Music Fests Like Coachella Drive Concert Sales to New Heights

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It's as though the lamentable death of recorded music was accompanied by a kick-ass wake. Sure, label executives have had to sell their fancy homes and put their kids in public schools, but the rest of us have feasted on a musical smorgasbord.

Nothing better exemplifies this than this month's Coachella Valley Music and Arts Festival in Indio, California (3 1/2 hours west of Phoenix), the crown jewel among destination music festivals, a sort of spring break for music lovers. Three days of music, more than 150 bands, repeated over two weekends (the second week starts Friday, April 19), featuring a wonderful cross-section of the music world old and new — Red Hot Chili Peppers, Moby, Wu-Tang Clan, Social Distortion, Japandroids, Vampire Weekend, Spiritualized, Puscifer, 2 Chainz, Tame Impala, Passion Pit, and The Postal Service, to name a few.

Coachella is part of a rapid buildup in stationary music festivals, big and small, across the country and reflective of live music's explosion of growth since the millennium. Though it won't compensate for a 50 percent drop in U.S. sales of recorded music since 1999, concert ticket sales filled nearly 40 percent of that loss between 1999 and 2009.


Live Music Events Like Coachella Drive Concert Sales to New Heights

The Liquid Sol 13 Music and Arts Festival
Friday through Sunday, September 20 through 22, at Canyon Moon Ranch in Florence. A three-day pass costs $120 to $150. Visit www.liquidsolfest.com for more information.
Sound Wave Music Festival
Coming this fall. Visit www.soundwaveaz.com for more information.

During that time, North American revenue from live music tripled to $4.6 billion, up from $1.5 billion, before dipping during the recession. Last year, concert revenue was $4.3 billion versus $7 billion in music revenue (more than half of it digital, for the first time). Though downloading may have sapped music sales, it's only amplified people's desire to experience music up close and personal.

"You text. You don't call. You don't write notes. You don't pop up at your friends' house. You Skype. We're not touching each other," says rapper Murs, who founded the Paid Dues festival in Los Angeles. "Technology has separated us so much [that] it's natural for us to have this desire to come together, and [festivals] really cater to that communal nature."

It's a booming business, even for newcomers. Last year, Firefly Music Festival premièred at a racetrack in Dover, Delaware, drawing more than 30,000 patrons daily, making about $9 million in ticket sales alone. It's estimated to have injected upwards of $12 million into the Dover economy.

"There's an increased trend of multi-faceted social events, and people are more willing than ever to make sure they don't miss out on experiential, destination weekends with friends," writes Joe Reynolds, CEO of Red Frog Events, the festival's founder.

Sensing a score, the field's getting crowded. A hardly exhaustive list on Wikipedia logs 110 major festivals across the country. There are three new country fests (Flatlands in Kansas City, Taste of Country Music in the Catskills, and Faster Horses in Brooklyn), a pair each in Florida and Atlanta (Tampa's Funshine and Fort Lauderdale's Tortuga; Atlanta's Shaky Knees and Magnetic Music Fests), and a new one from the people who bring you Coachella (Grove Music Fest in Niagara-on-the-Lake, Canada).

The Phoenix area is home to more than a few: McDowell Mountain Music Festival, which featured The Shins, Les Claypool, and The Roots at the 2013 installment, and the still-mysterious Liquid Sol 13 in September at Canyon Moon Ranch. Early-bird $120 three-day tickets, but not a single band, have been announced. (Attempts to contact founder Harry Luge Jr. or others associated with the festival were unsuccessful.)

Live Nation alone put on 18 fests last year, including Jay-Z's new Made in America, Sasquatch in the Gorge in Washington, and Atlanta's Music Midtown, each of which sold out. Three of the country's biggest, most established festivals — Coachella ($47.3 million, 78,500 attendees daily for six days), Lollapalooza ($22.5 million, 100,000, three days), and Bonnaroo ($30 million, 80,000, four days) — regularly sell out early.

That's the power of an established brand. A 2010 Bloomberg story pegged Bonnaroo's profits at $12 million a year, which would explain the $5 million in charitable donations made during its first decade of existence. It's also why so many promoters are taking their shot.

When you consider the $254 million Coachella brought to the desert region around Indio (and $90 million to the city itself), you can see why a city would do whatever it can to help. Apparently, that only holds until a festival's established itself, at which point it grabs for more. (Indio proposed, then ultimately withdrew, a $4 million to $6 million ticket tax.)

"One of the obvious reasons music festivals have taken off is, a lot of people think they can make a lot of money with them, and it's not that easy," says Grayson Currin, who co-founded the Hopscotch Festival in Chapel Hill, North Carolina, now entering its fourth year. "The margins are pretty small."

