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INITIAL REPORT Reverdy Johnson, [email protected]

Large Potential Exists for SFXE in EDM Space, Results to Follow

Companies: BUD, FB, GOOG, LYV, MSFT, SFXE, TWTR January 22, 2014

Research Question:

Will consumer brands find SFX Entertainment’s collection of electronic dance festivals compelling enough to become significant sponsorship partners?

Silo Summaries Summary of Findings 1) Ad Agencies . Thirteen of 15 sources said electronic (EDM) is Five of six sources said EDM festivals scene have room for becoming mainstream, has significant room for growth in the growth and will become an even more attractive and worldwide, and is an attractive method for sponsorship opportunity for global consumer brands. EDM consumer brands to reach all-important ever-elusive is quickly becoming mainstream and festivals are the new . music genre, especially for the millennials that brands are so determined to reach. Social and streaming networks . Brand sponsorship opportunities hold vast potential, with have a significant reach for this audience, as pre- and Google Inc.’s (GOOG) Motorola and Anheuser-Busch InBev post-festival productions become destinations for viewers (BUD) recently inking deals. Samsung Electronics Co. Ltd. and and sponsorship dollars. Three sources said revenue for these festivals is increasing year to year. Two others said Microsoft Corp. (MSFT) are sponsorship targets and could global brands are traditionally conservative and deliberate bring significant revenue to the EDM space. in their decision-making process, especially when . Electronic cigarette, gaming, and non-alcoholic beverage considering an untested space which lacks proof of companies are expected newcomers to EDM in 2014, while concept and sophisticated metrics. Two sources estimated sponsorship revenue per attendee at $1 to $2 per auto, beer, spirit, and consumer electronics brands will expand sponsor. Sources suggest $100 million in sponsorship their presence. revenue is a reasonable expectation in the next one to two . Streaming is an untapped sponsorship opportunity. Telecom years. companies could compete for exclusive streaming rights, 2) Festival Promoters reaching millennials through the methods they use and prefer All five sources said EDM is becoming mainstream. most. Festivals are the best place to reach coveted millennials, . Three sources estimated sponsorship revenue per attendee is opening up potential for brand sponsorships. Sources were split, however, over the current growth of between $1 and $2 per major sponsor. Others said sponsorships. Three said sponsors were on board with sponsorship deals being discussed are in the $5 to $15 EDM festivals, while two others said deals were more million range. difficult to secure. Sources highlighted electronic . SFX Entertainment Inc.’s (SFXE) aggregation of festivals gives cigarettes and gaming as potential sponsors in 2014, while bigger names like AT&T and Verizon are likely to be it size and reach necessary to attract big brands, while also more cautious due to safety and liability concerns. Live bringing polish to EDM festivals. Sponsorship revenue of $100 streaming was mentioned as an important growth aspect million is realistic in the next year or two. for these festivals. Sources estimated sponsorship . revenue per attendee in the $1-$2 range per sponsor. Two The lack of sophisticated metrics has caused some hesitation sources believe SFX can reach $100 sponsorship revenue by sponsors. Ad agencies and brands are uncertain how best levels, while one is more skeptical. to measure the success of a campaign, slowing some brands from engaging in EDM sponsorships. 3) Industry Specialists . Three of four sources said the growth potential for EDM SFX’s reliance on EDM may limit its overall reach. Millennials festivals is significant, and brands increasingly are are more attracted to the festival experience than the music, interested in sponsoring the events as a way to reach making festivals like Coachella and Bonnaroo—which offer a millennials. EDM is attracting more mainstream brands variety of musical genres—potentially more appealing and and looks to add non-alcoholic beverage companies and longer-lasting. telecoms this year. Sources estimate total brand sponsorship levels in the $5 to $15 million range, though . Nine sources cited safety concerns and the drug culture typical one source refutes suggestions of $50 million in at these festivals as considerations that factor into their sponsorships for a single event. Another source said sponsorship decision making process. festivals have a production budget of $30 million, showing the resources available as well as the importance placed on communicating the lifestyle, experience and image of these events.

