Zoe Mitchell on the Berklee College of Music – Music Business Journal recently wrote Over 32 million people in the US attend at least one music festival a year and more often than not travel 600 miles on average to get there. While the recorded music industry is in turmoil, experiencing live music is at a premium and sellers like Live Nation or SFX Entertainment Live are expanding into new sub genres like Electronic Dance Music (EDM) while brands like Anheuser-Busch, PepsiCo, Coca-Cola, Heineken, and Miller Coors, ranked from the most to the least active, recognize the medium for its branding potential among the millennial generation.
Some of the bigger festivals in the U.S. by 2014 attendance were Coachella, in Indio, California, with 579,000; Austin City Limits, in Austin, Texas, 450,000; EDC Las Vegas 400,000; Lollapalooza, in Chicago, 325,000; and Ultra in Miami with 165,000. ‘Social’ here means putting boots on the field and few events anywhere can attract such massive audiences. Festival fans are evenly distributed: the age group 18-24, represents 24% of attendances; 25-34, 22%, and 35-49, 28%; the 50+ group, at 15%, tails off some. The medium has its mega fans too, with one in ten attending three or more festivals a year and one in five attending two. Two-thirds, though, will only make it to one festival, and for good reason: last year, passes at Coachella started at $375, early bird passes at Austin at $225 (artists included Foo Fighters, Drake, and the Strokes), and at Lollapalooza early bird tickets paid a minimum of $250 (artists included Paul McCartney, Metallica, and Sam Smith).
Coachella and Lollapalooza, two summer festivals, are among the highest top grossing festivals in the world. Sitting on a lawn chair to listen to Outkast perform 100 yards away may not be as rare an event these days as buying a $9.99 digital album. Last year Coachella grossed over $78.3 million dollars, breaking the Billboard Boxscore record for a third year in a row. Coachella’s ticket prices cover a wide range. The general admission price of $375 does not include travel, hotel or food expenses, but prices can go up to $7,000 for a Safari Tent experience with access to VIP areas, a tent with A/C and the option of multiple queen sized beds. Price elasticity of demand, and revenue maximization techniques, do well selling concert and festival tickets (the recorded music industry, instead, came late to variable pricing and then only scratched the surface with Apple’s three-tier price system for iTunes).
Brands and Headliners
A festival generates revenue through ticket sales and sponsorships. Wallets that have long hibernated suddenly spring open up in the summer. The weather helps, and listeners are looking for more than a play button. They want to experience the freedom of the outdoors and a face-to-face community with less regard for electronic devices.
Brands try to latch on and connect with the fans. As noted above, the top five most active sponsors of music festivals in 2014 were drink companies. Says Dr. Andrew Bengry-Howell, a visiting fellow from the University of Bath, U.K.: “[These days], people associate the brand with [the] experience.” Often, there is a particular symbiosis between festivals goers and sponsors; a drink that is overpriced will be purchased without ill will if the attendee knows that the sponsor is responsible for the event and its possible production next year.
The success of the EDC Festival in Las Vegas and the Ultra Music Festival in Miami show that EDM festivals are gaining a stronger fan base—and that vodka, not beer, is becoming the drink of choice for the festival sellers there. Smirnoff recently became the official sponsor of twenty-six Live Nation EDM festivals across the country. This came after an earlier relationship with THUMP, an EDM culture channel, and other EDM festivals owned by SFX. Smirnoff intends to gain popularity by following up with house parties after the concert with headliners and well-known DJs in attendance, another boon for fans.
When nearly a half of all attendees are part of the millennial generation of 18-34s, social media affords more opportunity for exposure. Experiences are retold, a broader audience of followers is engaged, and value is added to the event because of its broader reach. Though there is undoubtedly a second wind of interest from social media that might bring in more marketing contracts and opportunities for festival organizers, headliners still matter. This past March, Coachella brought Alabama Shakes, Flying Lotus, Steely Dan, Tame Impala, and Drake. This year’s lineup at Bonnaroo included Billy Joel, Mumford and Sons, Deadmau5, Kendrick Lamar, Alabama Shakes, Childish Gambino, and D’Angelo. For July and August, Lollapalooza has lined up Paul McCartney, Metallica, Florence + the Machine, Sam Smith, A$AP Rocky, Tame Impala, Alabama Shakes. In each of these shows, of course, more than one hundred lesser know acts typically follow.
When promoters choose a headliner they want chart toppers. Yet the runaway success of music festivals is prompting a new question: are there enough acts that can handle the big festival stages? Harvey Goldsmith, the well-known concert promoter that organized Live Aid in 1985 and was knighted for his service to the U.K. industry, thinks there aren’t. He has said that between May and September of last year there were about 900 festivals in the UK. The market is now oversaturated at a time when artists are not developed by their labels as they used to be. He implies too that the buying music habits of the vast majority of festival goers are not supporting long-term acts as tastes are fickle, so headliners will continue to be in short supply and concert promoters will turn to older legacy acts like Paul McCartney, Metallica, Stevie Wonder, and U2. In fact, Goldsmith points out that the day after the top music festivals are over is the day when booking agents start searching and contacting potential artists for next year’s festival lineup; a bidding war then ensues that pushes the prices of megastars up. The same artists may play in more than one festival and overall festival ticket sales suffer.
Long-term, the U.S. may face much the same problems as the U.K., i.e. more fragmentation of consumer tastes, likely less label A&R to develop headliners, and more festivals to supply the dwindling cadres of headliner acts. Seen from this perspective, the current boom in music festival business may run into a natural roadblock. Festival promoters can be expected to depend more on sponsorships than they do today and the pressure to consolidate different festivals into one will mount (for instance, in EDM the EDC of Las Vegas and the Ultra in Miami).
In the meantime, technology may afford new opportunities for live streaming. The luxury of staying at home and having a front row seat is alluring and can bring a newer audience to music festivals. Chris Roach, head of business development for Goldenvoice, a subsidiary of AEG Digital Media and a company that is in the business of streaming festivals live, told Pollstar that “[we’ve] seen the average view time is over an hour in one sitting… [that’s] a pretty engaged eyeball for an advertiser to put their dollar against.” Indeed, if paying for an entire festival is too expensive or time is at a premium, this alternative could add an extra stream of revenue and help defray the costs of signing quality acts.
Ultimately, the competitive advantage of music festivals is that they are the purveyor of a unique musical and social experience. They should continue to thrive in a world where a shared face-to-face experience with music is becoming a scarce commodity. Our listening habits have changed and we tend to be much more self-contained in the act than in the days of radio, the jukebox, and stereo. Headphones, it must be remembered, were first introduced attached to an electronic device when Sony debuted the Walkman in the late 1970s. Moreover, the chance to interact with today’s technology at a festival and get to know like-minded fans outside of our immediate circle has never been as easy. All of this bodes well for the future. It is a great problem to have when the only downside of this booming business is that musicians have to work harder to supply more talent and meet a rising demand.