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Taylor Swift, Coldplay and the spread of superstar economics

Top artists now dominate the music industry more than ever. The same is true for economies

Taylor Swift is arguably the biggest music artist on the planet today. Photograph: Jutharat Pinyodoonyachet/The New York Times
Taylor Swift is arguably the biggest music artist on the planet today. Photograph: Jutharat Pinyodoonyachet/The New York Times
Cliff Taylor's picture
Cliff Taylor
Thu Aug 03 2023 - 12:15

The high price and general shortage of tickets for Taylor Swift and Coldplay concerts in Dublin next year are clear proof of one thing: the increasing market power of a small number of really big performers. Taylor Swift, in particular, is so big that the Wall Street Journal reported on “Taylornomics” the economic boost in US cities where her Era tour concerts are taking place. This spreads beyond local hotels, restaurants and bars to every conceivable type of merchandise sale – cocktails, doughnuts, braids – transport companies and so on.

Irish fans complain about the prices and the process of getting hold of tickets, via an opaque round of presales and general sales which can offer the choice of buying more expensive tickets now or hoping to get cheaper ones in a later round. It is a complex process which has the effect of getting fans who are prepared to – and can afford to – to pay up early on to be sure of getting a ticket. It is a sign of both how the music industry has changed and how, in many sectors, a small number of superstar performers get a vast amount of the total revenue, leaving the majority with much more modest returns.

In the pre-digital era, big performers toured largely to promote their records. Digital media swept away a large part of these earnings and while streaming services have restored some income to artists, live shows are now vital for their income.

[ How Taylor Swift could cause Irish inflation to surge ]

And the top performers get most of the cash. In his fascinating book Rockonomics, the late US economics professor Alan Krueger – a former adviser to president Obama – estimates that in the US the top 1 per cent of performers took 26 per cent of concert revenue in 1982 and around 60 per cent by 2017. The same pattern has held for recorded music. And with her tour likely to gross $1 billion, Taylor Swift is top of the pile in a group of younger, largely female, solo artists – also including Rihanna, Lady Gaga and a few others – who are cashing in much earlier in life than the older generation of solo artists. Meanwhile a few top bands like Coldplay are also cleaning up.

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Wherever Taylor Swift plays is now big news. Problems in ticket sales in the US late last year even led to a Congressional Inquiry, which focused on the market power of Live Nation Entertainment through its ownership of Ticketmaster – and its role as music promoter and venue owner. Here, Live Nation Entertainment owns Ticketmaster and has a 50 per cent in concert promoter MCD.

Krueger points out that it is the star who gets the bulk of the revenue, perhaps 60 to 65 per cent, after the promoter gets their slice. A variety of mechanisms are used between bands and promoters to split the revenue, typically involving some guarantee for the performers and an add on based on sales. Out of the band’s share, of course, a lot of mouths have to be fed. But as big artists like Taylor Swift take more and more control of the whole process, they can scoop very significant sums.

Music provides an interesting pointer to wider trends and a worldwide prosperity of the super-rich in the recovery since the financial crash, at a time when those on more modest pay have felt their economic position was static – or worse if they were competing in city centre rental markets.

Kruger and others have looked at some of the trends behind this and how digitalisation can create superstars by making their work instantly accessible around the world and then creating a “bandwagon effect” for a few top performers. The small number of singers and bands who grab the imagination – and are lucky – can get massive worldwide fame very quickly, as buyers act on the recommendation of friends and online “ influencers” and success breeds success. In some ways the internet has democratised sectors like music – after all every artist can post a song or video. But trends on big streaming platforms show how this bandwagon effect attracts the vast majority of plays to a small number of artists, with a long tail of much lower plays for the vast majority. If people depend, at least in part, on the opinion of others in making their choices, this can become very powerful.

[ Taylor Swift, Coldplay and Ticketmaster’s new selling technique: presale anxiety ]

Cashing in via a tour is then only a question of when and how much. And this rising gap between the superstars and the rest is evident in a host of other sectors. TV and streaming money leads to massive wages for top footballers, but only modest ones for those in the lower ranks. Top TV presenters earn hefty returns, while everyone else working on their programmes is on average wages. The gap between chief executive pay and that of average employees in most quoted markets has widened significantly in recent years.

What of the wider economy? Krueger points to data showing a rise in the share of income going to the top one per cent of the US population from 10 per cent in 1980 to 22 per cent in 2017, generally attributed to a range of factors including globalisation, pressure on lower and middle income jobs in sectors like manufacturing, weakening worker bargaining power and even changes in corporate policies in the area of fairness and compensation. The concentration of wealth is even greater.

Some of the very highest earners in areas like tech and finance have benefited from the quick scalability of their businesses due to digitalisation – many work in the “superstar” firms like Google, Meta, Apple and so on. The growth of these firms has also created a cadre of highly-paid employees in Ireland.

While inequality in disposable income in Ireland is around the EU average, there is significantly greater inequality in pretax income – the difference is the taxation and welfare system which redistributes income significantly. The top 1 per cent of earners – currently earning over €260,000 per annum – pay 23 per cent of income tax and USC, up from 18 to 19 per cent in the 2015/2016 period as the economy started growing again after the crash. The total disposable income – adjusted for household size – of the top 20 per cent of the population is almost four times that of the poorest 20 per cent, according to CSO data and the top 10 per cent earn just over 23 per cent of total income.

In terms of wealth, the Irish data is interesting. Central Bank research shows that from 2013 to 2020 the top 10 per cent of households accounted for 48 per cent of the growth in wealth. Despite this, this group’s share of total net wealth fell from 60 per cent to 54 per cent as lower earners benefited significantly from paying down mortgages. Households were deleveraging.

However this is not the whole story. The data shows that the share of households with net wealth of over €1 million increased from 5 per cent in 2013 to 12 per cent in 2022, rising from 87,000 to 223,000 households. So there are signs in the distribution of both wealth and income in Ireland of a small group doing very well. Many of this is related to the multinational economy and the spin off income in areas like professional services. The Irish economy, too, has its superstars.