Part 2: Clash of Titans

By Dan Ruby

Every year brings new launches in the festival business, an economic sector known for attracting more than its share of dreamers. But the level of activity this year is unprecedented, with major bets being laid by hard-nosed business players.

Still, considering the slowing U.S. economy, you have to wonder what's really going on here. Is there truly a market for all these new festivals? How can we explain the frenzy in festival launches?

The most obvious factor is the rapid consolidation of the festival market. What was once a fragmented industry, with individual for-profit and non-profit companies owning one or a small number of festival events, is rapidly evolving into a competitive alignment of top-tier festivals controlled by a few producer alliances.

While the festival business was once sheltered from the overall music industry, the growing importance of touring has raised the profile of festivals. For bookers and promoters, festival venues represent a fast-growing slice of the live music market, a recognition of the relative economy of festival versus concert attendance.

I say relative because the cost to the festival attendee is also soaring. At Coachella, fans pay $90 a day or $265 for the weekend for a general admission ticket. VIP tickets come in around $600 for most big-time events.

The two big kahunas in the concert industry, Live Nation and AEG Live, are now slugging it out to own key properties in the festival market. So far, AEG has been getting the better of it.

The company's home-grown festival production unit, Goldenvoice Productions, is responsible for Coachella, Stagecoach, a country music festival launched last year, and the new All Points West.

AEG Live is also partnered with producer Madison House Presents on the other big launch of 2008, Rothbury Music Festival. And it will have another big one if the resituated Mile High Festival comes off as expected.

AEG Live is also partnered with producer Madison House Presents on the other big launch of 2008, Rothbury Music Festival. And it will have another big one if the resituated Mile High Festival comes off as expected.

Live Nation's big play for 2008, Vineland, itself a substitute for an earlier planned Philadelphia festival, failed to come off as planned. It would have been the first U.S. festival for British promoter Melvin Benn, whose Festival Republic company is now majority owned by Live Nation. We'll see how it plays out in 2009.

Live Nation also has a new play in the touring festival market, partnering with the creators of Van's Warped Tour to create The Rockstar Energy Mayhem Festival, which will play in 30 Live Nation amphitheaters across North America this summer.

Among festivals, Live Nation got Sasquatch when it bought House of Blues. There are published reports that the company is seeking to produce an all-new event in Pemberton BC for the western Canada market.

So even though Vineland misfired this year, don't discount Live Nation's designs on the marketplace. Gaining three or four major festival footholds is key to the company's vertical integration strategy, in which it controls booking rights for both venues and artists--something like the old Hollywood studio model where a few single companies owned both product and distribution.

In most cases, one company cannot own it all, so they commonly seek out partnerships with other production companies that bring local connections or genre expertise. Thus we see players such as jam market biggie Madison House Presents teaming with AEG for Rothbury, or San Francisco powerhouse Another Planet Entertainment aligning with Bonnaroo's Superfly for Outer Lands. (Another Planet is the three-year-old startup from key executives of the old Bill Graham Presents formed after Clear Channel--now Live Nation--bought that venerable production company.)

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