Mar 1910 min read

The Economics of Taylor Swift

Updated: Oct 3

Taylor Swift- singer, songwriter, director, and one of the most powerful women in the world- officially became a billionaire in October 2023. With her extraordinary stage shows and a tremendous fan mass called “Swifties,” she enhances her reputation day by day. Taylor Swift’s wealth is awe-awakening: it mostly depends on her music career, such as tours, shows, and albums, but also her real estate portfolio, including mansions in elite regions, such as Rhode Island, New York City, and California. There is no doubt that her productivity and professionalism brought her deserved success, but, in contrast to what is widely assumed, there is a pure and ingenious economic rationale behind her marketing strategies and, indeed, in every action she takes.

A Blink to Taylor Swift’s Career

Having started her career at the age of sixteen by releasing her self-titled country debut album, Taylor Swift has entered the music industry swiftly. However, it was not until she was 20 and released her third studio album "Speak Now" that she had a diehard fan base. Before this period, we observe that radio shows, U.S. concerts, and the commerce of CDs, the sole way of listening to music back then, constituted most of her wealth. After opening the world with Fearless and Speak Now at eighteen, Swift aspired to widen her audience even more and began blending pop music into her country songs in her album Red. Although she was disappointed by this album, mainly because it could not be categorized into any genre and did not win many awards, she was one of the most renowned pop artists thanks to her album 1989 in 2014. This album not only lauded Taylor’s reputation but also initiated her new economic and marketing strategies, which are considered brilliant. According to the New York Times, Taylor Swift earned 1,287,000 dollars in U.S. sales only on debut week, on Oct. 27, 2014. Many critics considered these numbers as a signifier of her career’s climax point. Yet, they had not been successful at forecasting, as was evident when she released her sixth studio album, Reputation. In 2017 and 2018, she earned over 345 million dollars during her “Reputation World Tour" and became the second highest-grossing tour in her overall career. This era of her life was remarkable, as she proved to the music industry that her career was not over. But it was also productive since she turned the dramas happening in her life into money, first by writing songs about them and, second, promoting them with a story that, somehow, everyone, whether a fan or not, could find themselves. However, things did not turn out well for Taylor when six of her albums were purchased by Scooter Braun for 330 million dollars, which meant that she would not own her albums and could only get royalties from streaming services.

After making her album called “Lover” and reclaiming ownership of her work, she announced that she would be rerecording her albums. This rerecording process was possible because even though she did not officially own her music, she still had the copyrighted music and lyrics. During the pandemic, Swift kept working and released two new albums, "Folklore” and “Evermore.” Naturally, she could make a revenue of only 20,6 million dollars in total, very low compared to her other success stories, because she could not tour due to the COVID-19 pandemic. But, still, she made money through streaming platforms that were at their peak since many people spent time at home listening to music. When the world became normal again, so did the music industry. Of course, Taylor Swift kept producing albums, and in 2021, she announced her first rerecorded album, “Fearless (Taylor’s Version)” and, later, “Red (Taylor’s Version)."Besides earning royalties from her stolen albums, Taylor also began to make money from her widely supported rerecorded albums. Yet, she did not cease producing new music, as was evident when she announced 2022 her tenth studio album, ”Midnights,” which generated 230 million dollars. Her 20-year-long music career and growing diehard fan mass contributed to increase her wealth over time, but the last strike that made her the first self-made billionaire younger than 40 in the U.S. was sure “The Eras Tour.” This tour is significant at both macro and micro levels. It became the first tour in history to surpass 1 billion dollars in revenue, and it raised consumer spending to 5.7 billion dollars, hindering an imminent recession in the United States. Finally, a couple of weeks ago, she pronounced that she would be releasing her album “The Tortured Poets Department” on April 19, 2024. There is a lot to talk about Swift’s music and her success. Yet, since Economical is, as the name implies, an economics magazine, we will handle how she managed to generate a vast amount of money through music, her economic strategies, and, of course, her economic impact on the economy of the United States.

