Music Companies Are Asking Superfans to Spend More — But Can They Afford To?

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Record labels wants superfans to spend more, but consumer debt is up and many young people are planning to reduce their spending in 2024.

says that roughly 20% of customers provide 80% of a company’s revenue. Whatever the breakdown, music companies are expecting more from a small subset of big spenders. Concert promoter Live Nation wants premium offerings such as VIP boxes to increase totold investors during the company’s Feb. 22 earnings call. Earlier this year, the heads of Universal Music Group and Warner Music Group revealed their desire to offer new types of services and products for the most fervent of music fans.

Splurging has given way to focusing on the basics. Consumers intend to spend more than usual on essentials such as gasoline, groceries, produce and pet food, as well as health and fitness, in the next three months, according to ain February. In contrast, consumers intend to spend less on discretionary items: entertainment, domestic flights, hotel and resort stays, home improvement and alcoholic beverages.

For many young consumers who have taken on debt, 2024 will be a year to pull back. A third of Millennials and Gen Z say they have, according to a survey by Qualtrics for Intuit Credit Karma conducted in February and March of this year. About three-quarters of Millennials and Gen Z surveyed by Qualtrics say they plan to change how they spend money.

Credit card debt is nothing new, though, and some experts believe consumers can take it in stride. Although credit card balances increased in 2023, consumers “largely still have the wherewithal to repay their existing obligations,”credit monitoring service Experian. In fact, the average FICO credit score improved to 715 in 2023 from 714 in 2022 despite the average credit card balance increasing 10%. In February, credit ratings agency Fitchits forecast for U.S. real consumer spending to 1.

High-priced concert tickets and experiences might be out of the question, but superfan spending is also more mundane. Artists routinely put out new albums with multiple CD and vinyl LP variants knowing that their most hardcore fans consider them to be collectibles (and purchase them to help their favorite artistsMusic isn’t a necessity like food and shelter, but it’s proved to be both recession-proof and pandemic-proof.

 

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