THE BIG BUSINESS AT MUSIC FESTIVALS ISN'T NECESSARILY ON THE MAIN STAGE.
Music fans had no shortage of ways to amuse themselves in between pulse-pounding sets by The Black Keys and Arcade Fire at last summer's Outside Lands Music and Arts Festival in San Francisco. Oenophiles could sip a classic Cal-ifornia Chardonnay in Wine Lands or foodies could dine on gourmet burgers in the Food Truck Forest. Even Baseball fanatics had a fix, they could catch a few innings of their beloved Giants at the Stubhub-sponsored sports bar. Bad hair day? The Garnier salon offered everything from styling to cuts.
Along with a stellar musical lineup, the array of attractions throughout the fest's 80-acre grounds in beautiful Golden Gate Park helped Outside Lands draw more than 180,000 people over a three-day August weekend — the biggest-ever crowd in the event's four-year history. And with all the experiential choices, it's clear, today's music festivals are about more than music.
Though Outside Lands' generated more than $12 million in gross revenues from tickets priced from $85 to $475, ticket sales weren't nearly enough to fund a long list of operational costs ranging from talent fees and stage production to security and clean-up. As with other successful summer music festivals from Chicago's Lollapalooza to Manchester, TN's Bonnaroo, it's mutually beneficial business relationships large and small that provide the revenue to help the festival return for an encore next year — and avoid becoming a casualty like the Mile High Music Festival in Denver, or the Nateva Music and Camping Festival near Portland, ME, two live music events abruptly cancelled in 2011.
According to Rick Farman, co-founder of SuperFly Productions, which produces Outside Lands, the event's Bay Area locale — a cultural capital and a hotbed of aﬄuent, educated, tech-savvy consumers — required that, from year one, the festival truly had to be a "best-in-class, top notch experience." Fashioning Outside Lands as a celebration of the region's food and culture, as well as a showcase of top national bands, is what differentiates it from other multi-day music extravaganzas, Farman says. Another distinction is how the event works with corporate sponsors.
"We don't really do any stage signage," Farman explains. "Every corporate partner we work with has to be integrated into the event. We start with the question: What are you doing to add to the experience, and how does that tie in with the mission of your marketing or your brand?"
For StubHub, that meant creating a 60-foot by 90-foot sports bar tent — complete with bar stools, air hockey games and dozens of TVs — smack dab in the middle of the show grounds. Best known as an online source for tickets to sporting events, StubHub spent nearly its entire music business development budget on sponsorships at Outside Lands and three other summer festivals to spread the word that the website was also a resource for concert tickets.
"Our presence helped fans draw that connection," says Joellen Ferrer, StubHub's head of US Communications. "It was a perfect storm to be able to have a sports bar concept within a festival environment that's all about music to help us spread that message that we're not just about sports."
VIP treatment, tickets on layaway, hanging with the band? A concert ticket isn't just for getting past security.
By Rod O'Connor
When the hippies arrived in 1969 for Woodstock, most of the 500,000 attendees didn't even have tickets. But, as the dozens of gatecrashers arrested at last year's Lollapalooza in Chicago can attest, paid admission is a necessity for today's big-budget music festivals. And with so many ticket options available — from budget-friendly layaway plans to VIP packages for big spenders — there's really no excuse for fence hopping.
Coachella Valley Music and Arts Festival and the Stagecoach Country Music Festival, both held in the desert of Indio, Calif., 120 miles from Los Angeles, pioneered the layaway trend back in 2009, offering installment payment options for music fans just as the Great Recession was tightening its grip. Smaller festivals, such as the Summer Camp Music Festival, taking place this May a couple hours outside Chicago in Chillicothe, Il., followed suit. The Summer Camp Music Festival provides plenty of options at the other end of the spectrum as well. VIP upgrades allow attendees, most of whom camp out for the weekend on the show grounds, to pay extra (from $185 to $1,000) for everything from creature comforts like air-conditioned bathrooms to "Rock Star" packages that include backstage access to hang with bands that, this year, feature '90s stalwarts Primus and Janes Addiction. In 2011, "Lolla Lounge" passes at Chicago's Lolla-palooza — which included complimentary drinks, spa treatments and golf-cart shuttle service — sold out at $850 a pop. Both Lollapalooza and Outside Lands in San Francisco also cater to the big-money set by offering ultra-exclusive, fully catered cabanas for groups of 20 or more.
