In a year of controversies and difficulties for many music festivals, Wychwood Festival celebrated its 8th year in a busy, smooth and profitable fashion. Now Wychwood Festival plans to expand using crowdsourcing - offering shares online to attendees- to raise capital. It’s a first for any music festival, however given the nature of music festivals and the prices involved - it seems as good an industry as any to use the crowdsourcing platform. Graeme Merifield, owner of the Wychwood Festival, talked to Music-News about the reasoning behind it.
Why do you think the festival market has had a difficult 2012?
For a time it was a very popular thing to do in the UK, so the market became saturated.
I think a lot of people for a long time thought that festivals were very exciting, high-kudos events to be involved with and many new promoters and investors hadn’t done their homework as to how much these things cost to put on.
Wychwood has a solid name as a successful festival. What was the attraction to the unusual strategy of crowdsourcing?
Well basically, we looked at how we ran business, and the events we already do. We now have a bigger picture with new directors onboard and therefore we want to expand on the events we do. We thought about the facrt we’ve been going for 8 years now and we’ve got a loyal base of people that come back year after year and this was a chance to repay them for that by giving them a small part of the festival, giving them benefits including tickets for life, but also raising capital.
What are the risks involved then?
We think it’s a safe strategy, because we’re already funded to run Wychwood, having bought the license and brought new directors in and so on. Either we raise further capital, all well and good, and we start to expand into taking on new projects in safe areas - not necessarily taking on a new festival, but into areas where we could perhaps charge management fees, taking our quality brand here into those. Or, we don’t raise as much as we need, but we still run Wychwood unheeded anyway. So it’s not a case of needing to raise spare money its a case of trying to see if there’s scope for expansion sooner rather than later. It really comes down to raising money for manpower. We are a very lean operation, and I’m the only full time person working. I have an assistant for 6 months but other than that it’s just myself year around and it’s an unbelievable amount of work.
Wychwood has specific market: it’s family orientated, it’s upmarket. Perhaps then, the attendees of these festivals are the type of people that can afford the prospect of an £1000 investment. Do you think then that you’re in a unique situation, or can you foresee other festivals aimed at more of a mass market doing the same?
- Certainly other festivals are going to be interested in seeing how this goes. We’ve already had a few questions from other promoters wanting to know about our approach. Yes our ticket sales are mainly family-based. This has its pros and cons. During the recession families were being hit the hardest and many families would not necessarily have the money to put up front. There are other festivals that have a wealthier class of clientele for whom this would be a drop in the ocean, so perhaps they’ll choose to do it, as well as other festivals who attract more mainstream acts and therefore whose ticket prices are much higher than ours - so buying shares wouldn’t equate to a big jump in costs. I suppose it’ll enter different avenues and when you pursue it as a promoter you have to trust that your product has longevity. We have been doing it for eight years and we’ve been through ups and downs and we know what we’re doing. Hopefully our track record will give buyers comfort.
There has been a considerable jump in ticket prices, there"s been an increase in competition from abroad, this has been a summer of controversy for many festivals. Do you think that prospective investors will look at this Wychwood opportunity for a genuine return, or is it more a case of viewing it as a kind of lifetime ticket?
Probably the latter - It’s a lifestyle product and so far we’ve seen that a lot of the people buying the shares are the same people that buy earlybird tickets before a line-up is announced. As the business expands there will hopefully be a return but it’s also an opportunity for investors to get cheap tickets for friends which helps us with ticket sales and if they bring other businesses or sponsorship the festival they can also get commission so it’s really about finding the people who are most passionate about our event and what we do and other investors who like the idea of this kind of lifestyle.
Can you expect such loyalty? Do people really go to a festival every year for the duration?
I think with us a number of them often do. It’s also worth remembering that our tickets aren’t named, so there’s scope to give them to friends. Over the last eight years including last summer we’ll usually have a good thousand of the tickets sold for next year almost immediately after the festival has happened, and these are often the same people buying again and again. People phone up, small organisations call up explaining they’ve been coming for five years and asking for a discount. Finally we can offer them that deal with this.
Year on year, festival ticket prices rise- where once festivals were the cheap alternative to a foreign break, now you can do a weekend in Europe on the same sort of money as a major festival ticket. What"s the cause of the rise?
I suppose really that the cost of putting a festival on is astronomical. The costs are effectively based on how many people you’re likely to attract - as bigger festivals result in agents demanding high costs for bands performing. I’d like to charge less, but we have to make the books balance.
There’s been speculation on the festival market with regards to the future, with market saturation and foreign competition. From your position as a boutique festival - where do you think the Festival market will go?
I’d like to think that it shrinks in terms of events, but every year we say that and we expect there will be less festivals but every year people get that excitement and think they’ll be able to do it and bring in the numbers so I imagine it’ll continue to grow. The type of festivals that will do well I think are the smaller boutique ones which have a character that appeals to certain audiences. From my understanding this year only a handful of festivals sold out and they were all small ones that catered for a certain audience. I think festivals will also have to encompass other areas as well as music. Somebody once told me that they felt the best festivals were the ones when you can turn your back to the main stage and still have an equally good time with other things happening. This is expecially right with a family festival where everyone, kids included, should be having fun.
What advice would you give individuals looking to start a festival?
Think very carefully, as it is a saturated market. Start small - and manage your expectations - many of the festivals that have gone wrong this year, have gone wrong from the costs. If you can manage risk, you’ll progress.
Wychwood Festival is held every June at Cheltenham Race Course. Information on the festival and how to invest can be found on the Wychwood Official Website
Link to the investing portal is here: CrowdCube Investing