Music festivals are big business. Coachella, Lollapalooza and Bonnaroo — the three largest franchises in the U.S. — took in over $20 million in ticket sales each, contributing to what’s become a $4.3 billion live music market here, representing way more than half of the entire music industry’s total value in an age of still-declining recorded-music sales.
Festivals have become the core of the touring business, literally the key to many bands’ bottom lines, and by extension, the foundational element for the P&L of dozens of SR providers and hundreds of live-sound mixers. In fact, entire cities look to nearby festivals for chunks of their recurring annual municipal revenue: Electric Daisy Carnival brought $158 million in extra spending to cash-loving Las Vegas in 2014, according to Billboard estimates. (Add the $20 million in extra tax revenue and $132 million in estimated labor income, and the estimated economic boost tops $310 million). Outside Lands added $67 million and a reported 683 short-term jobs to San Francisco’s coffers. And Bonnaroo had a $51 million economic impact on the Nashville metropolitan area in 2012, the last time a study was conducted, according to the Nashville Tennessean, and direct local spending related to the fest hit $36 million.
At this point, I’m reminded of the guy in the gangster movie who tells the shopkeeper, “Nice little place you got here, buddy. Be a shame if something were to happen to it.” But as two stock market crashes and two recessions within ten years have graphically illustrated, it’s when things seem to be going best that you have to start thinking about the worst. Or to paraphrase über-investor Warren Buffet, when the crowd is running this way, you ought to at least be looking towards the opposite direction.
Festival Fever Abating?
There are already hints that festival fever is beginning to subside. In Europe, where the festival business has mushroomed even faster than in the U.S. in recent years, increasing 73 percent since 2003 according to the LA Weekly, over a dozen major English festivals have shut down, including Big Chill, Sonisphere and Cloud 9. U.K. weather (absolutely beastly these days) and a lingering European recession haven’t helped, but market overload and high ticket prices are also definitely major contributing factors. Data from Live Performance Australia, that country’s live-event trade organization, shows concert revenues steadily declining over the last two years, down eight percent down under in 2012. And the U.S. has lost its share of festival events, among them Langerado in South Florida, New Jersey’s All Points West and Denver’s Mile High Fest.
Music festivals as a sector is also becoming an increasingly consolidated proposition, operated by a smaller and more powerful group of companies, a list led — like much else in the upper and middle echelons of live music — by Live Nation and AEG Live. This has enabled these powerful producers to require more restrictive terms for artists and others, including market exclusivity deals that keep performers and in some cases sound professionals from working for competing producers within 300 miles and between 90 and 180 days prior to and past the event date. There are carrots used along with sticks here — both huge companies can offer their vendors more work at their many venues here and globally — but there’s little doubt that the same dynamic that’s impacted airlines, cable companies and phone providers is at work in the festival business and the larger live concert industry.
EDM — A Bright Spot, and a Sore Spot
The bright spot for music festivals has been electronic dance music — EDM. The attendance for the top 50 EDM-specific festivals, according to management consulting and advisory firm Massive Advisors, was two times the number in attendance of concerts for all other music genres combined in 2012. Live Nation said that electronic dance was its fastest-growing genre. However, as Josh Eells wrote in the New Yorker last year in an in-depth feature piece on how EDM was evolving in Las Vegas, especially at the Wynn Resort & Casino, which has 34 DJs like David Guetta and Avicii in residence, “the promoters at the Wynn acknowledge that the DJ bubble will pop. ‘It may not last longer than next year,’ [managing partner Jesse] Waits said.” The guys on the casino/club level know the scene — and the score — better than anyone, and as Eells points out, they’re already looking for the next big thing. In the U.S., EDM is faddish, in an industry and a culture that embraces fads (it has nothing to worry about in Europe) and it underlines the potential frailty of the entire festival sector.
In fact, EDM may turn around and become the festival killer. The top ranking DJ Avicii alone is racking up a pretty serious casualty count, with two deaths and 469 audience members hospitalized between his three shows in Toronto, Las Vegas and Boston, just between May and June. No one’s blaming the DJs directly, but the culture that comes with EDM is young, pharma-savvy and volatile. The trampling of a security guard at the Ultra Music Festival in Miami resulted in the city’s mayor calling for the event to be banned in the future, while last year’s Electric Zoo event in New York had its last day abruptly cancelled after two drug fatalities and a sexual assault. And that’s if Wall Street doesn’t kill EDM first: Robert F. X. Sillerman, the media mogul who bought up $1 billion worth of EDM festivals and took the package public last October, has seen the stock drop from the $13 IPO price to $7.11 per share as this issue went to press.
Dividing and Conquering
Festivals aren’t going away, but they may soon trend to smaller, more manageable events more narrowly focused on genres or lifestyles. Think Monterey Pop prior to Woodstock, when Dylan was lambasted for going electric but no one OD’d. Jim Carroll, a well-regarded music journalist in Ireland, suggested dubbing this year the “summer of the small festival.” That squares with the trend in the single-biggest revenue generator in festivals: sponsorship. Advertisers are going granular, and highly focused smaller events let them get their message across more clearly and with potentially less carnage. There will always be big festivals, but they may not be as big as they have been, or be quite as many of them. The time to think about that is before it happens.
