Coachella ticket sales went live on June 16th of this year–a full 10 months before the festival is set to begin in 2024–with tickets selling out in just a few hours. With the COVID pandemic halting all live concerts and events, concert goers have been more ready than ever to get back to festivals and celebrate their communal love of music. According to the IMS Business Report, since 2022, the dance music industry has grown by 34%, with a global valuation of $11.3 billion (a 16% net increase compared to pre-pandemic levels) (Sunkel 2023). Revenues in this sector have increased by 65% to $4.1 billion and the EDM genre’s representation of the festival circuit has also risen from 6% to 39% of the total share of festival bookings (Sunkel 2023). 

More than 32 million people attend music festivals each year and since the pandemic, there’s been a shift from a material to “experiential economy.” In a 2019 Deloitte survey of millennials (the demographic that comprises 45% of the total amount of people that go to music festivals), 57% said they prioritize traveling over owning a home (Gajanan 2019). With the hedonistic mindset that most people have absorbed in recent years, this sector is generating money not just for the artists performing, but the corporations (like Live Nation) that run these events and the regions that host these venues. The large music conglomerates have made these festivals into household brand names with cultural cache, even with the unique business model of each concert.   

To track the history of the “music festival,” one could pinpoint its origins in Ancient Greece with events hosting music, arts, and sports. The idea of modern music festivals debuted at Woodstock in 1969 with its DIY, community spirit (Gajanan 2019). People with the same music taste would come together, creating a driving force of attendance before these became profitable. Nowadays, the biggest ticket festivals span the entire country: Coachella, Lollapalooza, Outside Lands, and Governor’s Ball. Not only does the US have incredible venues, but Austria’s Donauinselfest boasted 3 million attendees in 2015–the world’s largest music festival to date (Gajanan 2019). In the words of Carlos Chirinos, a professor of clinical music and global health at NYU, these festivals have evolved from “communions of culture” into mega cultural phenomena. Brands have been built off of these events with options to connect personally with artists through VIP experiences and attracting firms that want to reach out to loyal customers in an authentic way (Bloomberg Profession 2016). This idea reflects the capitalist mindset perfectly: attendees are being provided with experiences and opportunities they already seek, and big data, advanced customer profiles, attendee feedback, and analysis have allowed corporations to tailor their events to match the brand message and target preferred customer dynamics (Bloomberg Profession 2016). 

The best example of this entrepreneurialism facilitating the shift to an “experiential economy” is Live Nation, a large live music corporation. Live Nation is the owner of the promoter Goldenvoice, behind the Bonnaroo (buying full control in 2019), Lollapalooza, and Austin City Limits festivals, and also helps promote Coachella, Firefly, and Stagecoach. With their conglomeration of these many festivals, they’ve even created a “Festival Passport,” giving audiences access to more than 100 festivals starting at $999 (Gajanan 2019). This increases the appeal of music festivals even more, decreasing the hassle and logistical expense of not only individual concerts, but festivals in general. Plus, with the large organizational capacity of Live Nation, they are able to control operating costs and limit insurance risks (i.e. bad weather) and manage ticket sales (especially with their recent purchase of TicketMaster) (Gajanan 2019). By utilizing design campaigns, their artist-brand collaborations, like Absolut Vodka X Lady Gaga, drive customers from festivals to purchase decisions (Gajanan 2019). Their overarching rule as venue operator, ticket seller, and promoter, increased Live Nation’s revenue by 166%, as reported by the International Music Summit in Ibiza.  