Economies of Sale (Taylor’s Version)

19,406 dollars is the average amount of money Taylor Swift makes per hour. Each year, her fans pay hundreds of dollars for vinyl, CDs, and concert tickets. The reason why most people do not hesitate to spend their money on her music is her brilliant marketing strategy. She presents herself in her music and song lyrics as a relatable individual, both individually and emotionally. Though they are precise, her song lyrics appeal to a wide range of people with diverse backgrounds or distinct experiences. Another factor that impacts why her fandom expands rapidly is her other marketing strategy: easter eggs. She adds many details to her music videos and lyrics that hint at her future rerecorded or new albums. The anticipation and curiosity felt by Swifties as they try to solve the meaning of these details make her music somewhat different and exciting to many. From a perspective of economics, her vinyl and CDs play a crucial role in generating huge amounts of money as well. She is one of the most influential artists who brought the vinyl back to life. Furthermore, she is one of the most effective artists who emphasized the importance of physical albums. Her focus on physical mediums of music does not only depend on the way she started her career or the date of her debut but also on the fact that people who embrace vinyl or CDs can become great target customers. Because she makes at least four distinct versions of the same album with variations of colors and photoshoots, she attracts collectors and fans to buy more of her music, eventually quadrupling the income that she would otherwise have if there were only one copy of her albums. For instance, even her unreleased album “ The Tortured Poets Department” has four deluxe versions in advance. What we clearly observe is that Taylor’s team is excellent at shaping and manipulating consumer behavior by tempting them to buy and consume more. Of course, collecting CDs or vinyl is mostly considered to be a hobby by many of her fans; yet, there is no doubt that the rationale behind the promotion of physical mediums for listening to music is especially targeted to reach the audience that does not spend much money.

One of the latest economic trends of our time is passive income. This notion is used as a tool for earning money with little effort and often an addition to another mainstream of making money. Taylor Swift very well benefits from passive income. The best example of it is her “The Eras Tour Movie”. Knowing that many fans could not afford The Eras Tour, Taylor had her performances filmed during the tour. She did not do anything else besides touring except get the film cut and edited. Still, she earned 261.7 million dollars worldwide because, as I mentioned before, many international Swifties, in addition to American fans, watched the movie. Now, even though the film is not in the movie theaters, it can be watched through the Disney+ digital platform. It is conspicuous that this is another passive income of her tour. In fact, it is the passive income of her passive income. After benefiting fully from her touring experience, she now profits from her film by earning money through digital platforms. Hence, she made money through her worldwide concerts by creating many more opportunities to reach wider audiences. Besides her films and other music videos, Taylor Swift turned one of the most tragic disadvantages to her advantage: her stolen albums. She could still make money from her stolen songs since she had the royalties as mentioned earlier. However, Swift did not confine herself to this and rerecorded her stolen albums to own everything about her music. That is why today, even though some people prefer old versions, she will make money, and if they prefer to listen to “Taylor’s version,” she will make even more money. Hence, it is fair to conclude that she turned her stolen songs' faith into a source of passive income. Presumably, the main lesson that should be learned is the importance of overcoming drawbacks and benefiting from each opportunity for financial well-being.

