The enormous success of Taylor Swift’s Eras Tour shows that entertainment, in particular live music, can significantly affect the economy. A typical concert-goer spends a considerable amount of money in the local economy on tickets, merchandise, food, drinks and travel expenses. This spending is multiplied in several ways as the fans travel from one city to another to see the show. This has a positive impact on the local economy, generating jobs and increasing the demand for goods and services.

In the late nineteenth century, falling working hours, rising disposable income, urbanization and rapidly expanding transport networks gave rise to a boom in demand for live entertainment. Process innovations and changes in business organization made it possible to industrialize this form of entertainment into the first instance of automated, standardized mass-entertainment that integrated national entertainment markets into a global industry.

Cinema emerged in most Western countries at the turn of the twentieth century as an all-pervasive form of industrialized entertainment. Every year billions of cinema-tickets were sold, and the proportion of consumers that went to a movie theatre on a regular basis grew substantially (Bakker 2001a).

This massive growth in entertainment output disproved the notions of some economists that productivity growth in certain service industries is inherently impossible. It also proved that, with the right incentives, even a comparatively old technology can generate substantial increases in production capacity. A key incentive was the shift from outright sales to film rental. This shifted the revenue streams from the film producers to the cinema owners and increased the incentive to increase quality.