Consolidation by AEG Live and Live Nation drives up prices and profits, but also improves facilities
When music festivals first started, gatherings at Woodstock in the US, and the UK's Isle of Wight and Glastonbury were countercultural affairs imbued with a hippy spirit.
Four decades on, the business of staging outdoor concerts is a multibillion-dollar industry dominated by two huge companies — Live Nation and AEG Live.
In many cases the artists have not changed, but the economics have.
Bob Dylan, The Who, Neil Young, The Rolling Stones and Paul McCartney all appeared at 1960s and 1970s festivals, which were often free to attend. In October, all of those ageing rockers will appear at the Coachella Valley Music & Arts Festival in Indio, California, which charges $399 for a three-day ticket.
Coachella is produced by Goldenvoice, a division of AEG Live, which is ultimately owned by billionaire Philip Anschutz. According to Billboard, it sold 198,000 tickets in 2015, raking in $84.3m, a new global record for a festival.
The four next highest attended festivals in the US are owned by Live Nation, which has a market capitalisation of $4.6bn and billionaire John Malone's Liberty Media as its largest shareholder.
Glastonbury, which is expected to draw an estimated 175,000 people next weekend, remains independent and family run. But the world's largest festival held in a green field is very much the exception.
Over the past decade, Live Nation and AEG Live have acquired dozens of festivals across the world between them, including the former's purchase of Summer Sonic in Tokyo and the Reading and Leeds festivals in the UK, and the latter's acquisition of a controlling share in the Hangout Music Festival in Alabama last year.
Their business model has been to turn high-risk, weather-dependent propositions into sustainable and profitable ventures. Able to draw the biggest artists to far-flung venues, they have the means to provide thousands of people with food, facilities and security over several days.
"We're not a Johnny-come-lately American company that is just discovering festivals," says Joe Berchtold, Live Nation's chief operating officer. "It's been the linchpin of our concert business for the past 10 to 15 years."
AEG Live did not respond to requests for comment.
The growing dominance of the two companies has had profound consequences for artists, music lovers and rival festivals.
"Some ask whether corporatisation is a good thing or a bad thing," says Chris Carey of Media Insight Consulting, a research group. "The answer is, it depends. In some ways, corporatisation means you're more efficient. You get better negotiating positions. You can do global deals to the benefit of small events."
But the consolidation also runs the risk of squeezing creativity out of the sector. Describing the impact of Live Nation and AEG, one music industry analyst said: "The risk is that they buy out interesting festivals and make them less interesting."
Live Nation and AEG have done much of their spending in the United States, where audiences and promoters began to catch on to festivals in the 2000s, well after weekend-long affairs became established across Europe.
Live Nation said it would continue to seek acquisitions, saying there are only a "handful" of interesting targets left in the US and Europe but "Asia and Latin America are particularly ripe for more, relative to what they have got."
Paul Reed, general manager of the UK's Association of Independent Festivals (AIF), says AEG Live and Live Nation are becoming "more powerful and more aggressive" as they acquire attractive smaller festivals.
Festival promoters make money in a number of ways. While the bulk of revenues from ticket sales goes to pay artists, operators boost their profit margins through on-site sales and corporate sponsorship.
Mr Berchtold said that 10 per cent of the 63m people in 2015 who attended Live Nation concerts did so at music festivals. Festival-goers spend more per person than at single act concerts because they purchase food, drinks and other goods over a period of days.
Live Nation operates around 70 festivals worldwide. In 2014, it took a majority stake in C3 Presents, which runs festivals in the US including Lollapalooza and Austin City Limits, for a reported $125m.
The company said one of the main reasons it has targeted these events is that they draw millennial audiences more focused on buying experiences than goods. This in turn has attracted corporate sponsors trying to reach a younger demographic at a time when they are shifting away from watching television to spending time on social media.
AEG Live's British Summer Time Festival in London's Hyde Park is sponsored by Barclaycard. Live Nation's Made in America festival, founded by rapper Jay Z in 2012 in Philadelphia, is sponsored by Budweiser.
Advisory group IEG calculates spending on music sponsorship in North America has risen from $1.09bn in 2010 to $1.34bn in 2014. Coca-Cola, Anheuser-Busch InBev and PepsiCo are among the most prolific sponsors of festivals.