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SFX Entertainment

EDM Festivals Sponsorships SFXE

Ad Agencies

Festival Promoters

Industry Specialists

Background SFX, the producer of EDM festivals like and TomorrowWorld, has capitalized on the growing popularity of the genre, estimated to be a $4.5 billion industry worldwide. Aiding this attendance boom is the use of social media, through which fans can engage with the festivals and its artists, buy tickets and relive the live experience through official event after- movies. Ticket sales through social media for EDM events are six times higher than traditional events, and the official Tomorrowland 2013 after-movie received over 30 million views on YouTube in less than three months.

SFX has been on an acquisition spree, buying festival producers and other music-associated companies in an effort to enhance its presence in the worldwide EDM festival space. Acquisitions include a 50% stake in one of the world’s largest festivals, ; a 75% stake in European ticket company Paylogic; 100% of Australian EDM festival producer Totem; and 100% of Made Event, which produces New York’s largest EDM festival, . In addition to consolidating the largest EDM festival operators, the acquisitions increase opportunities for major sponsorship deals, expand the number of festival locales (including in the U.S.), and lengthen the duration of the events.

SFX ENTERTAINMENT is in discussion with global consumer brands to become event sponsors, given that the bulk of its revenue currently comes from ticket sales and concession fees. Household brand names like Anheuser-Busch (BUD) and Samsung are getting on board with the EDM scene and SFX Entertainment. Sponsors find the sustained messaging opportunities and the dedicated following of the after-movies on YouTube, Facebook (FB) and (TWTR) attractive, though sponsorship levels pale in comparison to more mainstream events like Lollapalooza and Coachella. There also is concern over drug-related deaths that have marred the festivals, causing early cancellations of shows and bringing bad press to its sponsors.

Current Research In this initial study, Blueshift Research assessed whether consumer brands find SFX Entertainment’s collection of festivals compelling enough to become significant sponsorship partners. We employed our pattern mining approach to establish and interview sources in four independent silos: 1) Ad Agencies (6) 2) Festival Promoters (5) 3) Industry Specialists (4) 4) Secondary sources (5)

We interviewed 15 primary sources and identified five of the most relevant secondary sources showing SFX Entertainment landing major sponsorships and the variety of sponsors for EDM festivals targeting millennials.

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SFX Entertainment

Next Steps Blueshift’s next report on EDM and SFX will include a look at the potential for after-movie and/or live stream sponsorships, growth in China, and whether EDM might lose some followers if it becomes too mainstream. We will assess whether SFX is keeping management in place for the festivals it acquires or bringing in new management and determine whether it can maintain its loyal following if it changes management teams. We will continue to pursue marketing executives at global brands, and will revisit current sources for updates on the sponsorship environment for the industry and for SFX in particular. Lastly, we will look into the role plays for SFX and its role in helping secure sponsorships and additional revenue.

Silos

1) Ad Agencies Five of six sources said the EDM festival scene has tremendous room for growth and will become an even more attractive sponsorship opportunity for global consumer brands. EDM is quickly becoming mainstream and festivals are the new music genre, especially for the millennials that brands are so determined to reach. Because this demographic is more likely to access content online, social and streaming networks have a significantly better reach, bringing YouTube, Twitter, Facebook, and other social media into play as pre- and post-festival destinations for viewers and sponsorship dollars. Three sources said revenue for these festivals is increasing year to year. Two others said global brands are slow to fully embrace EDM as a platform, as they are traditionally conservative and deliberate in their decision-making process, especially when considering an untested space which lacks proof of concept and sophisticated metrics. Two sources estimated sponsorship revenue per attendee at $1 to $2 per sponsor. Sources agree SFX has the ability to lure large sponsors and high dollars, suggesting $100 million was a reasonable expectation in the next one to two years. Three sources raised the drug culture as a safety concern for sponsorships.