Coachella founder Paul Tollet learned the way most festival promoters do — in bars and clubs. He began by booking his older brother's band The Targets. While attending Cal-Poly Pomona, Tollet hooked up with Goldenvoice founder Gary Tovar, who funded his promotion company with proceeds from pot dealing. Tovar eventually took a rap and went to jail, signing over control in the company to Tollet and his partner, Rick Van Santen, in 1991.

They moved to a Beverly Hills address to impress the booking agents and benefited from Nirvana's breakthrough, as the bands they'd promoted for years suddenly became big draws. They had plenty of cash flow and booked 175 shows a year but dug themselves deeper in debt.

Coachella was going to be the big score that pulled them out of debt. Tollet described it in an OC Weekly story last year as a "Hail Mary." He wasn't lying. They were sacked for $1 million. Goldenvoice vice president Skip Page recalls their accountant bawling loudly on the final night of the first Coachella when it became clear how much money they'd lost.

That would've been it had it not been for relationships Tollet had built with bands over the years. Headliners such as Beck, Rage Against the Machine, and Tool waited patiently for as long as five months to get paid. Employees regularly accepted checks with more bounce than a SuperBall. Tollet and Van Santen eventually sold their promotion company, Goldenvoice, to AEG Live for just enough money to pay off all the people they owed. (Tollet initially retained full control of Coachella and still holds 50 percent ownership.)

"Guys like us, we didn't make any money," says Warped Tour founder Kevin Lyman, who attended Cal Poly-Pomona with Tollet and became friends. "Paul and myself, we had to bring in partners to make it work. Paul put his heart and soul into it, but it was his heart and soul, so he had to bring in AEG to share his whole business because he believed so much in it. I had to bring in Vans as a partner to kind of keep me going until we gained traction. I know that it takes a while to be successful."

Sponsorship is the key to any festival, even if the festival tries to keep things low-key — as Goldenvoice does at Coachella, more than its sister country-themed fest, Stagecoach, in late April. It can be the difference between losing and making money, especially in the beginning, and it helps salve the wounds when the weather turns foul. (Rain is an outdoor festival promoter's greatest enemy and biggest wild card.)

Lollapalooza founder Perry Farrell tried for a while to keep corporations at bay but found sponsorships the only acceptable way to keep ticket prices down. From 2003 to 2010, music sponsorship of concerts and multi-day festivals doubled from $574 million annually to $1.17 billion, with much of that increase coming from festivals.

Of course, sponsorships don't sit on a shelf like bottles of Mountain Dew. The good ones typically go to established festivals, and sometimes not even then. Though there was a moment when Warner Brothers considered buying Paid Dues from Murs, he hasn't had any luck finding a top-of-the-bill partner for arguably the finest hip-hop festival in the country. This while securing backing from shoe companies for his solo tours.

"It's funny because I haven't been approached by anyone. People tend to shy away from hip-hop. For something that's been proven as an art form and is here to stay, so many people back away from it. It's like pulling teeth to get a sponsorship. I appreciate Monster Energy, Heineken, and some of these sponsors for us, but to get a title sponsor . . ." Murs says with a sigh. "I understand it's a risk, because it's just the nature of hip-hop culture that there are some violent aspects to it, but there's a difference between gangsta rap and what Paid Dues represents."

Even after bringing in AEG Live, it wasn't all smooth sailing for Coachella. Its 2001 return was almost sunk by its failure to land a suitable headliner. The festival received a lifeline from Farrell, who reunited Jane's Addiction for the second time to play Coachella. By 2003, it had begun to gather real steam with a headlining bill featuring Red Hot Chili Peppers, Beastie Boys, and a reunited Stooges. By 2004, it was a sellout and has remained so ever since. Even last year, when it added a second weekend, it sold out in hours, the lineup still unannounced.

"We've evolved to the point where there are a lot of artists who want to play Coachella, Bonnaroo, Lollapalooza, Austin City Limits, and because these festivals are so well established and, in some cases, sell out before they even announce the talent, that puts the promoter in a very good negotiating position," says editor Gary Bongiovanni of industry trade publication Pollstar. "They're able to get better deals, though that only works with the established festivals."

There are only so many big-name acts to anchor a big festival, and they earn good money. While the lowest-rung act at Coachella made $15,000 in 2010, headliners can command seven figures. It's turned into a nice living for some acts.

"There's a whole circuit of bands now that seems like all they do is play festivals, and it's turned into a fairly lucrative career," says Lyman, though the drop-off is steep from one shelf to the next. "It drops off very quickly. Kings of Leon, Arcade Fire, Mumford and Sons, Chili Peppers — you're at one echelon, and then [the money] does go down steeply."

