Local economies are getting a boost from Taylor Swift and Beyoncé concerts
SACHA PFEIFFER, HOST:
Fans of Taylor Swift and Beyonce are flying all over the world to see them perform live, and they're bringing their wallets with them.
(SOUNDBITE OF SONG, "VIRGO'S GROOVE")
BEYONCE: (Singing) Baby, come over...
PFEIFFER: They're spending money, big money, not just on tickets, but on a lot of other concert-related things. Mara Klaunig is an analyst with Camoin Associates, and she wrote a research article about how local economies are being affected by these huge stars coming to town. Hi, Mara.
MARA KLAUNIG: Hi. Good morning.
PFEIFFER: Mara, because you are an economist, I'm assuming that when you hear that a Taylor Swift or a Beyonce is coming to town, different things might come to your mind than just the music. What do you think about in terms of the economics of these?
KLAUNIG: Absolutely. So I will just provide a caveat that my co-author and I of this article are diehard Swifties (ph). So...
KLAUNIG: But we're also big data nerds as well. So what we think about is the economic impact. We know that there's going to be just a huge influx of cash coming into these communities with people spending on their concert tickets and dining and travel and hotels and merchandise, and you name it. So what we are specifically talking about are activities that would not have happened if that event had not come to town. So net new spending is any activity that would not happen but for the event or activity that we're measuring. So if Taylor hadn't come to town, these people would not have come downtown to that stadium district and spent money.
PFEIFFER: Sweden is where Beyonce kicked off her Renaissance tour.
PFEIFFER: And as I'm sure you've heard, there's data showing there was a huge surge in hotel prices. A lot of money flooded in, but it almost had an inflationary effect. And it feels like a double-edged sword. It brings money in, but artificially at least temporarily increases prices.
KLAUNIG: Yeah, absolutely. You know, there's been a lot of chatter about the impact of these major concerts on inflation. But the thing is, is that it's likely a very temporary impact, and it's probably a little bit overstated. There's not going to be a permanent increase in prices due to these megatours. So, for example, many cities have seen hotel prices, you know, triple or quadruple the weekend of that tour. But those prices go right back to where the prevailing rates were.
But also the supply of consumer dollars hasn't changed. Most people have to save up or plan to go to these concerts, and it comes at the cost of other activities they might have wanted to do. So it's shifting spending from other categories rather than generating kind of, like, new spending, if that makes sense.
PFEIFFER: It does. And then how does the economic impact of concerts like this with these massive-name musicians compare to other big events that bring a lot of people to town, like sports events, World Cup, et cetera?
KLAUNIG: Yeah, they're pretty similar. You know, you see a big influx of people coming into, you know, your downtown or stadium districts. They're spending a lot of money, and then they're going home. So what we're seeing with the Taylor Swift Eras tour is it's kind of exponentially larger.
PFEIFFER: Like what? What's new with Taylor Swift?
KLAUNIG: So the average attendee is spending almost $1,300 to attend. It's almost double the amount that fans originally budget for this event.
PFEIFFER: That's ticket plus everything else?
KLAUNIG: Plus everything else. Yes.
PFEIFFER: The merch, the...
KLAUNIG: The merch, yes.
KLAUNIG: Yes. Yeah. I mean, and we're seeing things like, you know, really tailored experiences - you know, custom outfits, manicures, hairstyles to match the eras. You're seeing themed menus at bars and restaurants. We're seeing, like, pop-up friendship bracelet stores coming into town, you know, themed spin classes. So it really is kind of a different basket of goods you're seeing with these diehard Swifties than you would for just a run of the mill concert.
PFEIFFER: You're kind of answering something else I was wondering - whether this has always been the case when big musicians and other big events come to town, but the dollars are just bigger now. If that's so, is it because of this phenomenon of these ultra megastars?
KLAUNIG: It's kind of part of a larger trend. You know, I think the prevalence and impact of these world tours is increasing - you know, from Taylor Swift and Beyonce, but also, you know, Harry Styles - Elton John's farewell tour just ended. And we're kind of seeing these get bigger and better and more of a spectacle over time. But, you know, we're also seeing that there's been some pent-up demand for concerts and these kind of, like, social experiences, you know, coming out of that pandemic that we've just gone through.
But then I've also been reading that there's, you know, kind of changing revenue structures for the artists where they might have used to make, pre-streaming days, more money on album sales, but now they're kind of shifting their business model to the tours and making more of their income off of those tours. And then last thing I'd say about this is that, you know, we're seeing a long-term shifting consumer spending patterns towards experiences. In their dining and their shopping and their concerts, they want those experiences.
PFEIFFER: And how temporary are these economic blips? Meaning, is it only a short-term financial benefit, or do they have lasting economic benefits for the communities where these events happen?
KLAUNIG: The economic impact will be major in terms of kind of, like, the sales and the tax revenues that result from that. The jobs impact - you know, we're seeing on some of these reports that, you know - I think it was Cincinnati said that they were expecting 900 jobs to be created due to her stop there. Those are likely to be pretty temporary. Those - that's just kind of, like, increased short-term demand for parking attendants and concessions people. However, you know, we're hearing that some businesses have made, like, half their year's profit in that one weekend. That's obviously going to be...
KLAUNIG: ...A huge boost to that business.
PFEIFFER: What about cities where maybe it's the person's first time there, and they like it...
PFEIFFER: ...And they return, and so there's a lasting tourism benefit?
KLAUNIG: Yeah, absolutely. And I'll just disclose I was at the Taylor Swift tour in Cincinnati, so a lot of my research has focused on Cincinnati's economic impact.
PFEIFFER: Do you live in Ohio?
KLAUNIG: I live in Indianapolis. So I'm one of those out-of-towners.
PFEIFFER: Oh, so you traveled across state lines?
KLAUNIG: Yeah, yeah. I brought in some economic impact for that city.
PFEIFFER: So lots of benefits, not just short term, but potentially long term as well, when these big stars come to town.
KLAUNIG: Yes, absolutely.
PFEIFFER: Mara Klaunig is an analyst with the economic development firm Camoin Associates. Mara, thank you.
KLAUNIG: Thank you so much.
(SOUNDBITE OF SONG, "STYLE")
TAYLOR SWIFT: (Singing) You got that James Dean daydream look in your eye. And I got that red lip classic thing that you like. And when we go crashing down, we come back every time. 'Cause we never go out of style. We never go out of style. You got that long hair, slicked back, white T-shirt... Transcript provided by NPR, Copyright NPR.
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