The year festivals started to dry up

The annual music festival season is almost over. Last weekend saw two of the biggest of the year, Reading and Leeds. The appropriately named End of the Road, featuring Patti Smith and Blur's Graham Coxon, is taking place in Dorset this weekend, while Bestival, starring Stevie Wonder and Florence and the Machine, is next week on the Isle of Wight.

Whatever the weather brings for these last big outdoor music events of 2012, it already feels like this year was a washout as far as many in live music are concerned.

A perfect storm appears to have struck the industry, with several festivals being cancelled and many others suffering from lower ticket sales.

Heavy rain during much of June and July, the recession, youth unemployment, the Olympics, a lack of big headline acts, and the rise of foreign festivals have all been blamed.

But the awkward truth is that after a decade of almost uninterrupted growth, the live music market also looks over-saturated.

The latest concerts to run into trouble are those featuring veteran singer Leonard Cohen, which were set to take place at Hop Farm in Kent next weekend. The organisers, Vince Power's AIM-listed Music Festivals group, were unexpectedly forced last week to shift the Cohen gigs to Wembley Arena at short notice.

No reason was given but the Kent venue has been a headache for Mr Power this summer. His company has already admitted that its flagship Hop Farm festival, featuring Bob Dylan, at the end of June was loss making after weaker-than-expected ticket sales. Profits were also much lower at its other flagship festival, Benicassim in Spain.

Mr Power, who floated Music Festivals a year ago as the first listed festivals company in a bid to tap into the live music boom, has warned the stock market that he is exploring "ways of raising additional working capital". The shares have slumped 96 per cent since their debut in June 2011.

A spokesman for Mr Power declined to comment for this article but the problems aren't confined to his company. A string of other promoters have not found it easy.

The Big Chill, due to take place in Herefordshire in early August, was axed earlier this year. So too was Sonisphere, which had been booked for Knebworth in July. Vintage Festival was also cancelled and incorporated into the Wilderness festival, which happened last month in Oxfordshire.

All this comes as Glastonbury, the "big daddy" of the festival scene with 175,000 punters, took a sabbatical in this Olympic year.

Observers are unsure just how much of an effect the Games and Paralympics have had. London 2012 always going to be a distraction, even before Team GB won so many gold medals and caught the public imagination.

But there have also been a lot of free music events associated with the Games and the Cultural Olympiad. These have included Radio 1's Big Weekend for 100,000 in Hackney, north London in June, the cost of which was underwritten by licence fee payers, and nightly concerts in Hyde Park during the Olympics, paid for by telecoms giant BT.

Arguably these free concerts have made it harder for commercial promoters to bring in paying punters, who might be expected to pay upwards of £50 a head for a concert and £150 for a weekend festival.

Dean James, chief executive of live music group Mama, has complained that the BBC's decision to fund Big Weekend "significantly impacted" his firm's commercially funded Lovebox festival in east London.

"For them to turn up with a free event in an Olympic year was about as welcome as a fart in a spacesuit," said Mr James, who added that a top artist he had recruited to play at Lovebox then agreed to play for the BBC too.

Another complaint heard in some quarters of the music industry is that there has been a lack of big-name crowd-pullers this year, and that too many of the same rock stars, young or old, have been playing the circuit.

Punters are certainly less willing to part with their cash in tough times. Matthew Clayton, an organiser of Port Eliot, a boutique arts and music festival in Cornwall in July, says he has noticed in recent years that people want to camp for longer — four or five nights, not just the weekend, to make it more of a holiday.

"People will arrive at Glastonbury on the Wednesday when the gates open, we open on Thursday — I think that's a sign of the times," says Mr Clayton. "People want to stay for longer. People want more value for money."

Offering punters something unique and intimate is also key. A decade ago, the festivals and concerts business was edgier and more counter-cultural.

Now that it has become so much bigger and more mainstream, with big-name sponsors such as Vodafone and Virgin having jumped on the bandwagon, it's not surprising that trend-setters are seeking a different experience. Interestingly, some of those festivals that are prospering offer more than just music, with literature, fashion, comedy and the arts also on the bill.

Examples include Port Eliot, Wilderness and Latitude in Suffolk.

The fact that these events might appeal to an older, more affluent crowd also helps as the under-25s feel the financial squeeze.

Industry experts, including trade body PRS For Music, believe the live music industry will bounce back in 2013. The Olympics effect on ticket sales this year cannot be underestimated, say the optimists.

The opening and closing ceremonies at London 2012, and even the Diamond Jubilee concert outside Buckingham Palace in June, may even have been a good advert, because they showed how live music and a new generation of musicians are resonating with the British public.

Live music remains a valuable industry, worth close to £1.5bn a year in the UK, according to PRS For Music, after overtaking the value of recorded music in 2008.

"It's easy to knock the festivals industry," says Mr Clayton. "It's astounding the amount of money they bring in and the amount of jobs that they create. It's an industry that's sprung out of nowhere. It's an industry that should be celebrated."

Small faces: Turning off the hard sell

Small is beautiful for some festival goers who are fed up with the big over-commercialised music events and want something more intimate.

The organisers of Port Eliot in Cornwall in July only aimed to attract around 6,500 punters. Some other innovative festivals such as Latitude in Suffolk may be bigger but also offer far more than music, with everything from literature and comedy to film and arts and crafts.

Big-money sponsors aren't always encouraged at some of these boutique events. Only select brands are allowed in and they have to commit to be part of the festival, rather than just using it as a promotional event. Hip fashion label Anthropologie had a marquee at Port Eliot which offered free arts and crafts classes in pottery and fashion prints. Festival goers could then take their creations home as souvenirs. "We're not selling anything," explained Alice Sykes, PR director at Anthropologie Europe.

Matthew Clayton, one of the organisers of Port Eliot, said the key to retaining authenticity was that "we're not driven by the hunt for a gigantic profit margin".

That attitude would seem to chime with discerning festival goers in this age of austerity.