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The Festival Economy Is Broken · What the Flux

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  Speaker 1: This is what the flux. I'm Larissa and it's Wednesday,
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  Speaker 1: the twenty sixth of August. Here are the three biggest
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  Speaker 1: news stories today. For our first story, Coles released its
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  Speaker 1: annual profit, which is up by just one percent after
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  Speaker 1: the supermarket chain set aside two hundred and thirty five
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  Speaker 1: million to cover a major staff underpayment scandal. Last year,
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  Speaker 1: Cole's made a statut pre profit of one point h
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  Speaker 1: nine billion, which is the net profit minus the staff
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  Speaker 1: under payment fine. For our next story, Sheen the fast
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  Speaker 1: Fashioned Giant is aiming for an IPO in Hong Kong
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  Speaker 1: with evaluation that's roughly seventy percent lower than its private
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  Speaker 1: market peak in twenty twenty two. And for our final story,
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  Speaker 1: KPMG Australia is getting rid of five percent of its
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  Speaker 1: workforce as demand for the firm's consulting services declines due
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  Speaker 1: to the document misuse scandal that's been keeping KPMG in
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  Speaker 1: the headlines. The cut includes around three hundred and sixty
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  Speaker 1: staff and twenty seven partners. In this series Going Down,
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  Speaker 1: we'll be doing bite sized explorations into the most interesting industries, businesses,
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  Speaker 1: and economic events in Australia and around the world. For
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  Speaker 1: today's episode, we're deeping the decline of the Ozzie Music Festival.
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  Speaker 1: This was a scene that once gave us big day out,
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  Speaker 1: sound wave and splendor in the grass, but no more.
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  Speaker 1: In this episode, we're looking at why so many of
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  Speaker 1: them collapsed, what the economics actually look like behind the scenes,
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  Speaker 1: and whether anything is going to fill the gap they've
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  Speaker 1: left behind. I'm breaking this one down with Justin. Let's
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  Speaker 1: get into it all.
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  Speaker 2: Right, Lisa. I want you to think back to the
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  Speaker 2: last time or the best time you had at a
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  Speaker 2: music festival.
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  Speaker 1: Oh, I feel like thisst and worst sort of go
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  Speaker 1: hand in hand. There was one that everyone would go
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  Speaker 1: to a New Zealand called Rhythm and vines Ki. We
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  Speaker 1: listeners will know exactly what I'm talking about. It was
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  Speaker 1: about four days of drinking and music festivals under the sun.
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  Speaker 1: It would rain and everyone would be rolling around in
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  Speaker 1: mud and having their tents jumped on and it was horrible.
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  Speaker 1: That's so much fun.
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  Speaker 2: Yeah, festival's always been expensive, that muddy, logistically very difficult,
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  Speaker 2: but everyone always says completely worth it. So you may
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  Speaker 2: not have been here at the time, but Australia's modern
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  Speaker 2: festival era kicked off on Australia Day nineteen ninety two,
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  Speaker 2: when the Big Day Out launched in Sydney.
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  Speaker 1: Sounds like that was the start of something genuinely cultural
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  Speaker 1: in Australia.
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  Speaker 2: It was Big Day Out expanded to Adelaide, Melbourne, Perth,
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  Speaker 2: Gold Coast and Auckland as well.
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  Speaker 1: Wow for two decades it became the anchor of the
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  Speaker 1: Australian summer, with artists and bands like Metallica, Kanye West,
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  Speaker 1: Rage Against the Machine.
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  Speaker 2: You name it, and then Splendor in the Grass arrived
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  Speaker 2: in two thousand and one.
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  Speaker 1: This was a midwinter camping festival in Byron Bay.
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  Speaker 2: And in the mid twenty tens you also had a
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  Speaker 2: raft of other music festivals and day festivals too.
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  Speaker 1: There was Future Music Festival Stereo Sonic for dance fans.
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  Speaker 2: There were sound Way for metal and punk head Dangers.
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  Speaker 1: There was Laneway Festival for the more indie music fans.
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  Speaker 2: And then of course Meredith and Golden Plains as well.
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  Speaker 1: But just by twenty fourteen, Big Day Out effectively collapsed
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  Speaker 1: under its own weight and it was the first sign
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  Speaker 1: of the difficult commercial realities of the Australian music festival scene.
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  Speaker 2: Yeah. By twenty twenty four the live music festivals was
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  Speaker 2: in a commercial world of pain.
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  Speaker 1: In February that year, Grooven the Moo, a regional touring
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  Speaker 1: festival that's been running since two thousand and five, canceled
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  Speaker 1: just eight days after tickets went on sale.
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  Speaker 2: They blamed poor ticket demand.
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  Speaker 1: Then in March, Splendor announced it was canceling its twenty
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  Speaker 1: twenty four edition.
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  Speaker 2: And that was just weeks after revealing a lineup with
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  Speaker 2: Kylie Minogue, Arcade, Fire Future.
