As inflation remains high in many countries around the world, economists have found themselves considering a surprising potential contributor: music concerts.
Beyoncé is currently on her first solo tour since 2016, “Renaisssance,” and Taylor Swift is filling stadiums with her Eras Tour which sparked outrage about Ticketmaster and Live Nation’s power over live event ticketing.
Elsewhere Bruce Springsteen, Elton John, Harry Styles and Ed Sheeran are taking over stadiums, with millions flocking to see the stars — even if there’s a high price to pay for tickets, travel and accommodation.
Meanwhile, inflation remains stubbornly high in many developed economies despite interest rate rises designed to bring prices down. The latest figures for the U.K. came in above expectations at 8.7% on an annual basis, whilst the U.S. consumer price index for May rose by 4% from the previous year.
But what do concerts and the economy have to do with one another? Potentially a lot, according to some economists.
From ticket prices to hotels
From Natalie Merchant to The Who, Klaus Baader, global chief economist at Societe Generale, has tickets to see various artists this year.
“One of the things of course that struck me is how enormously high prices for concerts, for gigs have become,” he told CNBC Make It. And it doesn’t end with the price of a ticket.
“All the prices around it, too, have exploded … It’s not just that the tickets become more expensive. It’s also that your beer or cider or your Coca-Cola or your hot dog at the venue has also gotten a lot more expensive,” he explained.
Potential travel and accommodation costs are also high — a phenomenon observed by Filip Andersson, head of research for Sweden at Danske Bank.
The impact Beyoncé’s first tour stop in Stockholm, Sweden had on the country’s consumer price index is “evident,” he said — especially when it comes to accommodation.
“In the Swedish May inflation numbers, hotel prices rose more than what is usual for May,” he told CNBC Make It. “Hotels in the Stockholm region were reportedly fully booked the weeks around the event and prices thus skyrocketed.”
As almost a third of Sweden’s hotel rooms are in the Stockholm area, the price surge had a national impact despite being related to a local event, Andersson said. This indicates that not only are the costs of attending concerts higher because of inflation — they may also be contributing to it.
Not all economists are as convinced, however.
“I’d be a little bit surprised if there was a visible impact from a particular concert on the inflation numbers, but it’s not impossible,” Philip Shaw, chief economist at Investec, told CNBC Make It.
“I suspect that there is an impact on inflation overall from concert prices becoming more expensive. That’s not necessarily due to one particular artist,” he said, adding that concert prices themselves do, however, appear to have increased.
Underlying economic factors
There is a range of underlying factors behind this rise in the cost of tickets, according to economists; some to do with broader economic patterns and others relating to concert culture in a post-pandemic world.
“People haven’t been to a concert in a long time and the artist haven’t been touring for a long time so they’re going for really, really big tours both in terms of magnitude of each individual gig and also in terms of their breadth, their reach and their duration,” Societe Generale’s Baader explained.
He also pointed to changes around how musicians make a profit, a point which Shaw echoed.
“Artists’ models have changed from selling CDs and vinyl, and making money that way towards more of their revenues coming from concerts,” Shaw said.
Broader economic shifts could also be at play, especially in countries that had tight restrictions during the pandemic.
People are “dying for this kind of consumption,” Baader said, and due to increased amounts of household savings left over from the pandemic, people can afford the higher prices.
A lasting impact?
Even as inflation eases, however, concert ticket prices are expected to remain high, according to Baader.
On the consumer side, this relates to supply and demand forces and because many people have more disposable income, he explained. On the artists’ side, the reliance on tours to bring in revenue plays into the equation.
“I think that there’s going to be a lot of resilience in the prices of musical and other cultural events,” Baader noted.
But if there is an impact from concerts on inflation, it is likely to be brief. In Sweden’s case, Danske Bank’s Andersson believes a normalization of inflation levels will occur in June. “If this indeed was a ‘Beyonce effect’ it would be natural for this effect to be temporary and thus correct in June. We do not expect it to have any long-term effects,” he said.
It might be short-lived, but the impact of concerts on inflation could be recurring, with Taylor Swift coming to Sweden next year, for example.
“It is too early to tell, but from what I have read, Taylor Swift can have a notable economic impact on the cities she has toured. So it is possible, but not something we have included in our inflation forecast at this point,” Andersson added.