Following the pandemic, people went out and spent money in large quantities — looking to feel a part of the world again. While that surge has tapered-off, a new analysis from Bank of America predicts that live music will continue to drive consumer spending.
The new analysis, which was published by Bank of America’s Global Research Analysts, found that despite what some economists might think, people are still attracted to live entertainment. Pandemic savings may be depleted, delayed student loan payments are coming back, and the world is somewhat back to normal. Yet, there is always a consistent need for entertainment.
BofA Global Research Analysts Jessica Reif Ehrlich, Peter Henderson, David Plaus, and Brent Navon, CFA, noted that “there are several sustainable and longer-term key drivers that will fuel solid growth for a number of years.”
This ongoing trend, dubbed “funflation,” helped drive the live event industry out of the pandemic, with the help of increased ticket prices, the report found. Additionally, it touched-on the fact that virtual events during the pandemic “failed to deliver” the same experience as an in-person event.
Several companies are benefitting from the overall increase of spending in the live event industry, the report noted, including iHeartMedia, Endeavor Group Holdings, Warner Music Group, Spotify, and Madison Square Garden Entertainment.
“Spotify has a virtuous cycle with the concert business as fan engagement drives their MAUs but also leads to music discovery of new artists, which ultimately drives concert attendance,” the analysts said. “This concert attendance reinforces overall consumer engagement with music, which keeps users on music streaming platforms.”
The younger millennial and Gen-Z population are at the fore-front of the spending shift towards these experiences, the report found. Additionally, strong pricing from larger entities like Live Nation have an advantage in the industry and are able to increase pricing, adding to the “increased wallet share of economics.”
“In the ever-changing landscape of music, live performances remain the lifeblood of an artist‘s livelihood and relationship with their fans,” the report concluded. “Live music has seen a major turnaround since the pandemic forced the cancellation of the majority of concerts in 2020 and many more in 2021. The industry saw historic growth in 2022, with the recovery spurred by pent up demand for in person, communal experiences following the pandemic.”
