also depend on,” says Trine Bille.

So it is not simply a question of how much revenue Taylor Swift can generate for a city,

it is also about how we measure the value of culture and what happens if the effects that are easiest to measure are allowed to dominate.

The researchers therefore see Swiftonomics primarily as a powerful term for a narrative that brings together ticket prices, tourism, fan spending, branding and billions in revenue around a single superstar.

But as an economic revolution, the narrative does not hold up.

“Taylor Swift has not invented a new economy. She has made the mechanisms of the existing economy exceptionally visible,” says Trine Bille.