"We aim to win the hearts and minds of a new generation of consumers — young adults of legal drinking age," said Anheuser-Busch InBev.
Live Nation and AEG Live have also raised the bar for festivals by boosting fees for artists and surrounding their concerts with related "experiential" events, featuring other entertainment, such as comedians, immersive theatre and art.
Melvyn Benn, the promoter behind Reading and Leeds festivals said in 2014 that he had seen headline talent fees increase by 400 per cent in 10 years.
UK independent festivals group AIF's 2015 audience survey found that 54 per cent of festival attendees look first at the overall character of a festival when buying a ticket, while only 7.7 per cent choose to attend based on headline acts.
"Younger people want to go and choose their own adventure a lot more than just standing in a field and watching their favourite band with a pint of cider," Mr Reed says.
Other trends, such as need to create VIP "glamping" and spa options for those who want to avoid the tents and mud, have also pushed up the costs festival organising.
That in turn has put pressure on independents. Even Glastonbury, which is produced by Michael Eavis and his daughter Emily in Somerset, England, made a pre-tax profit of just £86,000 on £37.3m in revenues in 2014, according to Companies House.
"The margins are very tight, the expenditure is rising across the board. If you're operating an independent festival, you're lucky to break even within four or five years," says Mr Reed.
Live Nation predicts that festivals will continue to be big business worldwide.
"One of the things that has fundamentally changed is that . . . Facebook, YouTube and Instagram have enabled a fan in Colombia to hear about new music at the same time as those in Los Angeles or London," says Mr Berchtold.
"When Beyoncé released Lemonade [the R & B artist's latest album], that was a global event," he says. "From Peru, Portugal to Polynesia, fans will hear the music and there is global demand. The entire way that fans become aware of and wants to see the artist is changing and a festival is a great way to connect them."
Tickets to London's Roundhouse concert hall carry a strict warning to purchasers: 'Any ticket that is resold will become invalid', writes Hannah Murphy.
But last month, after £65 tickets to concerts by the band Radiohead at the venue sold out within minutes, many of them were touted online hours later, this time for hundreds, even thousands, of pounds each.
"Unfortunately, it's big business," said Brian Message, a partner in Radiohead's management company and co-manager of musicians Nick Cave and PJ Harvey.
Mr Message — and performers such as Adele and Mumford & Sons — complain that the $8bn-a-year secondary ticketing market is pricing out fans and damaging the music industry.
But it is also a fast-growing business.
Live Nation runs primary ticket sales platform Ticketmaster as well as secondary platforms GetMeIn and Seatwave, which take a commission from the resale of tickets on their online marketplaces.
The value of ticket sales at Ticketmaster grew 12 per cent in 2015 to $25m, while sales on the group's secondary platforms rose 34 per cent to $1.2bn.
"They need to decide which side of the fence they sit on," said Mr Message, who wants the music industry to develop more sophisticated paperless ticketing systems that would allow more control over a ticket.
Harvesting of event tickets by touts who resell them at vastly inflated mark-ups is nothing new, but sophisticated software now makes it possible to engage in the practice — known as scalping — on an industrial scale.
This month, Eric Schneiderman, the New York attorney-general called for tougher punishments for ticket resale sites that fail to reject tickets garnered by using 'bots' — computer programmes that automatically scoop up tickets from a primary platforms as soon as they go online.
A report by his office in January found a single bot took one minute to purchase more than 1,000 tickets to a U2 show in Manhattan in 2015. His investigation of third-party brokers alleged that they pushed up prices 49 per cent on average.
Ticket scalping laws vary from country to country and, in the US, from state to state. Touting can also be prevalent around big football matches and Wimbledon.
In the UK, Seatwave, GetMeIn and private competitors StubHub and Viagogo have long battled accusations from police and MPs that they encourage scalping.
A review by the UK government in May called for a regulatory clampdown on the platforms, including a requirement that they publicly identify traders who sell large ticket volumes. But it stopped short of recommending price caps
On Tuesday, the UK's Competition and Markets Authority, which had also previously investigated the four platforms opened a compliance review into their practices.
Ticketmaster said it "works to combat bots everyday and our industry-leading technology ensures that ticket availability and the overall ticket buying process is the best it possibly can be."