Hello!

This weekend is the start of Coachella in California – one of the most popular music festivals in the world. The cheapest ticket you can buy for one weekend at Coachella is $US499 ($AU760).

So as your feeds start filling with influencers at Coachella, I thought I would use this opportunity to reflect on the music festival scene here in Australia.

To put it bluntly, it’s not looking great. This year, several festivals have already been cancelled: Splendour in the Grass, Pitch Music & Arts, and Groovin the Moo to name a few.

There seems to be two main reasons for the cancellations. First is the rising cost of everything (both for the organisers and the customers), and second is the climate.

In today’s newsletter, I’m going tune into what’s going on.

Backstage costs

Let’s start with the rising cost of organising a music festival. 

Earlier this week, the national arts council, Creative Australia, released a report about the state of music festivals. 

In the 2022/23 financial year, there were 535 music festivals in Australia. The average cost to run a music festival was $3.9 million. 

More than a third of music festivals recorded a financial loss, averaging nearly $800,000 down per festival. 

Almost half of festival organisers said “rising operational costs” severely impacted their ability to run events. 

One of the biggest behind-the-scenes costs was insurance.

Why is insurance so expensive?

Almost 60% of festival organisers said insurance had a moderate to severe impact on their festival.

One festival organiser said “cancellation insurance since the pandemic has pretty much doubled.”

So why is insurance becoming so expensive?

Partly due to extreme weather events.

Basically, music festivals need insurance to cover unexpected events, like floods or bushfires. With such events becoming more frequent, the cost of insurance has gone up. So, how does a festival pay upfront for insurance?

It relies on people buying tickets shortly after they’ve been released. But, with people buying tickets at later dates (we’ll get into this next), festivals are unable to cover initial costs, like insurance, which can lead to cancellations.

For instance, Groovin the Moo cancelled this year after stating that “ticket sales have not been sufficient to deliver a regional festival of this kind.”

A change in buying habits

Interestingly, there has actually been an increase in the number of tickets being sold. Ticket sales are up 17% from pre-pandemic levels.

However, a challenge for organisers is a change in consumer habits, with people buying tickets late, rather than when they are initially released.

One reason for this is the rising cost of living, and uncertainty around personal budgets.

Another reason is the after-effects of COVID lockdowns, which created uncertainty as numerous events were cancelled or postponed indefinitely. Both of these things have contributed to an increasing number of people purchasing tickets as late as a week before a music festival.

There has also been a change in demographics.

Before COVID, 18 to 24-year-olds were the main ticket purchasers, representing nearly half of all ticket buying in 2018/19. Last year, that number dropped to below 30%.

Instead, 25 to 29-year-olds have become the biggest purchasing group, representing 35% of sales in 2022/23, compared to 27% of people aged 18 to 24.

Impact of climate change

I touched on it above, but it would be remiss not to also mention the impact extreme weather events are having on the industry.

For example, just in the past month we saw Pitch Music & Arts Festival shut down mid-event due to extreme fire danger ratings in regional Victoria.

Research from the University of New South Wales found that in 2022 and 2023, around 20 Australian music festivals were “cancelled or disrupted due to extreme weather conditions.”

And like I mentioned above, this drives insurance premiums higher, which can also push festival organisers away from hosting events in regional areas and more towards metropolitan locations.

Here’s the domino effect it has.

Government funding and sponsorships

So what’s the solution to this? One suggestion has been more government grants.

Government grants play a large role in supporting music festivals, with nearly half of them receiving some form of government funding in 2022/23. More specifically, 40% of festivals received grants from state and territory governments, and 21% of festivals received Federal or local government funding. 

Australian Festivals Association managing director Mitch Wilson told TDA that music festivals in the past haven’t had to rely on the government for support. 

“It’s only in these past few years that we’ve needed that support,” Wilson said. 

The report calls for more government support, as a large majority (80%) of festival organisers said an increase in funding and grants would be “valuable” to support “rising operational costs”. 

Mitch Wilson told TDA the music industry is an “ecosystem”, and that if festivals continue to get cancelled, “it could have a huge flow-on impact to the broader Australian music industry and its artists.”

It’s hard to know what the future of festivals in Australia holds. But as you scroll through the inevitably glamorous photos of Coachella over the weekend, remember this: Australia’s music festivals are going to need a lot more support before we even get close to hosting an event as large as Coachella.

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