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LONDON. — Taylor Swift is not just a musical phenomenon, but a business unicorn too.
The Eras tour which has arrived in Edinburgh is reckoned to be pushing her wealth well north of US$1bn.
Forbes, the money magazine, reckons she is worth US$600m from performance and her back catalogue is worth as much, while she has around US$125m worth of real estate.
Other musicians who have reached such heights have done so by investing their musical earnings in other ventures.
This daughter of Pennsylvania, and of a financial broker, mints money with astute leverage of her market power.
It’s known as Swiftonomics.
She is reputed to demand more than 100 percent of gross ticket sales, leaving the promoters to make their margins from sales of food and drink and extras.
That’s why they want ticket-holders to get there early.
By doing multiple nights at one venue, she cuts touring costs and forces her fans to come to her.
As Edinburgh is showing and London soon will, they do so in very big numbers, some over long distances.
We are told that financial savvy is part of her appeal to the fan base.
She took on Apple over royalties for tracks streamed on its music service, and she won. She did the same with Spotify, refusing to let her songs go on its free-to-use service.
Harvard Law School uses her as an example of negotiating power, saying in its teaching materials: “Taylor Swift was able to turn her back on negotiations with Spotify because she had no shortage of other negotiating partners eager to work with her.”
The 34-year old is smart and has become very rich both by dictating terms to music industry bosses and by selling to that fan base.
And they love her for it.
After she sold the rights to her earlier recordings to an investment company, she rebelled against its constraints on her artistic freedom.
While the investor had rights to those recordings, she retained the composer’s rights, and has re-recorded multiple albums, persuading her fans to buy the re-records as the preferable and definitive collector’s item. Fans do so over the originals by a ratio of 4:1.
This is not just about streaming.
The return of vinyl records has put them back into the basket of commonly-purchased goods included in the inflation survey for the Office for National Statistics.
Taylor Swift has a sizeable share of that vinyl market, often selling to people with no turntable, but who choose to collect for the artwork.
Is she a one-off? Possibly. But Scots author Will Page, a former chief economist at Spotify, reckons she has skilfully captured the opportunities arising out of fundamental disruption.
Others may not reach her heights of financial success, but he thinks she points the way for others to follow.
Mr Page said: “She has raised the bar in terms of what an artist can achieve in this complex value chain, both from streams and tickets.”
So let’s take a look at some of the trends in the music industry that Taylor Swift represents.
Spotify is focused on music and podcasts, while that is only part of the business model for Amazon, Apple and YouTube. — BBC.
Online Reporter