A host of recent and upcoming music concerts in India can amount to a spending push of about Rs 1,600–2,000 crore, according to estimates computed by economists at Bank of Baroda.
Indians are discovering and driving the 'experience economy' as global artists like Bryan Adams, Coldplay, Green Day, Dua Lipa, Ed Sheeran, Maroon 5, Shawn Mendes and Louis Tomlinson perform, as well as Indian artists like Diljit Dosanjh.
The music concerts could be translating into a spending push of Rs 1,600–2,000 crore in the span of the last two–three months, according to the estimates by economists Dipanwita Mazumdar and Jahnavi Prabhakar.
"However small the number is, if looked at on an annualised basis, it can provide the desired impact on private consumption demand, along with widespread backward and forward linkages from manufacturing (for improved logistics) and services sector to the flourishing of the gig economy," they said in a note on Tuesday.
Swiftonomics, a term coined to describe the economic impact of the Eras tour by pop star Taylor Swift, has already been seen to significantly boost spending across economies, including the US, Europe, Singapore and the UK. The multiplier effect is reflected across industries, such as food and beverages, hotels, transportation, merchandise, the economists said.
Swift's tour, that found mention in the US Fed's Beige book, is estimated to have generated $4.6 billion in North America in ticket spend, travel and merchandise. These impacts are usually short-lived and fade in the next quarters.
However, the localised effect and higher demand for services-related sector through these exogenous shocks have significant bearing on the overall spending levels. In addition to this, the presence and performance of other global stars has resulted in a thriving scene for the live music industry, the economists explained.
Closer home, the rise in disposable income and a willingness to splurge have resulted in the significant demand surge for such concerts in India. The financial results of the hospitality sector have categorically mentioned MICE (meetings, incentives, conferences and exhibitions) as a contributory factor for improving profit margins. However, a new phenomenon in India's context, this could possibly set a stage (quite literally) for more such events in the near term, the economists said.
Ticket sales encompass the major share of spending. Based on the stadium capacity and charges for each ticket, the economists peg total ticket sales to the tune of Rs 750–950 crore. It has been calculated by assigning different proportions of ticket sales from low, mid to high-range categories. The assigning of weights is mostly based on the layout of the grounds where higher weightage is given to moderately priced tickets. The lounge tickets kept under dynamic pricing have been to an extent opted out to avoid skewness. Notably, the base calculation excludes scalping.
Apart from this, most of the spending caters to hospitality and transportation with a cumulative amount estimated around Rs 400–500 crore. Hotel expenses have been calculated on the assumption of twin-sharing rooms and approximate stay of single day, considering most of the concerts also fall on Sundays. Dynamic pricing of hotels has again been opted out for convenience of computation and calculated using normal averages of two, three and four-star stays with a flexibility of 10% in pricing (upper band). Premium range stays have also been discounted as an outlier.
For travel estimates, core assumption hinges on a 5–10% interstate travel for shows in Tier 2 and Tier 3 cities, with this figure rising up to 20% for popular concerts.
Another lump sum spending is estimated to come from sponsorship that amounts to about Rs 250–300 crore. This includes title sponsorship, co-sponsorship and associate sponsorship. However, the estimates are conservative and have the potential to be on the higher side, considering the involvement of more and more local brands to cater to the masses.
Here, telecast rights have not been considered, due to lack of information. However, transactional video on demand, where consumers pay on an individual content basis, might garner much higher spending. As per the estimation, miscellaneous spending would be in the range of about Rs 45–60 crore. This includes the expenditure on event management, gig workers (volunteers), security expenses and merchandise spending. Thus, the total expenditure is expected to be in the range of about Rs 1,600–2,000 crore.
This amount might look meagre in unison, but on an annualised basis, it translates to a spending of about Rs 6,000–8,000 crore if this fresh avenue of live entertainment could be explored more in the coming days, the economists estimate.
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