Taylor Swift isn’t just a musical sensation; she’s a business powerhouse, too. Her Eras tour, currently hitting Edinburgh, is projected to boost her wealth beyond $1 billion. Forbes estimates her net worth at $600 million from performances and her back catalogue, with an additional $125 million in real estate.

Swift’s financial success isn’t just about music; it’s about smart business moves. Dubbed “Swiftonomics,” she leverages her market power astutely. Reports suggest she commands over 100% of gross ticket sales, leaving promoters to profit from concessions and extras, incentivizing early attendance.

By scheduling multiple nights in one venue, Swift minimizes touring costs and maximizes fan turnout. Her concerts draw massive crowds from all over, reflecting her global appeal. Her financial acumen is part of her allure to fans.

Swift’s business savvy extends beyond concerts. She famously challenged Apple and Spotify over royalties, refusing to release her music on Spotify’s free tier. These moves demonstrate her commitment to fair compensation for artists and highlight her influence in the industry.

Taylor Swift’s negotiation prowess is so renowned that Harvard Law School uses her as a case study, citing her ability to walk away from Spotify negotiations due to her abundant options. At 34, she’s not only intelligent but also incredibly wealthy, thanks to her knack for setting terms with industry leaders and appealing to her fan base.

Despite selling her earlier recordings’ rights to an investment firm, Swift rebelled against the constraints imposed on her artistic freedom. While the investor retained rights to those recordings, Swift retained the composer’s rights and proceeded to re-record multiple albums. She convinced her fans to prioritize the re-records, which they purchased over the originals at a ratio of 4:1.

This phenomenon extends beyond streaming. The resurgence of vinyl records has positioned them as a common purchase item, even included in inflation surveys by the Office for National Statistics. Swift’s strategic moves have not only reshaped the music industry but also influenced consumer behaviour in tangible ways.

Taylor Swift’s influence extends beyond just music sales; she also has a significant presence in the vinyl market, attracting buyers who may not even own a turntable but collect for the artwork. While she may seem like a unique case, former Spotify chief economist Will Page suggests that she has adeptly navigated the opportunities presented by industry disruption.

Page believes that Swift has set a new standard for artists in navigating the complexities of the music industry, leveraging both streaming revenues and ticket sales to achieve unprecedented success. While not every artist may reach Swift’s level of financial achievement, her strategies offer valuable lessons for others to follow.

Swift’s success reflects broader trends in the music industry. The rise of digital streaming initially threatened to disrupt the industry, but it ultimately led to the decline of physical sales like vinyl, cassettes, CDs, and DVDs. This shift consolidated market power into the hands of a few major platforms, with Spotify dominating music and podcast streaming while Amazon, Apple, and YouTube incorporate music as part of their broader business models.

The shift towards digital streaming has significantly altered the dynamics of the music industry. Distribution costs for streaming are minimal compared to the expenses associated with physical hardware and retail distribution. Consequently, artists can now claim a higher proportion of revenue from digital downloads compared to CD sales, with up to 30% versus a maximum of 15%.

Streaming platforms also offer virtually unlimited space for content, leading to an explosion in the supply of music. This surge in supply is unprecedented, with platforms like Spotify uploading more tracks in a single day than the total music released in an entire year decades ago.

However, this abundance of content also presents challenges. While the industry is generating more revenue, there are now significantly more artists and songwriters vying for a share of the pie. The number of creators on platforms like Spotify has soared, creating a dilemma of how to adequately support and compensate them all.

The advent of digital downloads has facilitated global album releases, enabling artists like Taylor Swift to launch their music as a worldwide event. This accessibility has made it easier for artists to connect with their fan base, and listeners are increasingly gravitating towards music performed in their native language. As a result, non-English language music is gaining traction, posing marketing challenges for international stars.

Moreover, the way people discover new music has evolved. Streaming platforms have become the primary avenue for sampling new bands, reducing the reliance on traditional venues like pubs and clubs for discovering emerging talent. This shift has raised concerns about the pipeline of new artists honing their craft in smaller venues, particularly as the age profile of performers filling larger venues skews older.

In this changing landscape, the relationship between live performance and recorded music has also transformed. While touring was once a means to promote album sales, it’s now common for artists to release albums to promote their tours, reflecting the evolving economics of the industry.

The music industry has seen a significant shift since the pandemic, with touring becoming an even more vital source of revenue. After months of confinement, music fans eagerly returned to live performances, driving ticket prices higher. Despite fewer gigs overall, revenue from live music increased by 22% in the UK in 2022, surpassing £2 billion. Meanwhile, recorded music, primarily through streaming services and vinyl sales, earned over £2 billion as well.

This resurgence in revenue, reaching £4.1 billion across recording and performance, marks a substantial rebound from the pandemic. However, it’s increasingly focused on major artists performing in large venues. Stadium concerts and festivals, which accounted for 23% of spending in 2012, now command 49% of the £2.1 billion in takings.

The decline in emerging performers playing smaller venues raises questions about whether the higher prices for big venue gigs absorb available funds, leaving little for smaller venues. Furthermore, the trend of big finance investing in music assets has intensified. While artists like Taylor Swift have benefited from this, maintaining control over their recordings and songs remains crucial.

However, for older and deceased artists, there’s a lucrative market for buying back catalogues. Major players like Universal Music Group have invested billions in acquiring rights to artists’ catalogues. This trend is driven not only by financial incentives, including tax benefits but also by the enduring appeal of older music. Streaming data reveals that older catalogue tracks, defined as older than 18 months, command up to 80% of the market.

Despite her substantial earnings, Taylor Swift remains financially and creatively driven, unlikely to relinquish control over her rights anytime soon. As the music industry continues to evolve, the balance between live performances, recorded music, and ownership of musical assets will shape the landscape for artists and investors alike.