"There are certain people who wouldn't take in an experience like this unless they were offered certain amenities," says Rick Farman, one of the producers of Outside Lands, about the VIP extravagances available at most big-time music festivals. "We're just trying to make these experiences attractive to everybody."
She says the brand awareness helped Stub-Hub achieve double-digit year-over-year growth in 2011, mostly due to increased concert sales.
These kinds of win-win marketing arrangements are essential for the continued success of Milwaukee's Summerfest, which celebrates its 45th anniversary this year. During its 11-day run this July, the event known as "The Big Gig" expects to draw more than a million people to the lakefront Henry Maier Festival Park to see 12 stages worth of acts that range from the Beach Boys to Iron Maiden to local performers. But with a business model built around affordable, family-friendly ticket prices ($16 for general admission), Summerfest must broker business-to-business deals with dozens of partners with price tags costing from a few-thousand dollars to more than seven figures to cover its $32 million operating budget.
As anybody who's attended a festival since Woodstock knows, licensed vendors are an ever growing part of the festival business experience, a necessary counterbalance to the famous face onstage. Vendor fees and cuts of merchandise, food and beverage sales pump much needed revenue into promoters' coffers. Last year, to avoid having to raise ticket prices, Summerfest raised the price of beer by 50 cents to help pay for what is, by far, the largest expense for music festivals: talent fees. According to World Festival executives, an increase in entertainer costs, likely a reflection of lost revenue in album sales, necessitated the price hike.
Chris Kaskie, president of Pitchfork, the Chicago-based online music website that hosts its eponymous music festival every July in the city's Union Park, says talent represents 40 to 50 percent of its annual operating budget. "It's clearly the biggest expense," he says. "If ticket prices go up, it normally means that bands are being paid more money. Live shows are where bands are making their money these days, so that's where you're seeing increases in expenses."
A boutique festival concept that draws approximately 50,000 attendees over three days, Pitchfork's financial backend functions differently than other festivals. It operates as a separate entity from pitchfork.com, but the fact that the event is linked to a pre-existing business means there's less pressure for the festival to serve as a revenue driver. "We don't want to lose money," says Kaskie. "But profits are not our primary goal."
Hence, Pitchfork works to keep its ticket prices roughly half the cost of those for larger festivals like Outside Lands or Lollapalooza while still offering a music lineup that boasts top-tier acts. (Vampire Weekend and Feist are among this year's performers.)
"We make our decisions in terms of how we price our ticket and how we structure our prices for [everything from beer to water] based on what we feel is both fair and based on necessity," Kaskie adds. "Someone else might look at it as, how can we make more money? But for us, it's what do we need to do to accomplish our goals? We're comfortable in the realm that we are in. We don't want to get bigger for the sake of getting bigger. We want to build something great year in and year out and not mess with it."
Of course, when a music festival establishes itself as a summer institution, the entire region benefits. According to a report conducted by San Francisco University, Outside Lands had more than a $66 million economic impact on Bay Area businesses in 2011. Attendees, 72 percent of which were visitors from outside San Francisco, spent an average of $400 each on hotel stays, restaurant meals, cab and bus rides, and other expenditures.
And Summerfest brings $180 million in direct and indirect spending to Brew City, says the Visit Milwaukee website. "It definitely has an impact on our business," says Steve Magnuson, vice president of operations for Marcus Hotels. But it's not just the massive events that bring residual economic benefits to area businesses. Copper Mountain, a ski resort community 90 minutes from Denver, will reap more than just good vibes with Wanderlust, a series of hybrid yoga and music events featuring headliners Ziggy Marley and Deepak Cho-pra. The festival, which debuted in 2009 in Squaw Valley, CA, offers multiple ticket packages that range from music-only passes for $35 to multi-day programs that include lectures, seminars and mediations sessions for $99 to $475.
From a cross-promotion standpoint, bringing thousands of aﬄuent, health-conscious yoga and music fans to a stunning Rocky Mountain setting couldn't be a better fit. Erin Woods, marketing manager of the Copper Mountain Resort Association, predicts the town's 1,000 lodging units, which range from studio condos to multi-bedroom mountain home rentals, will hit 100% occupancy during Wanderlust. She hopes the exposure brings festival attendees back when ski season comes around, and turns them into year-round fans of the picturesque vacation getaway.
"It's an opportunity for us to have a successful weekend," she says. "But I think the other major benefit is some of those people will buy ski passes next winter. It's a huge benefit to us on both sides."