KEY SILO FINDINGS Sponsorship - 5 of 6: EDM festivals are a tremendous opportunity for sponsors, and that the EDM genre is becoming mainstream. - 5: millennial audience is massive and highly attractive to sponsors. EDM is one of the best ways to reach this group. - 4: social media and streaming content is another way to reach millennials. - The sponsorships being considered are multi-million dollar deals, some $8 million - $12 million. One source said sponsorships generally are two-to-four year deals across multiple festivals. - 3: revenue is increasing year to year. - 2: some global brands are slow to move into EDM. These brands are more conservative and slower in the decision making process. - 3: concern around drug culture, which is a consideration in sponsorship decision making. Brand Engagement - Social media sites such as YouTube, Twitter, Facebook and Instagram provide important pre- and post-show engagement. - Streaming music brands such as , Rdio, and Beats Audio are becoming sponsors. - Non-traditional sponsors are increasing, and brand activations are becoming more sophisticated. - Jack Daniel’s is bringing its “Barrel House” sponsorship to U.S. festivals, after a successful promo in . - Samsung is the next big player in EDM sponsorships. A battle between Samsung and Microsoft could open the floodgates for large sponsorship dollars. - 1: clothing and broader technology companies are the next markets to sponsor. Metrics - 2: sponsors reap $1-$1.50 per attendee, with larger festivals bringing in $2 per person - More sophisticated metrics lacking for agencies and brands to measure success, leaving some brands hesitant to become sponsors. - 2: some festivals measure success with sheer number of eyeballs before, during and after,

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SFX Entertainment

SFX Entertainment - 1: $100 million sponsorship revenue possible over next one to two years. - A partnership with Samsung, which SFX Entertainment is going after, would be big for SFX. - 1: SFX is smart to create its own platform and own the rights over the content.

1. Marketing and branding executive in Australia specializing in EDM festivals Sponsorship dollars flowing into the EDM festival market are rising every year, even in Australia’s mature market. In the United States, the rate of sponsorship likely will rise even faster. Non-traditional sponsors such as credit card issuers (MasterCard), car makers (Mazda), and telecom providers are on the rise, challenging the dominance of beverage sponsorship spending. The under-age scene in Australia has proven attractive to global brands, with Clearasil, Spotify and Monster Headphones sponsoring that country’s major festival for 15 to 18-year-olds. Brand activations at these festivals are becoming much more sophisticated, with the Jack Daniel’s “Barrel House” at the recent a case in point. Key sponsorship deals typically cover a two- to four-year time frame, often encompassing several festivals over the course of each year. Sponsorship . “When we started in 2007, and started to sell tickets and sponsorship for festivals in Australia, it was a lot more challenging than it is now. We’ve seen a change in how brands perceive festivals. Five or 10 years ago the brand managers of most brands hadn’t embraced that music themselves, so intrinsically they didn’t see it as a good space for them to invest their brand’s money. Now all of those brand managers have grown up with dance music as part of their own cultural perspective, so that barrier has been broken down. EDM now is very mainstream, and brands now will ironically look at an EDM festival more than a traditional rock or indie-based festival.” . “The Australian market per-capita is probably the biggest festival market in the world. It’s gone crazy here. Ten years ago you had The , and that was pretty much it. Now you’ve got big touring festivals: The Big Day Out, , and Soundwave—these will all When we started in 2007, and go to , , , , . Then you’ve got a started to sell tickets and plethora of fixed, one-location festivals: is the best of sponsorship for festivals in that bunch, with the Falls Festival a big one too. We’ve got clients that will Australia, it was a lot more activate campaigns across all the big festivals [over the course of a year].” . “Sponsorship spend in Australia on EDM festivals is definitely in the tens of challenging than it is now. millions. In the last four or five years, the market has been tighter because We’ve seen a change in how of the global financial situation, but having said that, the revenues that brands perceive electronic we’ve been bringing in from our partners have increased every music festivals. … EDM now is year, and last year was the biggest year we’ve ever had. So the market is very mainstream, and brands still growing.” . “I don’t think the U.S. sponsorship market has got to the levels of saturation now will ironically look at an that Australia has reached. It will continue to rise [even more than Australia, EDM festival more than a which is already robust]. There’s a lot of blue sky [in the U.S.].” traditional rock or indie-based . “Last year we had MasterCard sponsoring , and the festival. activation we created was a secret back-stage concert for some MasterCard winners with an artist. We filmed it and turned it into content. We did the Marketing & Branding Exec., Australia deal with MasterCard for for the festival, and then we Specializing in EDM Festivals had three separate deals with [the artist’s] manager, with her record company for the master rights and with her publisher for the publishing rights.” . “Five to seven years ago, 80% of the sponsorship that we were writing and observing in the market was drink related. I'd say it's now somewhere between 60%-70% for drink related sponsors.” . “We break the drinks down into different categories—we’ll do a beer deal, a vodka deal, a brown spirit deal. When Jagermeister really fired up here, we carved out a liquor space just so we could do a separate deal. … So that’s where the sponsorship starts—with a solid base of your drink partners.” . “Then you look at all the other categories. Each year we find it easier and easier to deal with the non-traditional EDM sponsors. In the last 12 months we’ve done deals with MasterCard, Mazda, a couple of the telcos—which have

