Long Live EDM
The electronic music industry has grown up. Attendances at Electronic Dance Music festivals in the United States exploded between 2007 and 2014, going from 145,000 people to 1.4 million. This has made EDM the poster child for the millennial music industry, for no other music genre or industry sector can compare in performance (a tenfold increase in audience is equivalent to a staggering 34% annual growth rate).
In May 2015, the International Music Summit (IMS), a think tank dedicated to promote market research in EDM and serve as the unofficial trade body for the genre, evaluated the entire electronic music industry at an impressive $6.9 billion, which would top sales of recorded music, including streaming, compete with the value of the products industry, and surpass concert ticket grosses and publishing monies. The Electric Daisy Carnival in Las Vegas, for instance, had over 400,000 attendees in 2015, making it the largest festival in North America.1 The business of EDM awaits its own TV marquis show this April, FOX’s first annual Electronic Music Awards.2
Similar stories can be told in Europe and Australasia, two regions that were early adopters of the form. In Belgium, Tomorrowland attracts 360,000 visitors, and other shows are drawing thousands more visitors with each annual iteration, among them Creamfields in the U.K., Stereosonic in Australia, Nature One in Germany), and Sunburn in India.
Such an impressive run is bound to slow down at some point, but the EDM market will still remain vibrant. IMS’s $6.9 billion figure for 2015 was only a 12% increase from 2014, and considerably smaller than the 37% increase between 2013-14. These figures would not likely cause concern anywhere else, but in the bullish EDM market they receive much attention.
America is especially singled out for questioning. As the narrative goes, the numbers of festivalgoers there hardly showed growth in 2014-15. A partial explanation is that the Ultra Music Festival returned to a one-weekend event only in 2014 compared to two-weekends in 2013.3 But it is the troubles of SFX Entertainment, a company built to on the promise of EDM, which is likely fueling most anxiety.
On February 1, 2016, SFX Entertainment filed for Chapter 11 bankruptcy. Formed in June of 2012, SFX Entertainment, was Robert F.X. Sillerman’s project to take the EDM market by a storm. He spent $1 billion to acquire and consolidate several independent EDM promoters, including Disco Donnie Presents, Miami Marketing Group, and ID&T. SFX also acquired the online electronic music store Beatport. In retrospect, he over invested. SFX went public at $13 per share in 2013 but by the summer of 2015, its share price had fallen to $4 (it plummeted as low as ¢11 per share a year earlier).4
High debt, poor cash flow, and the odd less than stellar festival, pushed the company to the brink. By the time SFX decided to cancel One Tribe in Los Angeles because of poor ticket sales, the dye had been cast.5 Earlier, Sillerman had offered to buy the SFX’s shares at $5.25 a piece in order to take the company private again, but investors were skeptical about the availability of funds for the transaction. They were proved right when he finally abandoned his bid at even more depreciated share prices; when SFX failed to make a $3 million dollar payment on a $10.8 million promissory note the company entered bankruptcy proceedings. Bankruptcy planning will likely involve making the company private again, and removing a $300 million debt with the help of bondholders, which may accept an equity conversion and provide $115 million in additional financing—a sign that there is hope for the future of the EDM market as perceived by its investors . In the meantime, Sillerman will be replaced and its BeatPort store, purportedly the world’s largest for DJ’s, will be auctioned. However, SFX’s major festivals, including Tomorrowland, Electric Zoo, Mysteryland, and Stereosonic will continue as planned.6
The story of SFX could have a silver lining. The electronic music world feared that, since its inception in 2013, SFX would corporatize the EDM market. SFX was expected to take fewer risks and promote the same, well tested, DJs at their venues.7 Indeed, EDM festivals all over the world still feature many of the same talent, including Tiësto, David Guetta, Avicii, Afrojack, Martin Garrix, and Deadmau5. The hope is that the demise of SFX, and its new incarnation, might return EDM to its bolder roots.
It is thus foolhardy to dismiss the future of EDM based on the early record of SFX. An indicator of the resilience and strength of the genre is, for that matter, the global DJ product market, which is thriving and moving $350 million in gear annually.8 Moreover, Soundcloud, where the EDM music maker culture lives, reported having 175 million unique listeners monthly and 10 million users creating music every year — many if not most of these are EDM fans.9
The Internet is aiding and abetting the growth of EDM, and this will not change. Festivalgoers are sociable, depend on the web for media information, and on their cyberspace friends to find places to celebrate music together. EDM is also tied to the advances of music product technology in the Digital Age. Both factors, and the talent out there, explain the quick rise of the genre. The artist Kygo embodies every one of these considerations. He is from an under populated country, Norway, and is known for his signature Tropical House style. His music shows tremendous potential, and he skyrocketed to the top of the EDM world by getting 80K Facebook likes in half a year, signing a with Ultra Records/RCA Records, and then becoming the fastest artist to get 1 billion streams on Spotify—all in two years.10
By Matt Mannino
Endnotes:
1. Chareunsy, Don. “A Bigger and Better – the Best Yet? – Electric Daisy Carnival in Las Vegas.” LasVegasSun.com. Las Vegas Sun, 20 June 2015. Web. 08 Mar. 2016.
2. “WATCH.” Electronic Music Awards Foundations. EMAF, 2016. Web. 08 Mar. 2016.
3. See Footnote 1
4. Cameron, John. “Investigating How SFX Entertainment Destroyed Beatport.”We Got This Covered. We Got This Covered, 04 Feb. 2016. Web. 09 Mar. 2016.
5. Stutz, Colin. “SFX Cancels One Tribe Festival Due to ‘Disappointing Ticket Sales'” Billboard. Billboard, 01 Sept. 2015. Web. 08 Mar. 2016.
6. Sisario, Ben. “SFX Entertainment Declares Bankruptcy.” The New York Times. The New York Times, 01 Feb. 2016. Web. 08 Mar. 2016.
7. Owsinski, Bobby. “Why The SFX IPO Is Bad For EDM.” Forbes. Forbes Magazine, 17 Oct. 2013. Web. 09 Mar. 2016.
8. See Footnote 1
9. Butcher, Mike. “Soundcloud Launches Ad Platform And Preps Ad-Free Subscription Service.” TechCrunch. AOL Inc., 21 Aug. 2014. Web. 08 Mar. 2016.
10. Barshad, Amos. “Billboard Cover: Kygo on His Rise to Fame — ‘I Have to Enjoy It While It Lasts'” Billboard. Billboard, 19 Feb. 2016. Web. 08 Mar. 2016.
