Festival Bubble? How Not to Be a Victim
Joe Kennedy (President Kennedy’s father) made a fortune during the depression, and he claimed that he avoided the stock market crash of 1929 with the help of his shoeshine boy. Had the shoeshine boy learned some inside scoop from one of his high-powered clients that things were about to go sour in the market? No, quite the opposite. His shoeshine boy, financial wizard that he was, had a stock tip for him: a sure winner. That, Kennedy always claimed, was when he knew it was time to change his strategy.
That’s the story that came to mind for me when I read this nicely written and revealing piece by Grayson Haver Currin about the rise and perhaps eminent fall of the summer music festival.
Here are a couple of lines that sum up the thesis:
“During the last dozen years, music festivals in North America have undergone a total transformation that’s not only overhauled the concert business but also altered philosophies on record releases, promotional strategies and advertising-and-branding approaches at large. These events have metastasized from enormous gatherings of tens of thousands of people near major markets — the giants of the festival world — into a battalion of smaller, no-less-ambitious events in cities across the country … But there are signs that the exponential curve of festival growth is a path to an unsustainable scenario, where too many festivals overshoot talent costs and overrun the ability of fans to buy tickets at all.”
I can’t summarize the whole thing for you and you should read it yourself, but it’s a good survey of what’s going on in perhaps the healthiest part of the live music business today. But deep inside the DNA of every “boom” is the genetic code of the “bust” that follows. I believe Currin is right to anticipate this in the festival business. My hope is to add some perspective and help.
Booms tend to happen when somebody creates an innovation that really, really works. I’ve got enough gray hair to have seen the cycle go through a few times, and it’s always roughly the same:
• Breakthrough idea from some innovator
• First wave of copycats/emulators
• Massive second wave of copycats, including some “twists” on the original premise
• Mainstream interest surges
• First wave of die-offs among the weakest
• Waning of mainstream interest, flattening of growth
• Massive wave of die-offs
• Completely new, but much smaller wave of emulators, many with strengths the original didn’t have
• Consolidation of leaders
• Smaller, but stronger and more sustainable “normal”
Judging by Currin’s piece, we’re probably at the “first wave of die-offs” or “waning of mainstream interest/flattening of growth” phase here.
If that’s the case, how should people in the festival business look at the current situation? Aside from the handful of leaders whose survival is fairly certain if managed well, every festival manager should consider himself or herself at risk.
First, I’d strongly advise that you be financially cautious. Build a business model that can withstand some rough patches, because it’s likely that they’re coming. If you’re a middle-of-the-pack event, you might not be above the death line unless you’re careful about it.
Second, I’d invest heavily in differentiating yourself from others. I can’t give you any specific advice here, but if you’re drawing the same acts to a similar venue at similar prices for a similar crowd as a bunch of other shows, you’re not differentiated yourself enough to weather a storm the size of which is probably coming. “Pretty good” is good enough on the way up. It’s definitely not good enough on the way down.
Third, I’d start thinking about changing the business model significantly. You’ve got some time to innovate and add something that nobody else is doing yet, and which could be paying big dividends in a year or two. Again, I can’t help with the specifics here, but I can give you an example. Perhaps you’ve heard of TED. Before 2006, TED was a conference; a successful, expensive, elite conference, but fundamentally just a conference. In 2006, TED still had a conference (more than just the one, actually), but it also became a place where millions of people could go online to see “talks” about a range of subjects. Adding the online talks as a major new “engine” of the organization was a business model change that made a big difference. It’s not easy, but I believe that if you do the two things above, even if your music festival is quite average today, you’ve still got time to develop something new and powerful like that.
Fourth, just remember: If you do what everybody else does, you’ll get what everybody else gets. This is kinda OK when the tide is rising, but definitely not when it’s going out. Pretty soon, as Warren Buffett said, we’re going to find out who’s been swimming naked the whole time.