Swifties and the Bay Hive: Music companies want to monetize superfans

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It’s been a new “summer of hell” in Hollywood. Years of grief and anxiety have reached a crescendo over the collapse of the film and television industry. The city has ground to a halt due to the historic labor strike. Biggest entertainment companies profited estimated 60 percent less than a decade ago. Even Disney CEO Bob Iger seems uncertain about the prospects of the industry.

And yet none of this gloom is apparent in another corner of show business: live music.

After a hiatus induced by the coronavirus pandemic, this year several megastars are back on tour and raking in millions of dollars as football stadiums fill up every weekend. Taylor Swift, who is set to secure the first billion-dollar music tour, has been crowned temporary mayor of several US cities as she travels around the country this summer, making around $14 million per night. Earns average revenue. Beyoncé’s Europe tour has been so successful that it has been blamed for increasing inflation in Sweden. Pollstar, an industry data group, has announced that “blockbuster year,

In the US, fans are becoming more immune to the exorbitant prices required to attend a concert. Tickets for Swift’s Eraze tour cost at least $1,000 on the secondary market, even for high seats in the “Hemorrhage” section. If you’re willing to sit backstage, ie not be able to actually watch the show, you’ll be lucky to find one for $800 or $900.

The frenzy surrounding a select group of superstars has spilled over into corporate strategy meetings and investment bank analysis this year.

There is growing talk among music executives about “monetizing superfans” to open up new revenue opportunities. At first glance, this concept—trying to get more money out of people who genuinely love their favorite artist—isn’t particularly unprecedented. But it’s been talked about enough that Goldman Sachs recently estimated that these “superfans” could contribute $4.2 billion in additional income to music companies.

Of course, obsessive fans are not a new concept. Swift’s staggering popularity has been compared to the “Beatlemania” seen six decades earlier. But the subscription streaming model has taken away the ability for fans to buy music directly from their favorite artist. We pay a monthly fee to stream millions of songs. When our favorite musician releases a new album, it’s automatically uploaded to our phones at no extra cost.

Fans have responded by purchasing physical music – such as CDs, vinyl and even cassettes – to show support. This is emotional buying.

That buying has fueled growth in US album sales in the first half of the year: US vinyl sales rose 22 percent through June 30, while CD sales rose 4 percent, according to data group Luminate, formerly Nielsen Music. Luminate estimates that approximately 15 percent of the US population is made up of “superfans”, and they spend 80 percent more money on music than the average listener.

It’s logical, then, that major music companies, which have seen their stock prices tumble over the past year with widespread media debacle, would be thinking about how to monetize these “superfans.”

Industry leader Universal Music Group plans to revolutionize the entire model of music streaming. The “superfan” concept is a key part of this, along with efforts to crack down on cheating and remove “low-quality” content such as the 30-second Rain soundtrack.

How will these changes look in practice? The details are still being worked out, and I’m told that no concrete steps to “monetize” SuperFan are imminent. But music executives are discussing ideas such as allowing fans to pay an extra few dollars per month — in addition to subscription fees for Spotify or similar services — to access exclusive content or features from their favorite musician.

My guess is that many people would happily pay for a $15 a month Harry Styles or Billie Eilish subscription if the artist asked them directly. It’s a concept Universal Music chief executive Lucian Grainge has been talking about internally for years.

But a former senior executive at a major streaming service was more cynical. “I don’t know how this is any different than the way the industry has always worked, in trying to figure out how to get people to spend more,” he said. “It seems like saying something (to investors) to make sure they know that labels will be aggressive in finding new revenue lines. It looks a little fake.”

anna.nicolaou@ft.com