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Bank of America predicts people will continue to spend big on live entertainment. Other experts have said the impact of Taylor Swift and Beyoncé’s tours would be temporary.Consumer spending shifts, social media, and more global marketing may sustain the momentum.
That’s what Bank of America analysts argued in a September 13 report called “Funflation in Full Force,” in reference to the recent surge in spending on entertainment and live experiences.
The analysts call live entertainment the “biggest star” in the media and entertainment universe and cite several factors that could sustain the momentum for years to come and boost the bottom lines of companies tied to these events.
Bank of America said these are the five “sustainable and longer-term key drivers that will fuel solid growth for a number of years.”
Consumer spending is shifting to experiences.
Strong demand based on current pricing models could lead to more opportunities for dynamic pricing.
More supply and demand as artists continue to get better at using social-media platforms and promote themselves globally, especially in developing markets, to build fan bases.
Live events are “relatively disruption-proof” as virtual events pale in comparison to attending in person.
Strong sponsorship and experiential marketing.
On the surface, this contradicts some earlier warnings that while entertainment spending did prop up the economy, it would be fleeting.
With the end of the summer concert tours, Bloomberg analysts argued that the entertainment boost won’t last. The analysts described the spending as a “once-in-blue moon” phenomenon.
“A large chunk of that strength comes from temporary factors,” the analysts wrote. “These factors create a mirage of resilient consumption, when in fact it’s running out of steam.”
Beyoncé performs during the Renaissance World Tour on May 10 in Stockholm.
Kevin Mazur/Getty Images for Parkwood
Both views could be correct
Look a little deeper, and the two views might not be that contradictory. We could see a lull in the fall and winter with fewer big tours and blockbuster movies, followed by another boom in the warmer months next year.
Of course, that may not help the economy, and there have already been signs of more cautious spending late in the year. There are also some looming factors that will put more pressure on spending, such as the resumption of student-loan payments, soaring gas prices, rising insurance premiums, and plummeting personal savings.
Bank of America did warn in its report that there is some risk in betting on “funflation” to continue.
“We see the macro environment/consumers’ willingness to spend during a potential downturn and regulatory as the two biggest overhangs in the near term,” the analysts wrote.
Bank of America also acknowledged that part of the summer of fun was driven by “pent-up demand for in-person, communal experiences following the pandemic.” We don’t know if that trend will hold as post-pandemic cabin fever wears off.
The analysts also cited a 2022 Live Nation survey that found respondents were willing to spend the most money on live concerts and music festivals, and they’re less inclined to cut back spending on those experiences than other expenses.
Taylor Swift fans at a show in Denver.
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Taylor Swift and Beyoncé set the bar high
Bloomberg Economics estimated that the tours from Swift and Beyoncé combined would add an estimated $5.4 billion to the US gross domestic product.
One factor event organizers will struggle to replicate is the star power of Swift and Beyoncé. But if Bank of America’s predictions are correct, the economy may feel the effects of entertainment spending despite the diminished sparkle of the performers.
Replicating the economic impact of Swifties and members of the Bey Hive may not be necessary if more events by smaller acts can generate enough heat.