Finance

Cities Create Music, Cultural Festivals to Make Money

Municipal officials and entrepreneurs see the power of cultural events as a way to spur short-term tourism while shaping an image of the host city as a cool, dynamic location where companies and citizens in modern, creative industries can thrive.
by | January 2014
Sean “Diddy” Combs performs at last year’s SXSW Festival in Austin.
Sean “Diddy” Combs performs at last year’s SXSW Festival in Austin. Rachael Wright

In 1871 the Great Chicago Fire killed more than 300 people, leveled the city’s central business district and left more than 100,000 people—a third of its population—homeless. A massive rebuilding effort followed, re-establishing the city’s status as a center of transportation and trade. By 1893, the Chicago World’s Fair drew 27 million visitors and profoundly influenced art, architecture and design.

Tapping into that history, Chicago will introduce the Great Chicago Fire Festival this fall, with a parade, live music and a symbol-laden centerpiece: Fifteen floats representing local neighborhoods will bob in the Chicago River and be burned in effigy. As the 19th-century fire led to Chicago’s rebirth, the burning floats will reveal interior designs to showcase hope for the future. Michelle Boone, the commissioner of Chicago’s Department of Cultural Affairs and Special Events, says the festival could become “Chicago’s Mardi Gras.”

The celebration is part of a movement to use events as economic drivers and urban brand builders. Municipal officials and entrepreneurs see the power of cultural festivals, innovation-focused business conferences and the like as a way to spur short-term tourism while shaping an image of the host city as a cool, dynamic location where companies and citizens in modern, creative industries can thrive.

The leading example is South by Southwest (SXSW), the annual music, film, and digital conference and festival in Austin, Texas. Launched in 1987, the juggernaut not only draws visitors who spend money in hotels and restaurants, but now has become an entire microeconomy. As music executives, film producers and tech startup founders come to town—along with fans looking for the next big thing—those attendees lure marketers seeking to reach influencers. Companies host lavish parties, pop-up stores and guerrilla marketing stunts, all of which requires the services of florists, caterers, carpenters and real estate owners. The festival’s economic impact has grown steadily over the past few years. In 2007, it poured about $95 million into the Austin economy. Last year's event topped $218 million.

The Coachella Valley Music and Arts Festival in California’s Inland Empire is another influential cultural event, drawing big-name bands, thousands of music fans and marketers who want to reach festivalgoers. Since 1999, the concert promotion and festival production company Goldenvoice has expanded Coachella into a two-weekend giant, drawing 80,000 people per day.

In August Goldenvoice launched the First City Festival in Monterey, a smaller music event meant to draw on the city’s history as host of the long-running Monterey Jazz Festival. “We were designing this to be a laidback festival that fits in the city of Monterey,” says co-producer Paul Billings. In addition to live musical performances, Goldenvoice staged a carnival with games and rides and invited 20 local vendors to show art, furniture and clothing. The event drew 11,000 people each of its two days, about half of them from Monterey County and surrounding areas. According to surveys, most non-locals stayed in a hotel or a rented house and visited local restaurants and attractions.

While the event had no formal relationship with the city, Goldenvoice got marketing support from the Monterey County Convention and Visitors Bureau. When considering locations for its festivals, Goldenvoice looks at a city’s willingness to help with festival logistics and to reassure citizens more worried about traffic jams and concert noise than cool bands or hotel sales. “It ends up being a huge factor,” Billings says.

In Las Vegas, events are part of a new effort to revitalize the city’s downtown. Tony Hsieh, the CEO of online retailer Zappos—the company’s headquarters are located in the old center of town—wants the place to feel more like a creative community in the vein of Austin or Brooklyn, N.Y., than the more-traveled Strip. Hsieh has put $350 million into the so-called “Downtown Project," which is funding startups, local businesses and community-building endeavors. It also has developed monthly First Friday festivals that feature food trucks, music, dance performances and art installations. The festivals lure some 20,000 people downtown.

The area’s biggest event is Life is Beautiful. It drew 60,000 attendees in October to venues spread across a 15-block footprint within the historic city core. There was a music festival with big-name bands, a food fair with high-profile chefs, an art program and a speaker series.

RD / Kabik / Retna Digital

Festival founder Rehan Choudhry says Las Vegas Mayor Carolyn Goodman saw the event’s potential and consistently worked to ease the planning process. “Her entire organization had a very ‘We’re going to make this happen’ attitude,” Choudhry says. A year before the festival, Goodman met with the city’s police, fire and traffic officials to encourage them to help festival organizers. A task force met every three weeks to keep everyone informed of festival plans. “We didn’t have to do a lot of research for permits,” Choudhry says.

He sees that kind of public-private partnership as the best way to facilitate ambitious events. Launching a large festival requires a focus on the long-term financial rewards and an acceptance of a high failure rate that municipal governments aren’t likely to tolerate. “The biggest piece of advice to any city trying to do this is, ‘Don’t think year one, think year five.’ If it’s not long-term, it’s not worth the resources.”

In Chicago, the Fire Festival is being developed as part of Mayor Rahm Emanuel’s Chicago Cultural Plan, an initiative launched in 2012 to drive the city’s cultural and economic growth. While the area already hosts independently run music events such as Lollapalooza and the Pitchfork Festival, the planners suggested the city develop its own large, city-specific cultural festival with global impact.

Combining references to the historic fire with contemporary neighborhood issues was the idea of Jim Lasko, the executive artistic director of the local theater company Redmoon. He says events can have more immediate and lasting effects than typical economic drivers, like, say, a building, landmark or park. “They are also much less expensive, and they never disappear,” he says. Even after the streets are cleaned, festivals live on in the memory of participants.

In assessing the success of the new festival, the city will take into account such financial measures as attendance numbers and hotel room sales. But it is also keeping an eye on what Commissioner of Cultural Affairs Boone calls “artistic assessments.” Measures on her list: How does this stimulate the imagination of young people? How has it ignited new interest in Chicago history? How does it stimulate other artists to think about how they can program or activate the river in their own unique ways?

Those evaluations are less tangible, but can ultimately lead to measurable results. “When they’re well executed and they capture the city’s imagination and the nation’s imagination, events generate an enormous amount of revenue for the city,” Lasko says, partially by making the city “look like a place where people want to live and bring their creative enterprise.”

Boone doesn’t see the city owning the new event forever. The city’s role, she says, is to be an incubator. It can’t “maintain a competitive edge against for-profit companies that are able to run these as part of their business. It makes more sense for us to be more of a partner.”

The same goes for other events. Chicago has partnered with Lollapalooza on a program that gives college students from across the country concert tickets and exposure to local tech companies, including a business plan competition judged by Emanuel. In September the city hosted the first Chicago Music Summit, a day of panels, discussions and performances meant to showcase the city’s diverse talent pool and help music professionals—performers, producers, club owners—discuss ways to work together better.

Boone says she works with officials across other city departments to consolidate licensing applications, advocate for events and act as a liaison for event hosts navigating city bureaucracy. “I don’t turn down a meeting with anybody.”

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