Week 1: Underlying Economics of the Music Industry

Welcome back to my Senior Project blog! For this first week, I explored the underlying economics of the music industry to gain a deeper understanding of how the music business typically operates. By acquiring this knowledge, I have developed a stronger basis for the literature review, proprietary research, and interview-based analysis I will be conducting in the coming weeks.

I have primarily been focused on Alan Kruger’s Rockonomics and a Vanderbilt University online course titled: “Understanding the Music Business: What is Music Worth?” Among many topics I was introduced to, one idea I came across through the Vanderbilt course that especially interested me was that physical music sales have seen a sharp decrease, with many turning to streaming services like Spotify and Apple Music in today’s digital era. However, in contrast to what many recording artists and industry professionals are observing, Taylor Swift still receives a substantial number of sales in physical formats. Swift’s 2022 album Midnights sold 575,000 copies on vinyl alone in just one week of its release, and 1989 (Taylor’s Version), released in October of last year, sold a total of 1.261 million physical copies of CDs, vinyls, and cassettes in its first week. But this is no coincidence. The reason for this success lies in Swift’s strategic business tactics and her team’s understanding of economics and its intersection with the music industry. Swift differentiates each product from the next, making five different vinyl variants for Midnights, all coming in different colors, with different photos included, and bonus tracks on her Target exclusive editions. The sales for 1989 (Taylor’s Version) were especially large due to its availability in 15 different physical formats: five color vinyl variants, eight CD editions and two cassette editions. This allows Swift to combat the shift away from physical music, encouraging her large following of Swifties to buy a physical copy of her album (or five). This product differentiation, combined with an air of exclusivity, contributes to the level of monetary success Swift has achieved, which we have seen translated to an equal level of willingness to spend when these songs are performed live. 

Alan Krueger also mentions Swift multiple times in Rockonomics, commenting on her use of Verified Fan techniques, slow ticketing, and dynamic pricing – strategies she implemented during her 2018 Reputation Stadium Tour. Today, with the Eras Tour, we can build on Alan Krueger’s analysis – something I hope to be able to do throughout my research process. By examining Swift’s strategies and making connections between my independent readings and Swift, I will gain a strong understanding of the factors contributing to Swift’s Eras Tour success which will support the quantitative data and interview-based analysis I am conducting in the following weeks.

I have also spent time this week coordinating my interview-based analysis, planning Zoom calls with professionals in the music industry, music professors, and a likely placement at a recording studio in Brooklyn. Additionally, based on a Zoom call I had earlier this week, I will also be reaching out to professionals in other fields to gain deeper insight into how people view the Eras Tour through various lenses. Whether engaging with professors or those who work in economics, marketing, or history, I will ask them for their own commentary on my research/hypothesis. This will both present more data points for my qualitative analysis and allow for more exposure to contrasting points of view. 

In the coming weeks, I will continue to explore the underlying economics of the music business in relation to Swift. However, I will also shift to more quantitative Eras-Tour-specific research. Using the deeper understanding of the industry I have begun to cultivate throughout this past week, I will delve further into published data/reports and begin conducting my own proprietary quantitative research, aided by discussions with experts in various fields.