With over half of the 60 million+ concert tickets sold in the U.S. each year going to music festivals, it’s no surprise the vast attention they receive from the concert industry, advertisers and fans alike. The modern U.S. music festival start to grow in the 2000’s and exponentially over the past 5 years or so. At first,festivals came on line at a measured rate with names like Coachella, Bonnaroo, and Outside Lands.The model was simple: offer a whole bunch of music at a low price to thousands of like-minded music fans in a socially rich environment at a one of kind location.And as the fans grabbed on, the music industry and advertisers grabbed on even faster. For the fans, they were allured by a multi-day event with their favorite artists and the ability to dive deep into music discovery with countless other bands and stages to search through, not to mention the sideshows and camping. And the timing was perfect as fans began to consume their daily music in a similar way through digital streaming and subscription services. A whole bunch of music for a low price. It was all symbiotic. For the industry, the promoters and artists made more money than touring shows that have a much higher expense ratio. And the sponsors hit their target dead on with a single rifle shot as compared to the high risk proposition of shot-gun advertising.
For festival producers who survived multi-million losses incurred in launching these events, the pay days finally camewith hundreds of thousands of fans and tens of millions in revenue.And with this success, the segment exploded over the past half dozen years with festivals popping up everywhere. Every municipality, real estatedeveloper, promoter and producer who conceived the idea to build a new festival was convinced that they too would strike it rich. Some have done especially well, others have not.In fact, over the past year alone almost a dozen festivals in multiple genres have shuttered, reported significant drops in revenue and/or attendance, or just couldn’t lift at all. So what’s happening to the golden goose?
Let’s step back.The festival concept was ultimately a brand play.Unlike traditional concerts which relied on the headliner’s ability to draw, the concept was to build the festival brand itself and become less dependent on any single headliner to drive the business and, in turn, keep costs down. The high number of lower priced acts on the bill would cut across enough genres and fan bases to get the volume necessary to win. Although that certainly has been the case with a handful of festivals, it’s rare.Even for the iconic brands, it became eminently clear that they still needed a few giant headliners and lots of exhibits and attractions on site to draw the crowds. The costs started to sky rocket.Someone had to pay and the model pivoted a bit: a whole bunch of music and discovery at a fair value, but not necessarily a low price. Some had enough traction to push the price since they had built their brands, strong market positions, a dedicated fan base, and often limited competition. Others, not so much. And, it’s not simply about the headliners, but satiating the demand of a fan base that constantly wants something new. In fact, we have seen some big brands suffer declines even with giant headliners on the bill that just weren’t fresh enough.
For new market entries who have struggled, it reflects the failure in due diligence and building the model right from the start. As music festival consultants, we often see ego or excitement take over with new players who overestimate sales and underestimate costs or the time requisite to build the brand and turnstiles. Or somehow they believe that they can penetrate a market that is saturated with other concert venues or nearby festivals that vie over the same artists and fans. And just because there are a whole bunch of people living in the region doesn’t mean they will come. The market may simply be soft.
The festival model is here to stay as it should. At the same time, it is becoming harder for new players to build and sustain these monster events and what once was a field dominated by independents, is now fertile territory for only a handful of well positioned and financed players who can pay the bills and keep it fresh.