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A live music festival at night with lights blaring out over a sea of people.
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Don't stop the music

Music festivals are big business, with over US$5.5b generated by the industry in 2019. Billions of people attend them each year, but what exactly are the economics behind them?

Imagine turning your Spotify ($SPOT) top listens into a music festival. You don’t have to imagine the poster, see yours here. Go on, we’ll wait. Now you’re looking at it, how much would you pay to go to such a gig? Maybe you’re an indie darling and those artists would be fairly low cost, but the reality is that festivals aren’t cheap. 

Music festivals have come a long way from being a place for counterculture. Just look at Glastonbury, which began as a gathering of 1,500 free-loving people where tickets cost just £1 and included free milk. It is now one of the largest music festivals in the world, hosting the likes of Rolling Stones, David Bowie and Beyoncé and costing over £250 to attend. With no free milk. 

So despite a near 25,000% increase in price, are music festivals still worth it? According to economist Alan Krueger, you’re actually getting a bargain. This is because concert ticket prices for solo artists have also exploded.

Even just this year, acts like Lady Gaga and Harry Styles are on world tours with tickets often in excess of US$100. There’s been a 38% increase in ticket sales since 2019, benefitting listed entertainment companies like Live Nation Entertainment ($LVNY) and Eventbrite ($EB). There used to be more companies like Ticketmaster and SFX Entertainment, the brand behind EDM festival Tomorrowland. But both have been acquired by Live Nation Entertainment in the last decade. 

Back to ticket prices, the reason why music festival prices can be cheaper is because artists can share the costs, and with multiple acts across the stage it’s an elegant way to improve the productivity of performers. But this doesn’t mean festivals are cash cows. Costs have risen massively over time, particularly with increased logistical challenges. On top of that you have artists' fees. Ariana Grande charged $8m to perform at Coachella in 2019, a fee equivalent to over 18k tickets. 

So how much would your Spotify festival cost? Well, hopefully you get a corporate sponsor like Coca-Cola ($KO) and American Express ($AXP) – they’ve been known to sponsor festivals. But maybe you don’t even need a top performing artist. Maybe all you need is to present a new experience, which is exactly what consumers are looking for