Despite having to pay more for everyday goods and services, Americans feel they are better off financially than they were earlier this year. How they choose to increase and decrease their spending, however, varies from music to vacations to groceries.
The data shows that consumers are generally in a good position. The latest numbers from the University of Michigan's consumer survey released today (September 13) show that consumer sentiment is the best since May and 40% above the June 2022 low. Deloitte's Financial Well-Being Index rose for a third consecutive month in August and rose from 95.9 to 102.6 over the past year, suggesting that consumers are feeling good enough about their finances to increase spending on a range of goods and services.
Listen to travel and leisure companies and you get the impression that inflation-weary, cash-strapped consumers are holding onto their wallets. In August, Airbnb lost profits and warned of slowing demand, while Booking.com told investors it expected slower growth in the number of nights booked by customers. Disney theme parks have lower demand. Comcast's Universal theme park revenue fell 11% in the most recent quarter after hitting a record in 2023.
The concert business, however, does not share the malaise of theme parks and rental accommodations. “We don't see [a slowdown]”, CEO of Live Nation Michael Rapinoe he said on Tuesday (September 10) at the Goldman Sachs Communacopia & Technology conference in San Francisco. “And you almost hate to say it, because everybody else is saying it, but we think we have a very unique product.” Live Nation, the world's largest concert promoter and ticketing company, had a record second quarter with total revenue of $6 billion, up 7%, and expects 2024 to be a record year.
Concerts have the advantage of creating a more visceral response than other forms of entertainment. And because it's in person and live, Rapino explained, it's a unique experience with a competitive edge. “[Fans] I want to connect with this artist,” he said. “There is no digital duplication here. You cannot watch this show at home. It doesn't bother you when you watch it on Apple TV.”
Live music isn't completely immune to financial woes, of course. Several tours – including The Black Keys and Jennifer Lopez – were canceled due to poor ticket sales. Festivals ranging from Desert Daze in California to the Beale Street Music Festival in Memphis have pulled the plug in 2024 for financial reasons. And as Bulletin board has documented in recent years, the financial strain on artists touring in the wake of the pandemic has been very real. Higher costs for transportation, fuel, and food forced artists to economize and cut expenses to make a profit.
However, fans still spend dearly for a small number of superstars. The surge pricing used in the Oasis sale inflated the cost of basic tickets beyond the comfort zones of many fans. The Sphere in Las Vegas has drawn high-spending fans to residencies by U2, Phish and Dead & Co. and The Eagles' upcoming concerts should do just as well. Prices for Adele's final performance at The Colosseum at Caesar's Palace in Las Vegas before an indefinite hiatus soared to more than $17,000 for prime seats.
Consumers continue to spend on recorded music as well. According to the RIAA's interim report, the direct consumer spending segments of the business – subscriptions, physical formats and digital downloads – grew 4.7% in the first six months of 2024. Subscription revenue improved 5.1% and surpassed 60% of all recorded music revenue. Spending on physical music formats fared even better, rising 12.7% on the back of a 17.0% increase in vinyl sales. Download costs, an increasingly insignificant part of the business, fell 15.8%.
Segments that do not represent consumer spending — ad-supported streaming, sync rights and SoundExchange rights — rose just 0.9%. Ad-supported on-demand streaming, the largest component of the non-spend segment, grew just 1.7%. (SoundExchange royalties include ad-supported streaming in addition to satellite radio royalties, which come from direct consumer spending, and cable radio stations, which do not.) Sync royalties — reflect money flowing into advertising and television production and film production — down 9.8%.
Elsewhere in the entertainment industry, spending is mixed. U.S. movie ticket sales fell to $3.6 billion from $4 billion, though the pop culture sensation Barbie and Oppenheimer in the summer of 2023 it became a difficult comparison. U.S. video game revenue is expected to grow about 2.2 percent to $47 billion in 2024, according to market research firm Newzoo.
While the consumer is looking to indulge in entertainment, they are much more price conscious about everyday items. According to consulting firm McKinsey, people are cutting back on spending on essentials – particularly gasoline and fresh produce – as well as home improvement and domestic flights.
During a presidential debate in 1980, Ronald Reagan asked a now famous question: “Are you better off than you were four years ago?” In 2024, many Americans feel they were better off in 2020 — even though the economy was crippled by the pandemic that year. The music industry is better today than it was four years ago. And although recorded music growth has slowed this year, 2024 will also be better than 2023.