For bands further down the rungs, an appearance at a big festival like Coachella carries validation and helps attract the attention of other festival promoters. Beyond that, there's the opportunity to reach an audience who might never otherwise hear your band.

"The festival scene has changed everything for musicians and bands. We're just thankful to be a part of it," says Adam Grace of alt-country act Truth & Salvage Co. "There's so many bands and so few slots to fill. It feels really good to kind of be in the club. It's so important doing it just to reach multitudes of people. We know one Bonnaroo performance in terms of fans can be worth three months of touring. So, business-wise, they're great gigs. That's why everyone wants to do them."

For fans, it's an opportunity not only to see dozens of bands (many they may not know much about) but a chance to share an experience. Like the '60s festivals that were their ultimate inspiration, these are social events as much as concerts. Many — Coachella and Country Thunder — feature campsites, encouraging groups of friends and family to go together and spend the weekend there.

"Once you go into these big stationary festivals, it's about location. It's a reason to want to be in that place," Lyman says. "I think some people try to [set] up in any parking lot just thinking it's going to work. Coachella has the hipster Palm Springs culture, and it's beautiful. I think people remember the sunset at Coachella as much as the artists sometimes."

Such considerations are exactly what attracted McDowell Mountain Music Fest founder Jon Largay to move the event to Margaret T. Hance Park for its 10th time out. The fest had been held at Largay's since-shuttered restaurant/club, the Compound Grill, the past three years, and for six years before that at WestWorld in Scottsdale.

When negotiations to return to WestWorld broke down, Largay found a more willing partner in the city of Phoenix. The city welcomed the $3 million to $4 million in revenue MMMF brought to downtown, in addition to $400,000 in taxes. From Largay's perspective, Hance Park has capacity for 10,000 — more than double the roughly 4,500 who attended each day — leaving plenty of room for people to move around and for MMMF to add those numbers down the road.

"It's along the light rail and [has] a lot more geographical access for a lot of people. So we feel we're moving in the right direction," Largay says. The March date represented a change for MMMF, as well. "We moved it up a month, and we got out of Coachella's shadow. We also lose an awful lot of fans to New Orleans, so we got away from Jazzfest and bought ourselves about 10 degrees [of cooler weather]. I think all of those elements are a positive."

Largay also secured a camping area south of the park to preserve that element of the festival. He estimates that 30 percent of his audience comes from out of state. As owner of Westpac Construction, Largay has contacts with contractors who help him pull together the festival and make it profitable with in-kind donations and sponsorships. It's allowed the nonprofit fest to donate more than $700,000 to charity the past nine years.

"It isn't any different than a job site. The circus goes in, the circus goes out. The logistics of what we do and how we do it go hand-in-hand with the role we play as a contractor," Largay says. "But without the support of our sponsors, we would not be able to do it. It would not make economic sense."

Location also is a bonus for Country Thunder, housed at spacious Canyon Moon Ranch in Florence. This is Country Thunder's 20th anniversary. In that time, it's become one of the biggest country-music festivals in the nation. It brings in nearly 80,000 people over four days and contributes about $7 million to the Arizona economy.

Besides the country bar on the grounds, Moonshine Willy's, it's also notable for a campground that features 5,000 slots that sell out, ensuring a lively communal feeling. (There also are shuttles running from area hotels.) It's this idea that Tollet was pursuing in putting Coachella so far from big metro areas — encouraging people to leave behind their daily world and wholly embrace the weekend.

Another evolving aspect of big music festivals is the wide variety of entertainment available. Besides the music, there's more to do than eat and drink yourself unconscious. Last year's Country Thunder boasted zip lines, a water slide, mechanical bulls, and hot-air balloon rides. And just because it's a country-music festival doesn't mean it's deaf to EDMs ascendance — for the second year, it had DJs spinning in a dedicated area after the mainstage shows.

"Our attention is quite a bit on auxiliary things for people to do who maybe don't care for the kind of music or the artist we have on at certain times of the day," says Country Thunder president Brian Andrews. "We're not looking to entertain 20,000. We're looking to entertain 500 here, 1,000 there, and give them something to do other than listen to music."

Of course, all the balloon rides in the world won't compensate for a crappy bill. Since taking over Country Thunder four years ago from founder Larry Barr, Andrews' company has ponied up for big-name stars Tim McGraw, Keith Urban, Alan Jackson, Willie Nelson, and Kid Rock. Last weekend's fest brought in country chart-topper Lady Antebellum as well as past Country Thunder performers Toby Keith and Eric Church.