To start with one of the most notorious music festivals, Coachella grossed $114.6 million in 2017 and was the first major recurring festival franchise to earn more than $100 million (Gajanan 2019). Their profit margin was 38% in 2019, compared to the average large festival only generating 10-25% and smaller festivals making 5-10% profit (Brecht 2023). Festivals spanning two weekends generate more money regardless of lineup popularity, thanks to ticket sales increasing revenue at a greater rate than venue costs increase expenses (Brecht 2023). Since their first festival in 1999, attendance has increased by 500% (Branding LA 2018). Surprisingly, they lost $1 million their first year and only returned in 2001 when Goldenvoice invested in the festival to keep it afloat. Now, Coachella is the social event of the season. With graphic design branding of palm trees, making them synonymous with Palm Springs and Indio Valley, the creation of an archetype of a “coachella attendee” was created, amassing many celebrity audience members and influencer partnerships (Branding LA 2018). Plus, with the internet so readily accessible, Coachella live streams their concerts to reach out to music lovers everywhere who couldn’t attend the event or fork over hundreds of dollars to pay for a ticket, with VIP access reaching above $1,000 (Juliano 2023). Not only are audience members given an experience-of-a-lifetime (surely at a price), but headliners are compensated around $4 million per weekend, with bigger artists, like Beyonce, also signing documentary deals with gross revenues around $20 million (Trapital 2023). 

Another big name festival–Lollapalooza in Chicago–generated roughly $335.4 million for its host city’s economy in 2022 (Angelou Economics 2023: 3). Food and beverage contributed $80.8 million, hotels carried $48.5 million, and entertainment filled in $15.3 million (Angelou Economics 2023: 7).With over 100,000 music fans per day in the four day run, this festival produced $4.2 million in amusement tax revenue for Chicago’s economy. Employing thousands of workers each year, festival operations accounted for more than $65.2 million of the festival’s total economic impact in 2022 (Angelou Economics 2023: 8).     

As shown through Lollapalooza, an interesting draw to music festivals is their impact not only on the economy of the venue’s city, but on the artists and cultures of the area as well. In the 2007 Glastonbury festival, the average attendee spent $180 on site and roughly the same off-site in the local area. With the 2017 festival, over $8 million was paid to local companies in order to supply the festival. Plus, each year, the festival raises $1.35 million for a litter of charities around the world (Burdett 2017). The 450,000 people who attend Austin City Limits (ACL) in Austin, Texas want to celebrate the local community and artists that are featured during this two-weekend extravaganza (Brecht 2023). In order to hone in on the loyal fanbase, ACL utilizes social media and word-of-mouth marketing to attract a population who both want to hear their favorite bands play, but also might not venture out to other festivals. Going even further than ACL and Glastonbury, Woodstock in 1969 had a budget around $500,000 for a three-day festival, hosting around 100,000 people paying only $5 each in order to create a music utopia (Grams 2009). In the end, they had their 100,000 attendees, but the ticket booths didn’t come to fruition due to a venue change–shifting the model to a free concert–and it took the creators of Woodstock 11 years to get out of debt (Grams 2009)! 

Not all “free” festivals are unprofitable, however. Burning Man, a festival colloquially associated with techy millennials and “free-love” Gen Xers, is a “commer-free event.” Essentially, only coffee and ice are sold at the venue in Black Rock, Nevada, corporate sponsors are shunned, and each goer has to bring their own amenities and “leave no trace” when they leave. Like Glastonbury, the non-profit, the Burning Man Project, hosts the actual event where 70,000 people attend through the end of Labor Day weekend. The median income of a “Burner” was around $60,000 in 2017, so in theory, the festival is accessible for everyone. However, tickets cost $425 per person and 68% of Burners spent $1000-$5000 on tickets, supplies, travel, and other costs (Huddleston 2018). What’s more, in 2015, the festival took in $36.9 billion in revenue (nearly all from ticket sales), but the non-profit spent $35.8 billion to host the event–a long ways away from the principle of “decommodification” that founder Larry Harvey addressed in his 2004 book about Burning Man. 

Throughout this article, successful music festivals (either by monetary standards or through cultural clout) have been laid out and dissected. Now, for the opposite: Fyre Festival. This festival, with a block-buster Netflix documentary about the disaster, took place in April of 2017. The idea: bring Coachella to a tropical paradise. Roughly 5,000 people spent hundreds to thousands of dollars for tickets and plane flights to the Bahamas after hearing about this festival through a Coachella-esq business model of cultural cache, implemented to attract influencers and models (like Kendall Jenner who reportedly paid $250,000 to promote the festival) (Huddleston 2019). However, once attendees arrived, they found FEMA tents (instead of luxury accommodations), few basic necessities (like food, water, and electricity), and only one group of local musicians ever taking stage. Creator of Fyre Fest, Billy McFarland, defrauded over 100 investors out of more than $26 million dollars, and a $100 million class action lawsuit was filed in May 2017 by ticket holders for lack of refunds (Huddleston 2018). 

