Strictly Business: The Economics of EDM

business-of-edm

EDM is the music industry’s cash cow and punching bag. What once went down in warehouse raves now fuels multi-million-dollar festivals. Can they clean up their act and still clean up?

Written by Michaelangelo Matos

At the end of July, more than 180,000 people from over 200 countries gathered in a scenic national park in the small town of Boom, Belgium (near Brussels), and partied for three days straight. (Or really, two-and-a-half: The torrential downpour that hit on Saturday night around 10 p.m. was a crowd-killer for sure.) Walking along the grounds of Tomorrowland, a festival in its ninth year, on Friday morning before gates opened, the place seemed almost surreal even without hordes of party people in wildly divergent stages of sobriety (though like all such festivals, Tomorrowland runs a hard line against drug use). It felt very European fairy-tale, clean but florid. The main stage set-up was something like a scale version of Castle Greyskull from He-Man, complete with waterfall to the right of the DJ and a sit-down restaurant inside its stage-left gateway. Another stage looked like a butterfly; the get-up of yet another, the hardstyle-focused Q-Dance stage, resembled a rabid insect.

Tomorrowland’s sheer size is stunning—the park is rented for two additional weeks after the party finishes so ID&T, a dance-events company with additional headquarters in Amsterdam, Sao Paolo, and now Brooklyn, can restore the grounds to their exact prior state. Lines are run entirely underground, in purpose-made trenches. The biggest change from the run of American megafests may be the service. Security guards and vendors were friendly, and so was the crowd, unperturbed even by American at their most boorish—of the young woman who threw a screaming tantrum when she wasn’t allowed into an overcrowded venue.

One of Tomorrowland’s top draws is Afrojack, the Dutch producer behind Pitbull and Ne-Yo’s “Give Me Everything,” as well as his own hits; he was also the first DJ to sign an exclusive contract with the Wynn Hotel in Las Vegas, in 2010. He’s been headlining festivals like Tomorrowland for a few years now, but it’s the people at home that make him nervous. “I was on a stream to ten million people, and I realized that eight million of those people were watching from America,” he after playing his Tomorrowland set. “It’s so big there that it changes everything. You’re not just playing for the club—you’re playing for the world.” It’s been estimated that some 90 percent of the profit in EDM is made in the live arena. “The numbers are jumping up,” says Donnie Estopinol, the New Orleans native, now in Puerto Rico, whose Disco Donnie Presents was annexed by Robert Sillerman’s SFX Productions to great fanfare last year. “Even though it’s grown from 2009 to 2012, the exponential growth, the real growth, has come in the last 16 to 18 months. It was growing 10 to 20 percent a year to now 40 percent of people coming to shows, and that has changed in the last year and a half.”

Naturally, Tomorrowland is looking to expand into the States.

TomorrowWorld will take place in Chattahoochie Hills, Georgia, just outside of Atlanta—on a private farm, rather than a public park—from September 27 to 29. TomorrowWorld features many of the same headliners as its parent fest: Afrojack, Porter Robinson, Steve Aoki, Chuckie, Dimitri Vegas & Like Mike (also managed by festival honchos ID&T), Nicky Romero (who was playing the overcrowded venue mentioned above), Armin Van Buuren, David Guetta, and Tiësto, among others.

Décor from throughout Tomorrowland’s history will come over on some 80 semi-truck-sized containers. “After ten years, we have a lot of different decorations,” says Shawn Kent, who oversees ID&T’s U.S. office. “There’s a huge quantity of materials coming over to Atlanta.” There, they’ll mix with specially designed new installations, assembled on the ground. Partnerships with local vendors are in the works. There will be a greater emphasis on local and regional styles—a trap stage, for example.

That’s a lot for one party—but one party is all the Tomorrowland crew has planned for the time being. Though ID&T aims to put its parties on every continent, the company doesn’t have a set timetable; it is focusing exclusively on the U.S. edition of TomorrowWorld before moving forward, its timetable extending about two years. “We’ve got a great number of options that, at this moment in time, we’re not pursuing,” says Kent.