It doesn't hurt Country Thunder's leverage that it's owned by a production company based in Nashville that has two other festivals it books.

"It is all about the acts," stresses Sound Wave founder Steve LeVine. "People have . . . only so much spendable cash. They pick and choose what they do with it, so it's important to give them quality . . . entertainment."

The lineup feels especially important to LeVine because he still hasn't finalized a Sound Wave location. The past three years, the single-day dance-music event has been held at Big Surf Waterpark in Tempe, but even if it doesn't return there, LeVine plans to keep it around a body of water in keeping with the Sound Wave name.

LeVine's been able to trade on years of performing and booking dance music to pick rising EDM stars for his bills just before they broke big. Diplo, Kaskade, and Porter Robinson headlined in previous years. And last year, two breakthrough artists — Dutch house DJ R3hab and Calvin Harris, who was still riding the success of his 2011 Rihanna single "We Found Love" — helmed the bill.

Says LeVine, "I think we wowed everybody big-time last time — so we really have to do it right this time."

This is a big year for him, and not just because it typically takes festivals three to four years to get their footing and build a brand. Now into its fourth year, Sound Wave is following its most successful iteration (just under 10,000 concert-goers). Still booking the fall lineup and choosing a venue, LeVine's feeling under the gun. He considered putting Sound Wave on this spring, but it didn't come together. Some of the pressure is because he feels this music's moment is now.

"With the music and the entertainment value, the DJ is this new iconic movement. You talk about different eras of music, and we're in the DJ era right now," LeVine says. "There are a lot of special effects. A lot of the old riders were about what was in the dressing room of a star, the classic green M&Ms or rugs; the new riders are the Cryo guns shooting into the audience, or the confetti — the visual aspect is so important as part of the show."

Between Skrillex's winning six Grammys over the past two years and Swedish House Mafia's becoming the first dance act to sell out Madison Square Garden, it's hard to ignore the style's youth culture ascendance. Then, again, we've been waiting for Europe's dance music furor to translate stateside for nearly two decades now. (Wags might even see foreboding in the fact that the phenomenally popular SHM called it quits in March after five years, with a final show at Miami's big dance-industry conference, Ultra Music Fest.)

Multimillionaire promoter Robert Sillerman's placing his bets. Sillerman made his fortune buying up regional rock promoters (and sports agencies) in the '90s and folding them into powerhouse promotion group SFX. He sold it to Clear Channel in 2000 for $4.4 billion. Over the past year, he's made deals to purchase or buy stakes in MMG and The Opium Group, which operate many of South Beach's hottest clubs. (The latter deal fell through last month.)

He's also bought up several dance promoters in what's becoming a growing bidding war as bigger promoters get wise to this underground breakthrough. The dollar amounts offered these longtime independent dance promoters are obscene, reaching between $20 million and $60 million, according to a New York Times story last spring. Last year, Live Nation bought English promoter Cream Holdings, which has staged Creamfields events around the world.

Last month, it was announced that Sillerman had bought a 75 percent stake in the Dutch firm ID&T, behind Belgium's TomorrowLand electronic music festival, the largest in the world. This will mean bringing a festival called TomorrowWorld (because of Disney's American copyrights) to some fields outside Atlanta. He also spent $50 million for the world's biggest EDM music retailer, Beatport.

"EDM is rising, there's no doubt, and a lot of the mainstream promoters now are paying a lot of attention to it," say Bongiovanni. "At one time, it was pretty much the domain of the insomniac among promoters."

Festivals like Electric Zoo (New York), Electric Forest (Rothbury, Michigan), and Electric Daisy (Las Vegas) already have taken off. The latter set a North American record for attendance at a dance festival with more than 300,000 attendees over three days. Estimates put ticket sales in excess of $20 million. The popularity of the style ramped up rates to where top DJs — such as Deadmau5, Afrojack, and Tiesto — can make more than $1 million for a festival appearance and 10 times that for a Vegas residency.

The growth of dance music and outdoor festivals mirrors trends in Europe with longer traditions. England has several historic outdoor events, such as the Reading, Leeds, and Glastonbury festivals. They have been in existence since the early '60s and '70s. The Glastonbury Festival draws more than 175,000 a day, though it took it wasn't held in 2012.

Such fervor has taken time to cross the pond. In England, live music has outsold recorded music since 2008.

"Since Coachella has gone on, there are countless festivals around the [United States], and we're now into our second generation of kids knowing how to go to festivals," says Lyman. "We didn't have that, unlike Europe, where there are third and fourth generations of kids going to festivals."

