The big news of the Australian music industry in recent days is the collapse of the Soundwave festival.
The festival folded last week after its controversial impresario, A.J. Maddah, placed it into administration. Trade creditors, including most of the bands that played at the 2015 event in February, are collectively owed as much as $26 million.
The high-profile rock festival was Maddah’s brainchild. He is a risk-tolerant promoter — stories of contractors being paid late or not at all were common — and his personality is famously combative. In 2013, he fell out with the first headliners to his festival, Good Charlotte, after a very public spat on Twitter. With typical chutzpah, Maddah called the band’s Joel and Benji Madden “money-grubbing cunts with zero principles and disdain for their fans”.
The outspoken Maddah appeared to love his bad-boy image. But he also put plenty of noses out of joint. As one music industry insider told Crikey: “There is no one left to defend A.J.”
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Maddah had built Soundwave into one of the most popular events in the industry, selling out massive shows by booking famous rock and metal acts like Metallica, Soundgarden, Faith No More, Jane’s Addiction, Gwar and Alexisonfire.
Maddah was undoubtedly helped by macroeconomic tailwinds. Outdoor music festivals have been a fixture of the Australian scene since Ken West and Vivien Lees established the Big Day Out in the early 1990s, but it wasn’t until the mid-2000s that the festivals sector really boomed.
The boom was inflated by a combination of factors that may never be repeated.
Demographically, the early 2000s ushered Generation Y into the workforce in big numbers. In the go-go years of the mid-2000s, these 20-somethings chose to spend their disposable income on partying — and music festivals rapidly became their favourite place to indulge. This bulge of young music consumers — the largest since the baby boomers came of age in the late 1960s — provided a ready-made demand for contemporary music experiences.
At the same time, rampant downloading was destroying the old business model of recorded music. Suddenly, bands were forced back to touring as the only viable way of making money out of their music. As CD sales plummeted, and royalties with them, musicians returned to playing gigs. Even long-quiescent acts that hadn’t played in decades were suddenly on the market, and ready to tour. Supply of marketable talent — the all-important headline acts that sell festival tickets — therefore expanded rapidly.
But the special sauce that turbocharged the festivals explosion was the Aussie dollar. The long commodities boom of the 2000s pushed the Aussie dollar into the stratosphere. In 2013, for instance, it was trading well above parity with the greenback. With most bands paid in US dollars or euros, this jacked up the purchasing power of Australian promoters to unprecedented levels. Suddenly, superstars that had long been considered too pricey to tour Australia profitably came within the reach of ambitious promoters.
The result was the festivals boom of the late 2000s. It was a wild ride. Festivals proliferated. By the late 2000s it seemed as though one was starting up every month. The Big Day Out, Parklife, Stereosonic, Soundwave, Splendour in the Grass, Groovin’ the Moo, Laneway, Harvest — all launched or expanded during the heady days of the late 2000s.
It’s a very different landscape today. The Big Day Out is gone. So are Parklife and Harvest. Stereosonic is just hanging on. The heyday of the big outdoor music event is drawing to a close.
The trend is obvious in the downfall of Maddah, who made tens of millions in profits early this decade, but has fallen on hard times since 2014. According to a report prepared by Deloitte for angry Soundwave creditors, ticket sales fell by $23 million between 2013 and 2014. As Triple J’s James Purtill wrote last week, Soundwave was probably doomed regardless of its management.
But Maddah made numerous bad investment decisions, such as the disastrous purchase of Billy Hyde Sound, and the decision to expand by holding a new event called the Harvest festival.
The business model of the big outdoor festival itself seems broken. As Purtill reports, many suppliers to these events traditionally extended trade credit to festival promoters in the expectation of getting paid after the event. After 2014 and 2015, when Maddah was unable to pay, many staging and production suppliers starting demanding their cash upfront.
With many artists also demanding 50% or even 100% of their fee in advance, the huge capital reserves required to stage such events may now make them unviable. As Adelaide production hirer Andy Gaylor told Trtiple J, “I think it’s become impossible to hold big festivals.”
If there is a glimmer of hope on the horizon, it’s that not all music festivals are run on this model. The festivals that seem to have survived best are those that rely on loyal fans and an experience that is not tied to the quality of the line-up of the event. Boutique regional festivals like Meredith, Woodford and Falls seem to have weathered the storm, by providing unique venues and staying close to their audiences.
The failure of Soundwave will ripple out through the Australian music industry, particularly in related sectors like ticketing, staging and sound equipment. In the wake of the festival’s collapse, there’s been an unseemly squabble between Maddah and ticketing company Eventopia over who is responsible for refunding pre-sold tickets to angry fans.
Eventopia has this week announced it will refund tickets — but not until January.