Swifties and the Bey Hive: music companies seek to monetise the superfan

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It has been a new “summer of hell” in Hollywood. Years of grief and anxiety over the upending of the film and television industry has come to a head. The town has ground to a halt due to a historic labour strike. Profits at the largest entertainment companies have been estimated to be down 60 per cent from a decade ago. Even Disney chief executive Bob Iger seems uncertain about the prospects for the industry. 

And yet absolutely none of this melancholy is evident in another corner of show business: live music.

After a coronavirus pandemic-induced hiatus, this year multiple megastars are on tour and are scooping up tens of millions of dollars every weekend as they fill football stadiums. Taylor Swift, who is set to secure the first billion-dollar music tour, has been crowned the temporary mayor of multiple US cities as she travels across the country this summer, earning average revenue of nearly $14mn a night. Beyoncé’s tour through Europe has been so successful it has been blamed for exacerbating inflation in Sweden. Pollstar, the industry data group, has declared this “the year of the blockbuster”.

In the US, fans are seemingly becoming more immune to the jaw-dropping prices required to attend a concert. A ticket to Swift’s Eras tour costs at least $1,000 on the secondary market, even for a seat high up in the “nosebleed” sections. If you’re willing to be seated behind the stage, ie not able to actually view the show, you’d be lucky to find one for $800 or $900. 

The frenzy surrounding a select group of superstars has trickled into corporate strategy meetings and investment bank analyses this year. 

Increasingly, the chatter among music executives is about “monetising superfans” to open up new revenue opportunities. On the face of it, the concept — trying to get more money from people who really love their favourite artist — is not particularly groundbreaking. But it’s been talked up enough that Goldman Sachs recently projected that these “superfans” could contribute $4.2bn in extra income to music companies. 

Passionate fandoms are not a new concept, of course. Swift’s staggering popularity is being compared with the “Beatlemania” seen six decades ago. But the subscription streaming model has stripped away the ability for fans to directly buy music from their favourite artist. We pay a monthly fee to stream tens of millions of songs. When our favourite musician releases a new album, it’s automatically uploaded to our phones at no extra cost. 

Fans have responded by buying physical music — such as CDs, vinyl and even cassettes — as a show of support. It is emotional purchasing. 

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

It is logical, then, that the major music companies, which have seen their share prices stall in the past year alongside a wider media rout, would sniff around at how to make money from these “superfans”.

Universal Music Group, the industry leader, has set out to overhaul the entire model of music streaming. The “superfan” concept is a crucial part of this, alongside efforts to crack down on fraud and weed out “lower-quality” content, such as 30-second rain soundtracks. 

What would these changes look like in practice? The details are still being worked out, and I’m told that any concrete steps to “monetise” superfans are not imminent. But music executives are discussing ideas such as fans paying an extra couple of dollars a month — in addition to their subscription fee to Spotify or similar services — to access exclusive content or perks from their favourite musician.

I would guess that a lot of people would happily pay for a $15-a-month Harry Styles or Billie Eilish subscription, if the artists asked them directly. It’s a concept that Universal Music chief executive Lucian Grainge has been talking about internally for years. 

But a former senior executive at a big streaming service was more cynical. “I don’t know how this is any different from how the industry has always operated, in trying to figure out how to make the most of people willing to spend more,” he said. “It feels like something to say [to investors], to make sure they know the labels will be aggressive in finding new revenue lines. It feels a little fake.”

anna.nicolaou@ft.com