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SFX Entertainment

always dipped in and out of this space. So it’s fair to say that now this is recognized as a very acceptable route for brands to have in their marketing Each year we find it easier and mix to reach young people.” easier to deal with the non- . “We also sponsor Good Life Festival, Australia’s only under-age festival, for traditional EDM sponsors. In 15-18 year olds. Tthere’s a great opportunity for us to get deals with brands that wouldn’t necessarily sponsor the 18-plus festivals. We’ve got deals this the last 12 months we’ve done year with Clearasil, with Monster Headphones, and Spotify is the naming deals with MasterCard, Mazda, rights partner for that festival. It’s the perfect opportunity to get 75,000 to a couple of the telcos—which 80,000 15 to 18-year-olds over two days.” have always dipped in and out . “[With regard to safety concerns] the brands have to choose the right of this space. So it’s fair to say partner to work with. Like any industry, there are some good operators, and others who don’t do things necessarily the right way.” that now this is recognized as a Brand Engagement very acceptable route for . “We refer to a festival sponsorship now as just another media channel. The brands to have in their difference is that the festival space allows you a prolonged amount of time marketing mix to reach young to have a dialogue with those consumers. A 30-second spot, or a print or people. digital campaign will reach those people but there’s a finite amount of time that they’re going to engage with [the brand]. But with a festival, it’s 12 Marketing & Branding Exec., Australia hours over one day—or three or four days for the longer festivals—to have a Specializing in EDM Festivals dialogue.” . “The activations that sponsors are using for these festivals are becoming more sophisticated. When we started out, a typical sponsorship activation would be a chill-out lounge, and the brand would put a tent in there and some bean bags and put a couple of promo staff and that was considered a reasonable activation. Now activations are big investments, they’re important physical representations of the brand.” . “There are no and fast rules [with regard to the length of sponsorship ]. Promoters will like to do a two-to-three-year deal. We prefer to do a two, three, or four year deal because we don’t want to keep re-negotiating every year. The norm is probably a two-year or three-year deal across the major festivals—and for that the brand will get some exclusivity, they’ll get locked-in rights, and as that relationship develops, you can identify more and more opportunities to work together.” . “[A great of long-term and sophisticated sponsorship deal started] last year when we created this activation for Jack Daniel’s called the “Barrel House”, which I consider to be one of the best spaces of its kind in any festival in Australia, and even the world. It becomes the kind of hub of the festival. So if you’re a brand like that and you’re trying to reach young people and get them to try your product, they’re there for four days, with a bar and a stage, and you’re exclusively selling that product, there’s really no better way to reach those people. A couple of weeks ago we [repeated the set-up] in Byron Bay at the Falls Festival, which is a four-day festival.” . “[In an example of the Australian market driving corporate sponsorship trends in the US], we have just been appointed to manage Jack Daniel’s’ music strategy in America. So there’s an example of where an agency in Australia has generated the trust with that client to appoint us to do their campaign in the U.S. In the festival space, the market in Australia is more mature—it’s gone through the phase of maturity, and we’re doing things that the U.S. market hasn’t yet done. I think brands in the U.S. will look to As a starting point we look at Australia and the U.K. and want our experience from the last 10 years.” $1 to $1.50 a head as a typical . “[Safety issues] is not a conversation [that comes up] with our partners. investment amount. We’re focused on the number of people who are going to go, the reach, the frequency—how many times you’re going to talk to them—and what kind of Marketing & Branding Exec., Australia message can you get across to them.” Specializing in EDM Festivals Metrics . “The first dynamic you look at as a sponsor in this market is how many people you can reach—how many people are going to go to a festival. As a starting point we look at $1 to $1.50 a head as a typical investment amount. So if there’s 100,000 people at the festival, the sponsorship deal is going to be somewhere in the $100K to $150K range, depending on the kind of rights that any brand is going to be acquiring.” . “You might do a smaller deal for a brand that’s just going to come in and do a bit of sampling at the end of the festival. But if the sponsor is going to build an activation, have some signage there, have some promo stuff and all

