There’s plenty of chatter around ‘Swiftonomics’ recently – a term coined to articulate the influence wielded by singer-songwriter Taylor Swift, which stretches well beyond the realm of music. The American Federal Reserve even recognised the positive economic impact brought about by Swift’s Eras tour last year. Some analysts had gone as far as suggesting that if Swift were considered an economy unto herself, her worth would surpass that of 50 nations.
As Swift’s latest album, ‘The Tortured Poets Department’, shatters Spotify streaming records, it raises the pertinent question – can the monumental success of Swift’s music influence the share price of her record label, Universal Music Group (UMG)?
Bank of America (BofA) doesn’t think so. Despite Swift’s far-reaching success, BofA speculates that her contribution to UMG’s total earnings is fairly nominal, amounting merely between 2-3 percent. Swift, contrary to the norm in the music industry, maintains ownership rights over her master recordings. This entitles her to a significant portion of the royalties. Moreover, Swift enjoys a strong foothold amongst purchasers of traditional music mediums, typically characterised by lower profit margins.
According to BofA, UMG’s financial health does not hinge excessively on the success of a single artist, as commonly perceived. Rather, its stock price is more significantly influenced by external market dynamics like subscriber growth and price increases. UMG is set to announce its earnings on the 2nd of May, but the launch of Swift’s latest album may likely be a headline for her fan base rather than for UMG investors. BofA acknowledges Swift’s role in “moving the needle”, but they argue it’s only to a limited degree.