Explosive festival growth in Europe has sprouted 2,500 to 3,000 festivals yearly and 670 in England alone, a 73 percent increase since 2003. That's a lot more than here and cause for suggestions of over-saturation.

Last year, it reached a breaking point. More than a dozen major English festivals shut down (Big Chill, Sonisphere, Cloud 9), thanks to the EU's ongoing financial troubles, Olympic competition (Glastonbury cited an expected shortage of portable toilets), and a very rainy summer. Market saturation combined with the difficulty of finding acts big enough for fans to justify expending the equivalent of several hundred dollars only exacerbated the situation.

"The economics are always difficult, in part because if there isn't an established festival, you have an awful lot of competition for that talent," says Bongiovanni. "There are certain weekends, especially over the summer, where there are so many major festivals going on in Europe, and it's amazing there's enough talent to spread around through them."

In America, there's the added challenge that any independent concert promoter is competing with Live Nation and AEG Live, which have added leverage because they can promise additional gigs at area amphitheaters and clubs under their control.

"We're in a situation of David and Goliath, where the larger festival is run by very big music corporations," says MMMF's Largay. Nonetheless, Phoenix's MMMF scored a stellar lineup this year featuring the Roots, The Shins, Les Claypool, Heartless Bastards, Deer Tick, Edward Sharpe, Dr. Dog, Umphrey's McGee, and Yonder Mountain String Band.

"When you invite 40 bands to play, you don't have a total say in your ending lineup," he says, acknowledging that MMMF almost got all its top choices this year. "We're very excited with the bands that elected to play this year, to a point where we're maybe a little lucky from that standpoint. Maybe our relationships with the agents are good and maybe they understand why we're doing it."

The concert industry is about 60 percent the size of the recorded-music market in the United States. But that didn't prevent a number of bigger music festivals from shutting down during the last pew years.

Among them are South Florida's Langerado, New Jersey's All Points West, and Denver's Mile High Fest, the latter two created by Goldenvoice/AEG Live. All but Langerado failed to survive past their second year, testament to the difficulty in getting a new festival off the ground, even for established operators.

Melvin Benn, director of the UK promoters Festival Republic (Reading and Leeds, the canceled Big Chill), described it as "gambling in its crudest form," since a promoter usually promises to deliver the goods without knowing whether people will show. The bigger companies may have even more incentive lately to pull the plug than smaller promoters, who can tolerate smaller margins and a slow build.

"I don't think the climate to lose money to build a festival is out there anymore, because most of the companies that are behind these festivals are beholden to something," says Kevin Lyman. "They're beholden to a Live Nation, to their stockholders, and it's hard to justify going out there and losing a million bucks."

This has opened the door for local promoters to launch festivals in secondary and tertiary markets that don't get the biggest acts. Music festivals' sometimes sketchy economics scare off the big boys. Bongiovanni reports this is still an area of great growth.

"There are a lot of these events, and they're quite successful, but they're not looking to sell 100,000 people," the Warped Tour founder says. "Obviously, it's easier to do 20,000. The economics work a lot easier, too."

That's good news for nebulous area upstart Liquid Sol 13. And another new festival may also be on the horizon. Paid Dues was in Mesa in 2007, and Murs considered creating a satellite festival this year but couldn't get the dates to work. This year's Paid Dues was on the Saturday before Easter. Though he could've bused the performers to and from Phoenix, doing a show the day before or after — on Good Friday or Easter — just didn't make sense.

"I'd love to revisit it, and I'm still friends with the promoter in Arizona," says rapper Murs. "It's going to take some working, but it's definitely something we've talked about."

The Phoenix area's festivals are in the hands of people who have spent their life in the industry or who understand how to build something from nothing almost overnight.

"We've seen this in the late '80s and early '90s, where festivals popped up all over the place, and then they went away because it takes a lot of cash to operate [them], and there's a growing period before you see any profits," says Andrews. "So it's an investment. It's not like a grocery store, where if bananas don't sell well, you can lower the price. You have two, three, four days for your event, and then you have to wait another year to make changes."

Andrews believes the best customer service is delivering a good show, and that will pay for itself. "It's not all about the money. It's all about the people on stage and having a good time. That's how [fans] come back," he says. "When you start looking at making money and cutting corners, then people don't come back."

In the end — from the hundreds of volunteers who construct and man the events to the people who gamble their savings trying to bring a good time to the crowds that hopefully turn out for a great festival — it's a team effort.

"It does take a community to support events like [MMMF]. People get behind it, or they don't exist," Largay says. "If you want to be a cool person living in a cool city, I think [you have] a responsibility to participate."

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