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Let’s Get Festive!

In the midst of a depressing, cold December, you can take comfort in the variety of upcoming music festivals that are bound to cheer you up in the summer of 2018: whether you are an electronic or indie fan or you prefer big pop music festivals, you should probably start buying your tickets as these disappear quickly. The experience of a massive music festival is quite unique in itself, and some will argue that the experience even trumps the music. What once used to be a rebellious way to spend a few days in a remote field or forest is now a trendy, Instagram-worthy pastime backed by a billion-dollar industry. Some avid music fans claim that music festivals have undergone a process of commercialization, associated with corporate sponsors and aggressive marketing. Small, edgy festivals do exist but it is the big music festival that has become a lucrative business for performers, agents, producers and promoters – and everyone wants a share of the pie.

Perhaps quite unexpectedly, music festivals are not an invention of the past few decades. An enjoyable paper about the economics of music festivals traces the phenomenon back to 11th century France, where passing travelers could enjoy the singing of troubadours in communal gatherings. The famous German composer Richard Wagner founded a music festival to showcase his work in the 19th century; he did so, among other reasons, to establish his own financial independence as to free himself from the grip of various artistic patrons. In the 1960s, the world was introduced to American music festivals such as Woodstock and the Monterey Pop Festival, attracting hundreds of thousands of people. Although these festivals are now considered historical landmarks, it is interesting to note that they were not conceived specifically for the generation of large profits.

The picture is quite different today, as many festivals are quite successful in commercial terms. The growth in the number of festivals catering to all genres (including classical, jazz and folklore music) is explained by the increasing demand of audiences, their varied tastes, and their increasing leisure time. From the supply side, music festivals can provide large profits for relatively low marginal costs and transaction costs. For example, audiences at festivals usually spend more money than the average one-time concert-goer because they purchase food and beverages for several days. Another interesting economic insight about music festivals is that much of their appeal is due to product bundling, that is, selling pure bundles to a captivated audience. Festivals also inject enormous amounts of money into the communities in which they take place; for example, in 2013, it was reported that the famous American festival Coachella brought around a quarter of a billion dollars into the Californian valley in which it takes place. Technology, not surprisingly, plays a role in the spread of massive musical venues worldwide. Even though technology makes music accessible in ways unimaginable for a listener 30 years ago, it is interesting to see how people are still drawn together to listen to a live show. Technology has also become an important part of the festival experience itself, as audiences can purchase tickets, personalize the musical program, and find their way around the venues on-site, using a festival app. Some festivals are now cashless, with transactions made with shiny wristbands that are virtually connected to social media platforms.

A prime example of the transformation of music festivals from indie venues to commercial extravaganzas is one of the most famous music festivals in the world, Lollapalooza. It was started in the US in the early 1990s by a group of musicians and managers headed by Perry Farrell, the frontman of the alternative rock band Jane’s Addiction. The festival was established amidst an exploding demand for musical venues that featured alternative rock and punk bands. It was unique amongst festivals for various reasons, most notably the fact that it was not bound to a specific location: it toured across the US, featuring other counter-culture acts beside musical performances. After a decline in popularity in the early 2000s, the festival regained attention from crowds and is currently one of the most known festivals in the world. Now based in Chicago, Lollapalooza became a brand of its own as it expanded to other countries beyond the US, such as Brazil, Germany and France. In the United States, Lollapalooza attracts around 100,000 people per festival day.

The popularity of Lollapalooza also sparked ample criticism, that the festival commercialized alternative music for profit, and that the tickets were far too expensive. In 2014, it was reported that the Illinois Attorney General was investigating the festival’s demands for a “radius clause”, preventing acts in the festival’s lineup from performing in competing venues within almost 500 kilometers of the festival, 180 days before and 90 days after the show had taken place. It was also reported that local club owners and producers had complained about this clause for years. This is, however, not a new policy in the music festival industry: exclusivity clauses are an efficient economic measure to ensure the monopoly of a festival on the attention of its audiences who live close to the venue. Whether such clauses give the opportunity for the development of local music scenes beyond the scope of a big festival is a different question.

Lastly, for the big festivals, tickets can be sold out in a matter of minutes, often priced at hundreds of dollars or euros for a few festive days. We often hear of scandals related to resales of tickets and scalping, with audiences calling for better regulatory actions regarding ticket-selling platforms. Big Festival production companies make their money from selling tickets, but also from sponsorships and selling merchandise. In fact, corporate sponsors are now a crucial player in the industry: some brands sponsor festivals for reasons like boosting their public image (a company selling alcoholic beverages, for example, would like its customer to associate its brand with a positive experience), or to simply take part in this financially lucrative opportunity. Some brands produce their own music festivals. Another notable trend is the consolidation of the industry that leaves many festivals in the hand of just a few media companies. Live Nation Entertainment, for example, produces dozens of festivals per year such as Creamfields, Lollapalooza, Bonnaroo, Lowlands, Austin City Limits Music Festival, and dozens of more (the company’s website lists 131 festivals, including 8 in the Netherlands alone!). The corporatization of music festivals has a profound effect on artists, producers and fans; as usual, it remains to consider what will happen to creativity along the way.


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