It’s normal for festivals to lose money the first few years of operation because of the high fixed costs like land, as venues and cultural phenomena take a while to build. However, if the investors learned anything from Fyre Festival, it’s that there are concrete steps a music festival can take to be a money-maker in the long-run, while ensuring the safety and enjoyment of the audience. With an annual growth of 5.03% and revenue projected to reach $30.14 billion in 2023 and $36.71 billion in 2027, the live music sector is blowing up (excuse the Fyre Fest metaphor) (Brecht 2023). There are ample ways to make profit, like charging for VIP versus GA tickets, sponsorships, merchandise, and concession fees, even creating online databases for partners to access the emails of concert goers to directly advertise to them in the future. Live music is increasing in monetary and cultural clout, but it could even help diversify investor’s stock portfolios with a good risk profile coupled with good cash flow. There’s harmony in diversity when it comes to concert line-ups and investments. With that said, let’s “chella-brate” good music and good times while chasing sunsets and great tunes! 

Sources:

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Bloomberg. (2017, April 5). The business of Music Festivals | Insights | bloomberg professional  services. Bloomberg.com. https://www.bloomberg.com/professional/blog/business-music-festivals/ 

Brecht, R. M. (2023, September 6). Music Festival Economics. TSE Entertainment. https://tseentertainment.com/music-festival-economics/#:~:text=Profitability%20of%20a%20music%20festival,5%20to%2010%20percent%20range 

Burdett, M. (2017, November 30). Case study: Glastonbury Festival. GeographyCaseStudy.Com. https://www.geographycasestudy.com/case-study-glastonbury-festival/#Costs_and_benefits 

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Gajanan, M. (2019, August 14). How music festivals became such a big business. Time. https://time.com/5651255/business-of-music-festivals/ 

Grams, C. (2009, August 16). Free and the economics of Woodstock. Dark Matter Matters. https://chrisgrams.com/2009/08/16/free-and-the-economics-of-woodstock/ 

Huddleston , T. (2018, September 4). How burning man’s founders created a commerce-free economy for 70,000 people. CNBC. https://www.cnbc.com/2018/08/29/why-you-cant-buy-food-or-supplies-at-burning-man-2018.html?&qsearchterm=burning+man 

Huddleston , T. (2019, August 22). Fyre Festival: How a 25-year-old scammed investors out of $26 million. CNBC. https://www.cnbc.com/2019/08/18/how-fyre-festivals-organizer-scammed-investors-out-of-26-million.html 

Juliano, M. (2023, April 20). Coachella 2024: Tickets, dates & everything you need to know. Time Out Los Angeles.   https://www.timeout.com/los-angeles/music/coachella#:~:text=How%20much%20are%20Coachella%20tickets,cost%20you%20%241%2C119%20to%20%241%2C399 

Mulligan, M. (2023). The IMS Business Report 2023. IMS Ibiza. https://mcusercontent.com/77ec3e3fadbb08e9f7ddbfb93/files/b95f93cc-316c-433d-9f36-6735c4fc17c7/MIDiA_IMS_Business_Report.pdf 

Polsky, G. (2022, November 28). Festival production: Takeaways from successful music festivals. TSE Entertainment. https://tseentertainment.com/festival-production-takeaways-from-successful-music-festivals/ 

Sunkel, C. (2023, April 28). Global dance music industry grows 34% in 2022, eclipsing pre ... - edm.com. GLOBAL DANCE MUSIC INDUSTRY GROWS 34% IN 2022, ECLIPSING PRE-PANDEMIC HIGHS: IMS BUSINESS REPORT. https://edm.com/industry/ims-business-report-2023-electronic-music-industry-worth-11-billion 

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