The Business of Music Festivals

Introduction

Festivals are a firmly established feature of the cultural landscape but they mean something different to everyone. For many it signifies the first true taste of freedom after the oppressiveness of exams and parents trying their hardest. For others it is a yearly pilgrimage to a place beyond normality and for some it is a few days of bloody awful traffic and weird noises in the distance.

It might seem crass to look at something as pure as rolling around in a field with your pals in financial terms but festivals are a big part of the economy, particularly in the UK. By looking under the financial bonnet we can assess what makes sense to keep the show on the road and what is just naked profiteering that makes for a worse experience. So how do festivals make money? 

Origins

People have been getting drunk in fields and listening to music since the beginning of time, but festivals as we know them today began in the late 1950s with the Monterey Jazz Festival. Woodstock followed suit in 1969 as did the Isle of White Festival and Glastonbury in the UK. The concept has remained the same since but everything else has changed.

Festivals in the UK

In 2019, before the pandemic messed things up, there were almost 1000 music festivals a year which collectively contributed £1.76 billion to the UK economy. The vast majority of these are community-based micro events with under 5000 attendees. Of the bigger festivals (those with a capacity of over 5000), nearly a third are owned by Live Nation or AEG Presents. There has been a widespread consolidation of the sector as the larger events companies have bought smaller festivals. We’ll see why this has happened later on. 

Festivals form a big part of a number of local economies; Parklife for example brings in £16 million a year for the surrounding area and gives £100,000+ to local charities.

The Cost

It’s bloody expensive to put on a festival, you’re effectively building a small town but where nobody wants to do any work. Woodstock is looked back on fondly as a utopian coming together of people but in reality there was a serious lack of food and loos (600 between nearly half a million people), widespread drink spiking and general chaos. Fortunately, even if it isn’t particularly groovy, festival logistics have really improved since.

It takes a lot of investment to put on a festival that is safe, sustainable, accessible and enjoyable for everyone. It is notable that whilst people who put on festivals tend to be creatives and hippies at heart, they are generally also thoroughly pragmatic and savvy individuals. Well the people who do a good job at least (you’re not on this list Billy and Ja!).

Here are some of the main costs:

• Venue – hiring a big enough field to host a festival is by no means cheap and is often a great revenue generator for landowners of farms to parks. Finsbury Park is financially self-sufficient through the £1million it generates from hosting events such as Wireless each year. There is of course a need to balance the potential revenue with the damage it can cause to turf and the impact on local residents. 

• Production – a field is a great start but it is the stages and sets that begin to make a festival feel like a festival. This requires everything from scaffolders to set designers and requires literal tonnes of components to be transported in, set up, maintained, disassembled and shipped out. 

• Acts – central to any festivals are the acts. Streaming has flipped the economics of the music industry on its head. Touring used to be a promotional exercise for the latest album but now musicians make the vast majority of their revenue from gigs. Festivals form a key component of this for the majority of artists, sometimes upwards of 50%. It is also a great way for up and coming artists to acquire new fans. 

• Staffing – festivals require a small army of people to keep the show running. Boomtown, for example only employees around 40 people full time but over the festival weekend 17,000 crew are mobilised. This involves everything from stewards and security staff to traders and technicians. 

• Sanitation – the portaloo horror story is as synonymous with UK music festivals as rubbish weather and everyone shouting “ALLAN.” Whether it is the classic building site portaloo or the ‘long drops’ of Glastonbury and Reading/Leeds, you’re guaranteed to have an unpleasant encounter with the reality of tens of thousands of people living in a field for a few days. Trying to make this experience as least bad as possible requires some solid maths (to work out how many you need), good planning (to not put them next to the food trucks) and perfect execution (to prevent a biohazard incident in Red Camping) which all costs money.

So what?

There’s a lot of cost to manage when it comes to putting on a festival and there are several ways this is managed: 

1. Spreading the risk – one of the reasons the sector has consolidated so much is that larger companies are able to spread risk across a number of festivals. If one is washed out and makes a loss as a result, a successful festival two weeks later can mitigate this. It is not uncommon for festivals to make pretty varied amounts each year which means one particularly bad year can be the end of a festival if they don’t have financial backing. 
2. Economies of scale – another reason that companies like Live Nation are so dominant is that they are able to achieve economies of scale. This works both at the artist level (they are able to offer musicians multiple shows which makes them incredibly expensive to book for independent festivals) and from a logistics perspective – contracts are worth far more meaning they hold more negotiating power with suppliers. 
3. Cancellation insurance – insurance is hugely important to the sector given the chance of an event not happening. Unfortunately many festivals were unable to claim due to Covid which has made the past couple of years incredibly tough for both the organisers and their supply chains, who are heavily dependent on festivals going ahead.

How do festivals make money?

So now that we’ve covered the costs involved in putting a festival on, how do festivals actually go about making money to hopefully turn a profit? 

• Ticket sales – the primary way festivals generate revenue is by selling tickets. They are often tiered in price based on release date in order to encourage early purchases. They will also often offer a range of luxury experiences and add-ons, as you’d expect with any experience. 

• Sponsorship – most festivals will have some sponsors that pay to have their brand associated with it but it is a fine line to tread. It is the most obvious example of a festival ‘selling out’ so some such as Glastonbury only have a handful of discreet sponsors and others embrace it, partnering with brands their punters will appreciate. You don’t hear many people at Wilderness complaining about the Veuve Clicquot or Patrón tents. 

• Vendors – unsurprisingly huge crowds of drunken people get pretty hungry and so the opportunity to sell them the drinks in the first place and the inevitable burritos/burgers/vegan fried chicken is pretty lucrative. The biggest bars at the biggest festivals can clear millions of pounds a day and the organisers will generally take a 30-35% cut. 

The Bottom Line

So as we’ve seen festivals are expensive and logistically challenging to put on with huge levels of concentration risk as you are reliant on a few days of trading to compensate for months of planning and sunk costs with contractors.

Are festivals profitable?

The answer can range anywhere from not in the slightest, resulting in massive losses to fairly profitable but not on a consistent basis. Of course there are examples of profiteering and price gouging where short term gains probably are large but there are so many festivals these days that the ones that take advantage of their customers don’t fare particularly well. The majority of festivals are run by people who love music and have the sole aim of putting on a great show. 

Note: I’m being charitable here and suggesting that charging £8 for a can of beer isn’t taking advantage. Prices are always going to be higher for the reasons listed above and well, you’ve got a captive market.

Conclusion

We often draw a distinction between art and science, believing you are either someone who understands words and ideas or someone who understands numbers and the mechanics of things. There is even a snootiness between the supposedly different groups of people, seeing the other as hapless hippies or buttoned up squares respectively. 

Festivals are beautiful because they are where art and science meet in the shared experience of the crowd. Enough loos and effective crowd management are just as important as mind-blowing acts on stage to a good experience. Music transcends the hours of toil put in by musicians and everyone involved in the logistics of creating that moment, but that doesn’t mean we should forget it.

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