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SFX Entertainment

the usual things, then around $1 to $1.50 [per person], and up to $2 if it’s a larger activation is the kind of range we look at.” . “Then on top of that, the brand will have a budget for its agencies and all the other costs the sponsorship will incur, so say another $150,000 to actually activate whatever they’re doing. So the promoter will get 100% of the [$100,000 to $200,000 negotiated sponsorship fee]. It’s just like a brand going in and buying a TV spot on a network—they’ve still got to have a separate budget to make the ad. It’s the same principle.” . “A good sponsorship team will get more deals. At Future Music Festival we’ve got 10 or more sponsors; so on top of the standard five or so [drink brands] you’ll have a telco, a financial partner, a car. … It’s kind of blue sky when you look at the potential to get people on board.” SFX Entertainment . “The big promoters—certainly SFX—have to make sure everything’s done right. They have to make sure the right safety mechanisms are in place, the bars are run correctly. You’ll never be able to completely stop tragic accidents happening, but that’s no different to a football match or a bar or somebody’s house.” . “With SFX [entering the market] it’s more likely that those festivals will be run correctly, because they’re big organizations with professional people. Live Nation is the same. Future Entertainment in Australia is [likewise] a very reputable organizer.”

2. EDM-focused agency in the U.S. and Australia Sponsorship deals being talked about in the North American EDM festival market for the coming year are multi-million dollar deals. EDM festivals like are earning a fraction of the sponsorship revenues of festivals like Lollapalooza, and there is a lot of room for growth. Newer brands coming into the space include music streaming rivals Spotify, Rdio and Beats Music, all of which are expected to spend significantly over the coming year. A big area of sponsorship growth is in live-streaming and after-movie footage, Motorola’s sponsorship of TomorrowWorld being a case in point. We’re set up in the U.S. and are working with a number of Sponsorship brands, and the spends we’re . “We’re set up in the U.S. and are working with a number of brands, and the spends we’re talking about are huge—multi-million-dollar spends just in the talking about are huge—multi- U.S. for next year.” million-dollar spends just in the . “Festivals like EDC [Electric Daisy Carnival] are bringing in a tiny fraction [in U.S. for next year. sponsorship] of what a Lollapalooza does at the moment—so there’s huge potential to grow.” . “What we’re seeing is that a lot of brands will come up with a global positioning around music, which will be largely led out of the U.S. That global strategy will then be [rolled out] to the other regions of the world.” Some of the newer brands . “So what we’re expecting to happen is some of the bigger brands doing coming into the space are the deals with artists globally out of the U.S., and then those campaigns will be streaming music providers, activated at a local level in territories around the world, including Australia.” which have been sponsoring . “We’re expecting to see a bit of a bump [in ad revenues] over the next two or three years in terms of brand activity around electronic music in this [Asia events and have been investing Pacific] territory. I don’t expect it to be a boom per se, but I definitely think quite heavily: Spotify, Rdio, we’ll see growth.” Beats Music. I expect all of . “[The kinds of brand categories we see coming into the space] goes in fits these to be quite big spenders and starts. Mazda has been quite active in the space and festivals in here in the next 12 months, general. Some of the newer brands coming into the space are the streaming music providers, which have been sponsoring events and have been because [music streaming] is a investing quite heavily: Spotify, Rdio, Beats Music. I expect all of these to be space that’s becoming really quite big spenders here in the next 12 months, because [music streaming] competitive. is a space that’s becoming really competitive.” EDM-focused Agency U.S. & Australia

