Opinion
How can businesses shake off the cost of living crisis? Just sell it like Tay Tay
Millie Muroi
Business ReporterTaylor Swift has managed to pocket millions during a cost-of-living crisis, and it’s not just because of her musical talent. Her new concert movie – Eras Tour – has raked in $3.8 million across Australia and roughly $200 million worldwide, and that’s just from the opening weekend.
Some marketing techniques are tried and tested, playing to our fear of missing out (FOMO), and Swift is a master marketeer.
Taylor Swift attending the Eras Film at a screening in Los Angeles.Credit: Getty
Do you really need multiple vinyl copies of her latest re-recorded album? No … until you get a well-targeted ad for a limited edition, yellow “Sunrise Boulevard” vinyl with never-before-seen photos available for only 48 hours. I didn’t buy it (I don’t even own a record player) but I’d be lying if I said it didn’t briefly enter my cart … for research purposes.
When you flag the scarcity of a product, or limit the time to make the purchase, it plays to our emotions, bypassing the more rational considerations we might make if given more time.
Thousands of fans who missed out on tickets to her coveted Eras tour are still burnt by that experience, but they may also be amplifying Swift’s movie ticket sales.
Movies are less FOMO-inducing because there are so many sessions and seats to fill. Sure, COVID put a dent in cinema attendances and accelerated the shift towards streaming services, but you only have to look at the success of Barbie and Oppenheimer to see the stampede back to the box office.
Consumer spending data from August showed we splurged on cinemas despite rising cost pressures.
Consumer spending data from August showed we splurged on cinemas despite rising cost pressures. Perhaps we’re chasing shared experiences we missed during the pandemic, or maybe we’re seeking a temporary escape from the stresses of the cost of living crisis itself.
Whatever it is, Swift is riding the wave. Her concert movie, filmed across three of her shows, hit $150 million in global ticket sales before it even opened in cinemas on October 13, and amassed another $50 million by the end of the weekend.
It’s super smart because it’s a fairly low-cost way for her to leverage her tour (she just needed to hire a film crew and a few extra people to put it together for her). It’s also a great way to capture more consumers, including those who wouldn’t splash hundreds of dollars on a concert ticket, but who might be willing to scrape together some change to accompany their Swiftie friends to the movies.
Economists call this price discrimination, where businesses boost sales by offering different prices to different buyers for similar or identical products and services. Think premium options at a supermarket (which extract more money from those who can afford it), happy hour at a bar (aimed at bringing in business from people looking for a bargain), or concession and student discounts at a theme park or the movies (for customers who tend to earn less and probably can’t be coaxed to pay the standard price).
For a cinema, there’s a huge cost to building and maintaining a big venue. On quieter nights, charging a lower price can bring in many more customers – while adding very little to costs. Cinemas pay staff to be there regardless of how many people turn up and screens run whether there’s one viewer or 100, so even an additional ticket sold for $2 would probably be a win for the business. On the other end, they also offer more expensive options like “gold class” tickets to squeeze more from people willing to pay.
In Swift’s case, she starts by selling expensive concert tickets to people she knows are willing to pay the big bucks. Then, she captures those who are less willing or able to pay with a cheaper option: the movie.
You don’t have to be a pop star to do this. It may not generate millions, but being flexible with pricing can attract more customers, especially as inflation bites. Since most businesses are already paying fixed costs (such as renting out a space for a store and paying employees to be there), reaching additional customers by adjusting prices during off-peak times or offering a similar service for less, can be a smart tactic.
It’s also a win for customers who may not otherwise be able to afford it.
A live concert and a film are not the same thing, but the benefits of the latter are not lost on me: let’s face it, unless you’re right up close to the stage, most people spend half the time at live concerts looking at – or through – screens anyway.
Swift isn’t the first artist to have a concert film (Justin Bieber had one in 2011) but her ticket sales have already eclipsed Bieber’s total box office take, and will only climb higher.
The vinyl record may have gone unpurchased, and Swift’s concert tickets might have slipped through my fingers, but you can bet there’s nothing I’ve bought more swiftly than those tickets to her movie.
Millie Muroi is a business reporter at the Sydney Morning Herald covering banks, financial services and markets.
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