Beyoncé performs on stage during her ‘Renaissance World Tour’ at PGE Narodowy in Warsaw, Poland on June 27, 2023.
Kevin Mazur | Wire Images | Getty Images
With inflation still high in many countries around the world, economists find themselves considering a surprising potential contributor: concerts.
Beyoncé is currently on “Renaissance,” her first solo tour since 2016, and Taylor Swift’s Eras tour has energized the stadium, sparking interest in Ticketmaster and Live Nation at live events The wrath of the powers in ticketing.
Elsewhere, Bruce Springsteen, Elton John, Harry Styles and Ed Sheeran are taking over stadiums as millions of people flock to watch the stars — even with the cost of tickets, travel and accommodation very high.
Meanwhile, inflation remains stubbornly high in many advanced economies despite rate hikes aimed at keeping prices down. The latest UK data beat expectations with an 8.7% year-on-year increase, while US consumer prices rose 4% in May from a year earlier.
But what do concerts have to do with the economy? Some economists think it could be a lot.
From ticket price to hotel
From Natalie Merchant to The Who, Societe Generale’s global chief economist Klaus Baader has tickets to see a variety of artists this year.
“Of course, one of the things that has shocked me is how expensive concerts and shows have become,” he told CNBC Make It. And it doesn’t just end with the ticket price.
“All the prices around it have skyrocketed too…not just the tickets have become more expensive. But the beer, cider, Coca-Cola or hot dog you have at the venue has also become a lot more expensive,” he explained.
Potential travel and accommodation costs are also high – a phenomenon observed by Philip Anderson, head of research at Danske Bank Sweden.
He said the impact of Beyoncé’s debut tour in Stockholm, Sweden, on the country’s consumer price index was “clear”, especially when it comes to accommodation.
“In Sweden’s May inflation figures, hotel prices rose more than normal for May,” he told CNBC Make It. “Hotels in the Stockholm area were reported to be fully booked in the weeks before and after the event, sending prices soaring. “
Andersen said that since nearly one-third of hotel rooms in Sweden are in the Stockholm area, the price increases had a national impact despite being linked to local events. This suggests that the cost of attending a concert is not only increased by inflation, but may also be inflationary.
However, not all economists are so convinced.
“I would be a little surprised if a certain concert had a noticeable impact on the inflation numbers, but it’s not out of the question,” Philip Shaw, chief economist at Investec Group, told CNBC Make It.
“I suspect that concert prices have become more expensive and that has had an impact on overall inflation. It’s not necessarily due to a particular artist,” he said, but added that concert prices themselves do appear to have increased.
underlying economic factors
Economists say there are a range of underlying factors behind the rise in ticket prices. Some of these have to do with broader economic patterns, others with concert culture in the post-pandemic world.
“People haven’t been to concerts in a long time, artists haven’t toured in a long time, so they want to do very, very big tours, both in terms of the size of each show, the size of the show. .their breadth, reach and duration,” Societe Generale’s Bader explained.
Taylor Swift on stage at Night 1 of Taylor Swift | Eras Tour at Nissan Stadium in Nashville, TN on May 5, 2023.
John Shearer/tas23 | Getty Images Entertainment | Getty Images
He also pointed to changes in the way musicians make money, something Shaw echoed.
“The model for artists has gone from selling CDs and vinyl records and making money that way, with more revenue coming from concerts,” Shaw said.
Broader economic shifts are also likely to play a role, especially in countries that have imposed severe restrictions during the pandemic.
People are “hungry for that consumption,” and can afford higher prices thanks to increased household savings left over from the pandemic, Badr said.
lasting impact?
However, even if inflation eases, concert ticket prices are expected to remain high, Bader said.
On the consumer side, it has to do with supply and demand forces, as many people have more disposable income, he explained. From an artist’s point of view, relying on tours to increase income is also an important factor.
“I think there’s going to be a lot of flexibility in the price of music and other cultural events,” Bader noted.
But even if music has an effect on inflation, it may be short-lived. In Sweden, for example, Danske Bank’s Anderson sees inflation levels normalizing in June. “If this is indeed a ‘Beyoncé effect,’ then naturally the effect is temporary, so that’s true in June. We don’t expect it to have any long-term effects,” he said.
It may be short-lived, but the inflationary impact of music can be repeated, as Taylor Swift is coming to Sweden next year.
“It’s too early to tell, but as far as I know, Taylor Swift can have a significant economic impact on the cities she visits. So it’s possible, but at the moment we haven’t factored that into inflation Prediction,” Anderson added.