Editor's Letter

Editor’s Letter: A cruel summer for festivals

By | Published on Wednesday 26 September 2012

Music Festivals

I think it’s fair to say, 2012 has been a tough year for UK festivals. Bad weather, the Olympics, the recession, increased competition from festivals on mainland Europe, a lack of new bands hitting headliner status and the BBC putting on a big fat free event in London have all been blamed for adding to the strain. And the fact that there are just so many festivals to choose from shouldn’t be overlooked either.

A few music events (particularly smaller ones) dropping off the calendar each year has become a given in recent years, but this year there has been a seemingly endless stream of festival failures and misfortunes. Big Chill, Sonisphere, Rough Beats, Cloud 9, Golden Down, MFEST, Hit Factory Live and the Underage Festival all pulled the plug before their 2012 editions took place, for a variety of different reasons and some with very little notice. Bloc and Creamfields, meanwhile, both cancelled in mid flow – the former due to overcrowding and the latter because of flooding.

Bloc, too, is one of the festival companies to fall into administration this year due to debts racked up, joining All Tomorrow’s Parties, and this week Guilfest and Vince Power’s entire festival company, in that unenviable club.

And those last two, Guilfest and Music Festivals plc, both of which went into administration within 24 hours of each other this week, are perhaps the sharpest indicators of just how badly the festivals market has been hit this year. Guilfest has been a mainstay of the British festival scene for 21 years, starting out as a one day event in 1992, and arguably paving the way for the more recent boom in ‘family-friendly’ events. But one year of bad weather has left the event with debts of £300,000 it can’t repay, and founder Tony Scott has told the BBC that the only chance of bringing it back again will be to find someone with “deeper pockets” to take it over.

Music Festivals plc, meanwhile, was launched and floated on the AIM stock market just over a year ago with great fanfare, expecting strong returns from its two main festival brands – Hop Farm in Kent and Benicassim in Spain. But by May, the company’s boss, former Mean Fiddler chief Vince Power, was forced to admit to shareholders that the market was slow and things weren’t going quite as planned. In July he had to loan the company £750,000 in order to keep it afloat. And in August the company’s shares had dropped to 3p each, from 65p with the company first floated in June 2011. By the time trading was suspended last week, they’d fallen to 2p – giving the company a valuation of £200,000.

Some of the events listed above will still return next year of course, but undoubtedly the 2013 festival calendar will look very different to that of 2012. And behind the scenes, things will likely remain challenging, even if the sun decides to shine a bit more, and without the distraction of the Olympics and the accompanying competition of Radio 1’s Hackney Weekend.

Some of this year’s problems will also add extra pressure on your average festival promoter next year, especially the smaller ones. Back in July, Music Glue’s Mark Meharry predicted the Bloc debacle alone would have major implications, telling CMU: “There is going to be a significant knock-on effect [from this] and it will affect the entire live industry. Online payment gateways started getting really nervous [about live events] when Michael Jackson died, because of the scale of the risks involved with online ticketing [when events are cancelled last minute]. They began to clamp down on the risks and have recently forced ticketing companies to guarantee that funds for high-risk events are not passed to the event organisers until after the event happens”.

Which is a nightmare for smaller festival promoters, who need to access ticket money upfront for cash flow. Meharry noted that some ticketing firms handed over the money anyway, taking on the risk attached with paying such advances. While other ticketing providers let the promoters themselves take the credit card payments – by setting up ‘merchant accounts’ with their banks – so the money went straight to the festival organiser.

But: “If Bloc do not refund the money to customers in a timely manner, the payment gateway will be forced by the credit card companies to refund every customer in full and the shockwave through the financial services industry will impact all of us. In plain English, going forward this convenient loophole will close and the festival merchant accounts will be immediately frozen by payment gateways; the money tap will stop and festivals will not receive ticket revenue until after the event”.

And, of course, earlier this month Bloc’s organisers admitted that ticketbuyers’ best chance of getting their money back would indeed be to make claims through their credit card providers. Whether the impact will be as severe as Meharry predicted remains to be seen, but for smaller festival promoters losing access to upfront funds would be disastrous, and immediately give an advantage to the major players which have access to other monies or decent banking facilities.

But, for all this doom and gloom, is there a positive to be found out of all this? We Got Tickets’ Dave Newton told The Guardian this week: “Over the last three or four years there has been a growing sense that the [festival] market has become too crowded. There is a bit of auto-correction going on. Prices have accelerated too much. People are being asked to pay £100 for a ticket that five years ago would have cost £35”.

Although many factors have combined to cause the particularly high number of problems for festivals this year, some sort of collapse in the market has seemed inevitable for some time. Since the mid-90s there’s been an explosion in the number of festivals.

Festival Republic’s Melvin Benn told The Stool Pigeon earlier this year: “Through the 70s and 80s there were just two festivals: Reading and Glastonbury. Then, during the mid- to late-90s, there was quite an explosion. That is clearly retracting now. Will we go back to the 70s or 80s model? I don’t think so. Festivals have become so much part of youth culture. My feeling is in ten years’ time we will be looking at something not that dissimilar to 1997 or 1998 where there were a dozen big festivals and a number of smaller ones”.

This thought was very possibly rattling around in Benn’s head when he decided to cancel this year’s Big Chill back in January. Having originally blamed a clash with the Olympics, he admitted in July that the festival brand his company acquired in 2009 just didn’t stand out enough in the crowded marketplace any more, saying that he was not “absolutely certain where I wanted to take the festival and what I was doing with it”.

Indeed, even before Festival Republic took it on, it was always slightly telling that, for a number of years, The Big Chill always seemed to offer fantastic deals whenever other boutique festivals went under (“bring your ticket for that cancelled event and get in here extra cheap”), which always made you wonder just how much spare capacity the event had in order to absorb so many extra punters. And of course, Benn himself got ownership of the brand because the Big Chill company went under in 2009.

Back in the day, The Big Chill was a totally unique event within the festival market – a complete revelation when it first arrived – and a very welcome alternative. But it had lost that position sometime before Benn took over, as the number of festivals in general, and even just of the Big Chill model, boomed.

So, if the real problem all along was market saturation, then a few liquidations is the solution. Which sounds harsh, and is upsetting when some of the festivals we really love hit the wall, but that’s the capitalist world we’ve all chosen to live in for you. And in some of the gaps left behind, totally new, totally different festivals will emerge from the brains of the next generation of promoters, delivering new revelations. And that, I think, is the silver lining here.

Andy Malt
Editor, CMU