How Inflation is Changing the Festival Industry

Festivals and live events are unforgettable experiences one remembers fondly for a lifetime. However, live productions are unequivocally massive undertakings, with innumerable moving parts: site crews, lighting engineers, designers, artists and their teams, vendors, and attendees; all integral components of the ecosystem.

In a post-pandemic era, the live music economy in the US remains fragile. Due to inflation, organizers are seeing disproportionate increases in production costs, talent buyouts, and other numerous facets of the live event sphere, according to several events experts across North America. 

“We started seeing the effects of inflation ripple across the board quite early…It’s a cascade of events,” explained Zander, who heads operations for Texas-based event production company PRIME. “All festivals are underselling, not running nor performing the way they used to. Insurance is up talent-side because the system costs more now. The costs for stage building, the materials—wood, metals—have gone up as well, and these cost increases, unfortunately, do get passed on to ticket buyers, which isn’t ideal either because of the current economic strain.”

Catch One, a popular independent dance music venue in Los Angeles keeps ticket prices consistently low while attracting large crowds. The club’s success may be attributed to its business savvy. 

“The cost of flights alone has dramatically changed the touring market. Artists, and specifically overseas artists, are harder to book for a reasonable rate due to higher travel costs which leads to difficulty to compete with larger promotion companies,” explained Catch One’s talent buyer, Pamela Crick.

According to Crick, booking talent who doesn’t require hotel and ground buyouts, meaning talent based locally or regionally, has allowed them to quickly acclimate as they continue to deal with the rising costs of a creeping recession.

“Party goers are less inclined to pay for higher ticket prices more than ever before—and even when they do—there is a higher no show rate of attendees, leading to lower bar sales and slower nights for venues and promoters. I mean, going out in Los Angeles alone is like a $100 event minimum between Ubers, drinks, ticket prices. I am not sure many people can keep sustaining that price with the way things are going, especially if things keep going up,” said Crick.

As PRIME’s operations head explained, increased costs only help to aggravate the delicate ecosystem, further impacting the cost of an experience. “As a consumer, you’re calculating the math in your head when you’re looking at these lineups and ticket prices and thinking ok, cost of fun per hour…Will I be adequately gratified?” said Zander.

He predicts that in the near future, organizers may elect to accommodate by providing more accessible experiences, being more conservative with agents, and pivoting their sights to local markets. 

“If we become more conservative with agents, offering less, we’d effectively be providing less to artists and the experience they’ll provide. If we begin to scale back because of the market conditions, then that’s just how we respond until the market adapts. As investors, we need to get coordinated with local markets. The market is too open for anyone to be protected. People need to get coordinated, and fast,” he said. “We have to get crafty as an industry to ensure we’re being sensitive to buyers and attendees to ensure events continue.”

Jason Euler manages corporate sponsorships and experience creation for Relentless Beats, an independent promoter based in the Southwestern US. The company books nearly 800 international, national, local, and regional acts annually across multiple genres.

“We do everything from 500 person club shows to festivals that see about 25,000 people a day. On any given weekend we have anywhere from 9 to 15 shows across five cities,” he shared. 

Bearing witness to the ebb and flow of the broader live events circuit since the mid-2010s, Euler shared that post-pandemic, Relentless saw an array of record highs after almost two years of COVID limitations. Then, once the economy started to take a downturn, he noticed changes in all sectors within the ecosystem.

”Our industry has hit a weird point where the artist booking fees are getting higher, the costs are getting more expensive to produce a festival right now and ticket prices are going up…But, the average median income level of our attendees is not going up. We’re nearing this interesting plateau-point where something’s going to have to tip eventually here,” said Euler. “The attendee is the lifeblood of what makes these events exist. We live and die by what they’re choosing to spend their money on, their time, attention, and their focus on. They’re the reason we have jobs.”

Working primarily in partnerships, Euler coordinates with sponsors the company partners with for festivals and events. “In that space, we’re noticing companies being a lot more particular. Instead of a decline, we’ve actually seen an increase in sponsors, but they’re being selective in how and where they spend their money, even on the business side,” explained Euler. “I’ve heard some talks from partners like ‘hey, we’re worried about what’s coming up, we need to scale back a little bit, here and there.’ We’re supposed to go into a recession next year if we’re not already in it, so it’s going to be really interesting to see what next year’s sentiments look like.”

The experience creations manager proposes industry organizers and crews focus on honing and tailoring their live events experiences during this tumultuous time.

“At the end of the day, [attendees] are the lifeblood, it all starts with them. Maybe you don’t have the finances to do something, but there are always ways to add personal touches to connect on a grassroots level with your community,” shared Euler. “I think the groups that really enhance their customer experience and make that their sole focus, those are the ones who are going to survive this and those are the ones who are going to come out better because of it, following this economic downturn.”