Swift-O-Nomics

Taylor Swift has been named Time Magazine’s 2023 person of the year and for good reason. Few people have affected news or events in the way she has this year with the notable exceptions of Jerome Powell or Benjamin Netanyahu.

Image Credit: Time Magazine

My focus here is more on her economic impact than her music. Taylor Swift tends to fill three stereotypes in the minds of some; little sister, ex-girlfriend from high school and that girl who refused to date you. This creates a bias that can blind some from the financial juggernaut that is Ms. Swift. The often-referenced Scott Galloway is particularly susceptible to this bias, and although I reference him frequently, I think it’s important to recognize when I feel he’s out-to-lunch. The insights I’ve gotten from Professor Galloway are many but when I’m looking for understanding of the business of Taylor Swift (she is worth $1.1 billion personally) I’m left wanting. He can’t seem get past the impression of the little girl singing about ex-boyfriends. But when viewed as a business, Swift-o-nomics is big. Some economists are estimating the economic impact of her Eras Tour to be $5 billion. From bonuses to her truck drivers, donations to local food banks wherever the tour visits, the financial success of the accompanying movie and the economic impact of the tour in general, the positive financial wake left behind her is impressive.

Let’s put aside her Eras Tour for one moment as this is probably what most readers are already aware of. There are other lessons to be learned from her. I want to highlight what she didn’t do; invest in Sam Bankmen Fried. Taylor Swift reportedly refused a $100 million deal to advertise with Sam Bankman-Fried's cryptocurrency exchange, FTX. This decision seems prescient in hindsight, given FTX's subsequent collapse and Bankman-Fried being convicted on fraud charges. Swift's refusal highlights her careful approach to endorsements and her team's due diligence in protecting her brand and reputation. The failed deal also underscores the risks associated with celebrity endorsements in the volatile crypto market. Swift's choice to decline the deal reflects her cautious stance in business ventures, especially in industries with uncertain regulatory and financial landscapes. Some would argue that her avoidance of this was due only to her advisors, not Swift but this assumption requires context. She had to be smart enough to take her advisors advice as plenty of other celebrities didn’t avoid wading into the high-risk and speculative world that is crypto. 

Image Credit: Paramount Pictures

To me, the most damming result of the FTX collapse is the multitude of financiers that poured billions of clients dollars into FTX who should have known better. This highlights the importance of a good team of professionals and the self-awareness of clients who are willing to listen and act upon advice when given. The ongoing education of clients and the willingness of advisors to help make complex ideas understandable is a large reason for good outcomes for investors, in my experience. When events outside of our control have negative effects on markets, economies and investments, a strong client/advisor relationship can help avoid the worst of these outcomes. My point is to reinforce this relationship in which a two-way street exists where the advisor listens to the clients concerns and objectives and the client listens to the advisor’s guidance to achieve those objectives. Finally, when it comes to Taylor’s music, I’m a casual fan, but when it comes to business, I’m definitely a Swiftie.

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