Taylor Swift’s Economic Impacts

On a broad level, Swift’s impact gets even tenser, as she is a significantly powerful model in shaping consumer behavior on a global scale. To exemplify, The Eras Tour could generate up to $4.6 billion in consumer spending for the U.S. economy, according to QuestionPro. But, it is not only The Eras Tour or concert tickets that boosted consumer spending and influenced the American economy. The U.S. is a huge country consisting of 50 states. This implies that traveling from one state to another brings excessive costs. For instance, driving a car from Wyoming to Tennessee lasts 21 hours, which tempts most American citizens to prefer airplanes. But, even with planes, it takes about 5 hours to travel to another state Therefore, many travelers seek hotels or hostels to spend the night at. This chain of actions that begins with a movement within the United States creates a butterfly effect and impacts many businesses, initially airlines, then hotels, and later, local shops or restaurants where the guests will spend the rest of their time with and spend their money. On top of that, Taylor Swift fans who attend her concerts spend a lot of money on accommodation in the region, boosting its economy and local enterprises. From a greater perspective, one must recall the influx of international fans to the United States, as well. Drastic numbers of tourists flock to cities such as New York City or Los Angeles to see their favorite artists. Although not everyone can see her, most fans visit these cities even just because some famous spots like Cornelia Street or Coney Island are mentioned in her lyrics. The attraction of foreign people to the United States buttresses the tourism industry and increases the GDP, preventing, as mentioned before, a recession or stagnancy in the economy.

On a more specific level, Taylor Swift creates new job opportunities, though she does not do it intentionally. With the advent of technology, people have found distinct methods of earning money through selling products on social media, becoming an influencer, or possessing YouTube channels. Among them, the genre of “Taylor Swift” has a significant prevalence. In other words, thousands of individuals are employed or earn income from producing Taylor Swift-focused content or products. For example, first, we can discuss Instagram accounts that produce Swift’s illustrations and, thus, have thousands of followers. The age group of these social media users varies from 13-22. Therefore, it is sensible to conclude that Taylor has become an inspiring figure for teenagers or young people to pursue their talents and learn how to make money from them. This concept in economics is named “externalities”. At a most basic level, the marginal social benefit of Taylor Swift is higher than her marginal private benefit, which indicates that her making her music benefits society as a whole. Secondly, we can advance the local businesses that sell her merch or Taylor Swift-themed objects. Though the United States is an advocate for the market deciding which firms to maintain and which firms to shut down, local people who are encouraged by Taylor Swift’s lingering and pervasive impact somehow manage to increase their revenues with their small local businesses. Finally, there are more than a million YouTube content creators who create video content focused on Taylor Swift, her life, and her artistic talents. Considering that YouTube pays $500-700 per 100K views on a channel and there are approximately two thousand YouTubers with about 100K subscribers, they can make a total of 1.4 million dollars when they all upload only one video. Moreover, these numbers are only the base numbers, and they minimize our estimations. Thus, Taylor Swift not only makes a significant amount of money herself but also accelerates the increase in her wealth. In addition to this, she mediates with millions of people all around the world to make money as well. Again, the depiction of Taylor’s economic influence best explains why her art can be classified as a positive externality, and she impacts both the country she lives and its citizens positively.

Conclusion

Whether one loves her or hates her, nobody can deny the powerful impression of Taylor Swift in every aspect of the world. One of the branches that is mainly concerned with Swift’s artistic career and model as a businesswoman is economics. Taylor Swift’s musical talent, songwriter identity, and, most crucially, her marketing strategy draw millions of people to her shows, concerts, or world tours. She utilizes a passive income strategy so brilliantly that she creates multiple mediums of generating money, though she still can consume most of her energy in her career. By reversing the drawbacks of life in her favor, she achieved a considerable amount of revenue with her re-recorded albums. She received great support from the public as she tried to own her music. Eventually, her efforts resulted -keep resulting- in high profits, contributing to her enormous wealth. Of course, her marketing strategy of CDs vinyl and their different versions were other fundamental elements that boosted Swift’s economic power. The world tours and tourist attractions for Swifties influenced the economy of the United States of America, drastically shaping consumer behavior. Likewise, they strengthened and supported the local businesses as they depended on them to provide for their needs during their travels. On the other hand, she inspired young people to earn money through social media and synthesizing their Swiftie identity. Some critiques suggest that the economic impact of Taylor Swift is so extensive because she is at her career’s peak. However, her ever-growing fan base and relentless music production seem to prove her musical journey will continue for a long while.