The singer’s fortune would have exceeded one billion dollars with her last tour, The Eras Tour.
Taylor Swift is not just a musical phenomenon. She in business she is also a unicorn.
Her tour The Eras Tour – which recently passed through Edinburgh, Scotland – is credited with making the singer’s fortune surpass $1 billion (about R$5.4 billion).
Forbes magazine estimates that his performances are worth $600 million (about R$3.2 billion), roughly the same value as his music catalog. And he also owns properties worth around $125 million (around R$675 million).
Other musicians who have reached these levels have invested their musical earnings in other ventures. But this daughter of Pennsylvania, USA, and a financial advisor, generates money by cleverly using her market power as her push. This is the so-called “swiftonomy”.
Swift is known for taking more than 100% of the box office gross, leaving promoters to earn their margins by selling food, drinks and extras. That’s why they let the public into performance venues early.
By scheduling multiple nights in each location, she cuts down on travel costs, forcing her fans to come to her. As has happened in Brazil, Edinburgh has shown that they are arriving in large numbers, some traveling long distances – and it will soon be London’s turn to welcome them.
His financial intelligence is said to be one of the reasons that attracts his fans.
He challenged Apple for royalties on songs included in his music streaming and won. And he did the same with Spotify, refusing to publish his music on the platform’s free service.
Harvard Law School, in the United States, cites the singer as an example of negotiating power. Her training material states that “Taylor Swift was able to turn her back on Spotify in her negotiations because she had other partners willing to negotiate and work with her.”
The 34-year-old artist is smart. She got rich by dictating her terms to music industry bosses and selling to fans. And they love her for it.
After selling the rights to her early recordings to an investment firm, Swift rebelled against the company’s restrictions on her artistic freedom.
Although the investor had the right to those recordings, he retained the copyright to the compositions. With that, he re-recorded several albums and convinced his fans to purchase the re-recordings as their favorite and definitive collector’s items. And fans now prefer the re-recorded songs over the originals, by a 4:1 ratio.
And it’s not just about streaming. The return of vinyl records has brought the old medium back into the core basket of products included in the UK Office for National Statistics’ inflation survey.
Taylor Swift holds a sizable share of the vinyl market. Many people who don’t even have a turntable to play them purchase records as collectible works of art.
Would it be unique? Perhaps.
But Scottish writer Will Page, Spotify’s former chief economist, believes Taylor Swift has cleverly seized the opportunities created by fundamental upheavals.
Other people may not achieve the same financial success, but he believes that the singer shows the path that others should follow.
For Page, “it raised the bar in terms of what an artist can achieve in this complex value chain, both streaming and at the box office.”
But what are the music industry trends represented by Taylor Swift?
The arrival of streaming
Digital streaming threatened to destroy the music industry as downloads could be pirated. But the industry reacted and streaming has replaced sales of vinyl, cassettes and, more recently, even CDs and DVDs.
This advancement has placed immense market power in the hands of a small number of platforms. Spotify, for example, has focused on music and podcasts, which are only part of the business model of Amazon, Apple and YouTube.
But streaming distribution costs are minuscule compared to the costs of packaging physical media and shipping it to stores.
Without these costs, artists can claim a much higher percentage of download sales than they would earn from a CD: up to 30% versus a maximum of 15%.
Streaming also offers unlimited space for people to enter the market.
For Page, “the explosion on the supply side is beyond imagination. Spotify can have 120,000 songs uploaded in a single day, more than all the songs released in 1989.”
Page argues that the industry made more money, but had “more mouths to feed,” as there were 9 million content creators on Spotify alone.
In 2009, the UK Copyright Society brought together 50,000 composers. Today there are 173 thousand.
“The number of British artists and songwriters has tripled since the launch of Spotify,” says Page. “It’s a positive story. How do you feed them? That’s another story.”
Download trends
Digital downloads have made album releases by artists like Taylor Swift possible in global events. Anyone can download the album on the same day as its release.
Two trends emerge from this. First, singers can easily reach their fan base, and listeners of new music are increasingly looking for artists who sing in their language.
The list of the top 10 most played songs from each European country, for example, may be dominated by musicians from those countries themselves. Therefore, the dominance of the English language is decreasing, which makes business difficult for international stars.
