Investors all over the world are looking for the next big thing. The festival industry might just be the place to look.
Electronic dance music used to be frowned upon, and raves relegated to warehouses. Not anymore.
Within a music industry whose perennial power hitters are over the hill, a mode of entertainment with new stars, with massive numbers of young followers, is picking up some major momentum.
Electronic dance music (EDM) has made it. It’s a key player on every stage, from Coachella to The Grammys. Its annual festivals and profit margins have commanded attention on Wall Street. Let’s look at just one festival: where it’s been, and where it’s headed.
A Money Maker: The Electric Daisy Carnival
The Electric Daisy Carnival started at some point back in the 90s as one of those sporadic warehouse raves. In 2011, after several years of success as a yearly festival in Los Angeles, San Bernardino, Austin, and back to L.A., the EDC arrived in Las Vegas. Within just its first five years in Vegas, its economic impact was $1.3 billion.
Insomniac Events, producer of the Electric Daisy Carnival, commissioned Beacon Economics to quantify the festival economy created by annual event attendance. Beacon is a research and consulting firm focused on informing businesses about potential growth and investment strategies. Here’s what Beacon found.
The 2011 festival, over the course of three days and nights, generated $136.4 million for the Vegas economy.
In 2012, the three-day Carnival pumped $207 million into the Vegas area. It also helped to support over $84 million in labor income for Clark County.
By 2015, by Beacon’s calculations, the Carnival was making a $350.3 million impact in Clark County. Of that, more than $168.3 million was direct spending. Why is this significant? According to the Las Vegas Convention and Visitors Authority, the Carnival outstrips the direct spending of any major Las Vegas convention: the International Consumer Electronics Show (CES), the Automotive Aftermarket Industry Week, or the annual conference of the National Association of Broadcasters. The Carnival had already taken hold in New York City, too, by 2015, where it boosted the New York and New Jersey economies by more than $40 million.
Investors Anticipate Profitability
The Electric Daisy Carnival now draws more than 400,000 attendees to Vegas every year for three nights of non-stop dancing. Still more visitors come to the city who don’t have a festival ticket, but want to be in Las Vegas for EDC Week. The Strip with its many nightclubs and music venues supports EDC and offers plenty of satellite and collaborative events. It might be no exaggeration to say EDC has transformed Vegas. Electronic music festivals are now a major part of its scene and its draw as a destination.
Some EDC ticket holders will go to the EDMBiz conference, hosted the same week. Speakers include reps from media and marketing, musicians and managers, journalists and tech people, all interested in the profitability of the electronic dance music industry and its future potential. Companies with big names like Corona, Uber, Hotels.com and Smirnoff are sponsoring the experience. The message: EDM is just coming into its prime.
Now, there a limited edition Live Nation Festival Passport marketed annually. For $800, it offers access to 100+ festivals around the world, including the Electronic Daisy Carnival, now in both Vegas and Orlando. The offering is a hit, with many electronic music fans coveting a place in the private Facebook group for passport holders.
Live Nation Entertainment (NYSE: LYV) defines itself as the leading live entertainment business in the world. It’s made up of market leaders Live Nation Concerts, Live Nation Media & Sponsorship, and Ticketmaster, the platform through which and fans expect to pay more that $300 a ticket to attend the Electric Daisy Carnival (layaway plans are available, starting with a deposit of $90). But you can get plenty of dance music online, can’t you? Of course. It doesn’t matter. You can’t replace the experience that immerses a crowd in the beat and effects. You can’t replicate the sensory stimuli in the marriage of music and tech, and the wave of responses and emotions associated with that. It’s all based on mixing tracks on an accessible platform, so continual diversity of artists and offerings moves through the very cells of electronic dance.
Dime Dancing Is Through
Asia is, to Live Nation Entertainment, the indisputable next frontier for dance music festivals. Live Nation is now working in Chinese venues through its Live Nation Electronic Asia division. This introduces Live Nation’s experience to populations with a massive demand for EDM.
It was in April 2018 that Insomniac announced the first ever Electric Daisy Carnival China. Hong Kong event promoter Jim Wong, already well known for promoting EDM events in mainland China and Hong Kong, will manage Live Nation’s new presence in China and beyond. Wong and Live Nation Electronic Asia are keen to ensure the growth of EDM culture in Asia.
The China tour kickoff happened in Shanghai in October. The first artist to go on tour through Live Nation Electronic Asia was leading DJ and producer Tiësto, armed with a new album, Clublife Vol. 5: China. Live Nation arranged for Tiësto to tour eight Chinese cities. Live Nation promotes the Creamfields Festival as well, and will return to China in 2018, with events and festivals across China in cities including Shanghai, Beijing, Guangzhou, Hong Kong, Taiwan, and more.
Watch This Space
We expect a lot of action in this space for the investor, and will keep our readers informed on the phenomenon and the interesting opportunities it presents. We anticipate new festivals to attract the dance-loving community to make more trips to Vegas and other major cities worldwide — with some of the most exciting breakthroughs ahead in Asia. Given Live Nation’s presence in China, Japan, South Korea, Indonesia, The Philippines, Thailand and Singapore, the Carnival has barely started its international growth.
So, watch for more overseas markets to open, even while EDM culture spreads stateside as well.