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  Speaker 1: And the stated reason unexpected events.
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  Speaker 2: They also canceled twenty twenty five, so did Grooven the
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  Speaker 2: Move and then Falls Festival was indefinitely suspended since twenty
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  Speaker 2: twenty four and hasn't resumed.
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  Speaker 1: In fact, just at least six major festivals canceled in
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  Speaker 1: twenty twenty four alone.
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  Speaker 2: And why is this all happening, Larisa Well?
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  Speaker 1: Festival organizers are struggling to make the economics work.
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  Speaker 2: According to Creative Australia, the medium cost to stage a
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  Speaker 2: music festival in Australia in twenty twenty four was more
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  Speaker 2: than three point three million dollars.
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  Speaker 1: International artist fees have blown out thirty to forty percent
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  Speaker 1: in the last few years.
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  Speaker 2: But it isn't just artists. According to the Australian Festival Association,
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  Speaker 2: costs up forty percent across the board as well.
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  Speaker 1: The problem is they're not able to raise ticket prices
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  Speaker 1: to the same level, so.
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  Speaker 2: The margins get squeezed until they collapse.
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  Speaker 1: And here's the thing. Ticket prices are rising just not
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  Speaker 1: fast enough.
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  Speaker 2: Yeah, this one. The average festival ticket costs around one
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  Speaker 2: hundred and twenty dollars in two thousand and four. By
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  Speaker 2: twenty twenty five it hit three hundred and thirty four dollars.
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  Speaker 1: That's an increase of one hundred and eighty percent, more
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  Speaker 1: than triple the rate of inflation across the same period.
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  Speaker 2: But it's not just costs. There's also the structural demand problem.
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  Speaker 1: Yeah. COVID kind of burned a generation of festival goers.
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  Speaker 2: Yeah, there were two years of cancelations and it kind
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  Speaker 2: of trained music goers to wait to purchase tickets rather
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  Speaker 2: than commit early, which.
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  Speaker 1: Is pretty unworkable for many festivals where they need to
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  Speaker 1: sell eighty percent of capacity up front just to pay
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  Speaker 1: the artist's deposits.
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  Speaker 2: Now here's where things get a little bit interesting. There
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  Speaker 2: are still festivals thriving.
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  Speaker 1: They just either need to be very large or very small.
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  Speaker 2: Yeah. For example, The team behind Beyond the Valley, Wildland
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  Speaker 2: and Pitch Music and Arts sold over eight hundred thousand
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  Speaker 2: tickets across its events in twenty twenty five, which is
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  Speaker 2: up from five hundred thousand two years earlier.
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  Speaker 1: Beyond the Valley's twenty twenty five editions sold out in
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  Speaker 1: under an hour.
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  Speaker 2: The thing with a big group like I'm Titled is
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  Speaker 2: they can spread fixed costs across multiple events.
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  Speaker 1: They own the dance and electronic lane.
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  Speaker 2: And they lean on many local talents to keep their
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  Speaker 2: costs down.
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  Speaker 1: The brutal mat is this for a mid sized festival.
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  Speaker 1: Talent fees now eat up forty to fifty percent of
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  Speaker 1: the entire budget.
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  Speaker 2: And that's up from just twenty five to thirty percent
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  Speaker 2: a decade ago.
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  Speaker 1: So where does it all go from here?
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  Speaker 2: Does? Well? Live music isn't gone. We've seen live performance
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  Speaker 2: revenue hit more than three and a half billion dollars.
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  Speaker 2: Artists like Taylor So we have Coldplay Ed Sheeran are
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  Speaker 2: all getting massive numbers and massive tours.
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  Speaker 1: But the media and Australian musician earns fourteen thousand, seven
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  Speaker 1: hundred a year from their music, and.
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  Speaker 2: More than thirteen hundred live music venues have closed since COVID.
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  Speaker 1: The optimistic version of this is that smaller genre specific
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  Speaker 1: music festivals fill the gap at one end, and the
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  Speaker 1: mega thirty five thousand person music festivals are at the
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  Speaker 1: other end.
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  Speaker 2: The peas music version is the middle never really comes back.
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  Speaker 1: And that means the place where many Australians actually discovered
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  Speaker 1: niche artists disappears quietly.
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  Speaker 2: Clux Sam, we hope you enjoyed our deep dive into
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  Speaker 2: the decline and shifting landscape of Australian music festivals. On Friday,
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  Speaker 2: we're going to be doing a deep dive into the
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  Speaker 2: Australian gym economy, one of the biggest and most surprising
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  Speaker 2: fitness markets on the planet, and how a single Paddington
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  Speaker 2: studio grew into a billion dollar global franchise and then
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  Speaker 2: employed it. Looking forward to going through this deep dive.
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  Speaker 2: Thanks for listening and we'll see you on Friday.