MW How Taylor Swift and Beyoncé fans could fuel a fresh meme-stock frenzy with music ETFs
By James Rogers
GameStop co-founder Gary Kusin sees parallels between Swifties and the videogame retailer's intensely loyal fans
As the co-founder of the company that became GameStop Corp., Gary Kusin knows a thing or two about building a fiercely loyal customer base.
In 2021, he watched on as the meme-stock frenzy swept up the struggling videogame retailer. The phenomenon sent shares of GameStop $(GME)$ skyrocketing, and Kusin highlights the role played by the company's intensely loyal fans. The company's customers "were not going to let a store that was a part of their lives, and remains a part of their lives, go away," he told MarketWatch. Kusin left Babbage's, which later became GameStop, in 1995, and currently has no stake in the videogame retailer.
Three years on from the meme-stock frenzy, the author of "Always Learning: Lessons on Leveling Up from GameStop to Laura Mercier" sees parallels in the devotion shown by Taylor Swift's fans. "Swifties are not customers, and GameStop people are not customers - it's the fabric of their lives," he said.
The numbers behind Taylor Swift's success are certainly eye-watering. Her epic Eras tour, which began in March 2023 and ends in Vancouver on Dec. 8, grossed over $1 billion by the end of last year, according to concert trade publication Pollstar. The U.S. Travel Association has estimated that the total economic impact of the Eras tour in the U.S. could exceed $10 billion.
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"Her whole operation is in a class by itself, since the Beatles," Kusin told MarketWatch.
Such is the extent of Swift's appeal that the GameStop co-founder thinks she could even IPO parts of her empire, if she wanted to. Kusin acknowledges that this would be "out-of-the box," and speculates that it could be structured around four legs of her empire: her catalog, concerts, merchandise, and new content.
MarketWatch understands that, within Swift's business empire, an investment vehicle such as an IPO has never been up for discussion.
The concept of fandom and celebrity-focused investment vehicles is worth pursuing, according to David Schulhof, founder and chief executive of the MUSQ Global Music Industry ETF MUSQ. Indeed, he sees potential for a "real meme frenzy" among fans for a fund carefully targeted around a celebrity.
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The MUSQ ETF was launched in July 2023 and has over 30 holdings. These include Sony Group Corp. (JP:6758) $(SONY)$, Apple Inc. $(AAPL)$, Spotify Technology S.A. (SPOT), iHeartMedia Inc. $(IHRT)$, Live Nation Entertainment Inc. (LYV), Universal Music Group N.V. (NL:UMG) $(UNVGY)$, Tencent Music Entertainment Group $(TME)$, and Sphere Entertainment Co. $(SPHR)$ - the last being the owner of Sphere, the new 360-foot-tall immersive concert and entertainment venue in Las Vegas.
Schulhof told MarketWatch that more music-related ETFs are on deck. "We have specifically looked carefully at launching two ETFs," he said, noting that one would be around Taylor Swift and the other around Beyoncé Knowles. "They capitalize on the 'halo effect' of each celebrity," he added.
The fund manager said that the Taylor Swift ETF's potential holdings could include record label Universal Music Group, Live Nation (which handles ticketing for the Eras tour), AMC Entertainment Holdings Inc. $(AMC)$ (which showed "Taylor Swift: The Eras Tour" in its theaters and distributed the movie) and Imax Corp. (IMAX) (which also showed the record-breaking concert film). Even sports book DraftKings Inc. (DKNG) could be in the ETF, according to Schulhof, who cited the huge interest in Swift's boyfriend, NFL star Travis Kelce.
Holdings for a Beyoncé ETF could include label Sony, Live Nation and companies that the star has forged partnership deals with - such as Levi Strauss & Co. $(LEVI)$, PepsiCo Inc. $(PEP)$, Uber Technologies Inc. $(UBER)$, Peloton Interactive Inc. $(PTON)$ and L'Oreal S.A. (FR:OR) $(LRLCY)$, Schulhof said.
Related: From Taylor Swift and Beyoncé to blockchain and AI: Music ETF CEO eyes the next big thing
Schulhof highlighted the stars' massive fan bases, pointing to Swift's 284 million followers on Instagram and Beyoncé's 314 million followers on the social-media platform. "If we could feed the fan base into buying shares, that would be a powerful story," he noted.
"We're just figuring out market timings. We will be announcing [the ETFs] shortly," Schulhof added, noting that the funds will trade under the tickers "TYLR" and "BEYC."
Elsewhere in the music industry, the fund manager thinks that that rapper and entrepreneur (and Beyoncé's husband) Jay-Z's business empire also deserves attention - particularly his privately held Roc Nation company, which spans music, sports and publishing. "If you IPO Roc Nation, you're selling retail shares to shareholders," he said. "I love the idea of Jay-Z going public."
Schulhof, a former music and film industry executive, worked with Jay-Z on "Paid in Full," the 2002 movie produced by the music star. "He's a brilliant entrepreneur," Schulhof said. "He has built up an incredible empire."
-James Rogers
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(END) Dow Jones Newswires
November 23, 2024 07:38 ET (12:38 GMT)
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