The other trend indicates that music listeners and music video viewers are using streaming platforms to watch new bands. They are less willing to go to clubs and bars, hoping to catch the next musical phenomenon before it becomes big.
As a result, the number of bands trying to achieve fame by performing at smaller events is decreasing.
This is a cause for concern for some managers of larger concert halls, especially when considering the age range of performers who can fill their spaces.
This trend brings us to the percentage of artists’ earnings, between shows and recordings. Bands often went on tour to promote their latest album. Now it’s the opposite: they produce an album to promote their tour.
After the pandemic, touring began to account for an even larger share of music industry revenue. After all, after months of confinement without being able to attend live performances, music fans took advantage of the opportunity to satisfy their nostalgia.
Will Page has looked at the UK data for 2022 and it is staggering.
Recordings have generated more than £2 billion (around R$13.8 billion), most of it from streaming services and a small portion from the rediscovery of vinyl.
In the live music sector there were fewer shows, 26% fewer than in 2019, before the pandemic. There were 14% fewer festivals and stadium shows, 22% fewer arena shows and 43% fewer theater shows.
But people were willing to pay much more for tickets. Amounts of 100 to 150 pounds (about R$690 to R$1,000) were no longer rare, so revenue increased by 22%. The total box office also exceeded 2 billion pounds (about R$ 13.8 billion).
As a result, including recordings and live performances, the British music industry’s revenue increased from 3.2 billion pounds (about R$22.1 billion) in 2019 to 4.1 billion (about R$28.3 billion) billion R $).
It’s a beautiful return from the pandemic, but increasingly focused on great artists, on great events.
In 2012, audiences spent £1.3 billion on live music, of which 23% was taken up by festivals and stadium concerts. Ten years later, out of a total raised of £2.1 billion (around R$14.5 billion), festival and stadium attendance has more than doubled to 49%.
For Page, “it’s a much bigger slice of a much bigger pie.”
Investments in catalogues
As for reducing the number of new artists performing in small spaces, an outstanding question remains in the music industry: whether price increases for large events after the pandemic would absorb all the available money, making it impossible for audiences buy the cheapest tickets for smaller events.
Page will soon update the numbers for 2023. They will demonstrate whether concert price inflation has caused a reduction in household budgets.
It is possible that the return of the pandemic was not sustained after the first year without wearing masks.
Another important trend in the industry is the large financial movement for the purchase of musical assets.
Taylor Swift took advantage of this opportunity, but discovered the inconveniences faced by an artist who continues to produce and wants to have control over the use of her songs and recordings. But for older and deceased artists, there is a large market for purchasing old catalogues.
The website Music Business Worldwide (MBW) follows the sector and noted that, in 2020, one of the largest players in the sector, Universal Music Group, invested more than 1 billion dollars (about R $ 5.4 billion) in back catalogues. Much of this sum was used to acquire Bob Dylan’s songs and recordings.
The following year, the value dropped to $459 million (about R$2.48 billion).
The numbers are rarely published, but industry estimates indicate that Sony paid $550 million (about R$2.97 billion) for Bruce Springsteen’s recorded and released music.
Paul Simon’s copyright changed hands for a reported value of $200 million (approximately R$1.08 billion). And David Bowie’s song catalog (1947-2016) was sold for around $250 million (around R$1.35 billion).
The advantage for artists and their heirs is that the tax on the sale of assets is one percentage lower than that applied on profits from that asset.
And another advantage is that a large company will take financial responsibility for that asset. And he can expect big profits to come his way.
Pop and rock music may seem ephemeral or disposable, but people tend to continually return to the music they enjoyed in the past rather than looking for the latest hit.
Streaming data shows that songs are classified as “catalogue” when they are more than 18 months old, which represents up to 80% of the market.
After so many busy years on the road and in the recording studio, Taylor Swift can now stop and relax, with her monstrous earnings.
But she seems financially and creatively motivated. Therefore, it seems unlikely that she will sign away her copyrights in the near future.
Source: Terra
Earl Johnson is a music writer at Gossipify, known for his in-depth analysis and unique perspective on the industry. A graduate of USC with a degree in Music, he brings years of experience and passion to his writing. He covers the latest releases and trends, always on the lookout for the next big thing in music.