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SFX Entertainment

. “The next big step with festivals is if we see someone like a Samsung come on to the scene. If a Samsung-type brand comes into the space it will be really good for everyone—I think that will be the tipping-point moment.” . “Another big area of growth is around the live streams. If you think about live streaming of festivals, it’s kind of water-cooler moment for young people. A lot of the festival live streams have been getting huge numbers.” . “Young people are not watching TV in the same way. They don’t all gather ’round at 7p.m. and then talk about it together the next day; they’re consuming content on their own terms and they’re downloading it illegally. So the only times you can get young people to come together en masse is around these live music events.” . “If you can aggregate all the live streams of festivals around the world and promote that through your own YouTube channel and have one brand own all that, I think that has huge value.” . “[Safety concerns] don’t come up that much among the brands we work with. It’s a consideration, but it’s not seen as a huge concern.” The next big step with festivals Brand Engagement . “YouTube is where all the pre-[festival] and post imagery global views are is if we see someone like a with EDM, and if you can own that as a brand it’s very, very powerful. It’s like Samsung come on to the the new MTV. It’s a really big area; [traditional media] can’t easily target scene. If a Samsung-type brand young people at the same time, with the same message any more. This is comes into the space it will be one of the only means left where you can actually impact millions of young people simultaneously with a message—and that’s powerful.” really good for everyone—I think . “Think about if you were a global brand, and you partnered with 10 or 15 of that will be the tipping-point the biggest festivals around the world, and all of those festivals were live- moment. streamed through your channel, and Samsung had the YouTube channel where all of this content appeared exclusively, and then they have pre-rolls EDM-focused Agency U.S. & Australia integration, post-rolls, all sorts of social media. So instead of buying an ad around, say, sport content, you can instead own this content. And when I say ‘own’ it, you’re talking about being integrated into the content, and trying to interrupt the experience a little bit with your ad message, which people get in the free content. Then people will watch it.” . “Motorola just sponsored the TomorrowWorld live stream on YouTube in the U.S., and we did a two-year deal with Virgin Mobile about two years ago for a big festival here called Splendour in the Grass, where we packaged up the live stream and produced that and brought the brand into it.” . “[In Australia] we’re seeing that there isn’t a strong delineation of genres [of music] any more. ‘Festivals’ has become the genre here in Australia when brands are thinking about targeting youth; they’re not thinking, ‘I want to do ’, or ‘I want to do indie music’ or ‘I want to do dance music’. Brands are much more interested in a person’s lifestyle, and how they live their life, rather than what music they’re listening to.” . “A lot of the research we’ve done shows that in this demographic, people don’t wear the badge of the genre as much; they might be into dance music, and into indie music and into rock music as well. They could just as easily go They’re still assembling their to an event like Laneway festival, which is all the emerging indie bands, or team, but I think they’ve they could go to Stereosonic. Those genre barriers have dissipated quite a already shown that they have bit, and so a lot of the brands entering the space here wouldn’t have just a direct electronic music strategy. It would be more of a youth strategy great ambition, and they’ve partnered around festivals, and then some of the bigger festivals are dance- been doing things that are not music led.” particularly easy to do, so I Metrics wouldn’t bet against them. I . “The $1 to $2 per-head sponsorship deals you hear about are probably closer to $1 here in Australia, and they’re mostly around pourage. So if think they really are in the you’re an alcohol brand or energy drink, and you want your drink to be the zeitgeist of youth today, and if first pour, or the only beer that gets served at the festival, then that’s the they can get everything aligned price of entry. And then there’s obviously a cost to activate around that. And in the way they are setting out then you need to promote your association with a lot of post-[festival] type to, I think it’s going to be very activity.” SFX Entertainment lucrative. . “I’m pretty sure SFX will be going pretty hard after Samsung. Samsung EDM-focused Agency became the naming rights partner of ADE [ Dance Event], a U.S. & Australia festival and conference which takes over Amsterdam for a whole week in

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SFX Entertainment

October. Samsung blanketed the whole city, so they’re the type of brand that has the budget that SFX will be going after. For a global deal like that, I’d say it would have to be in the tens of millions. I don’t think it would be cheap.” . “[SFX-owned] Stereosonic is one of our biggest partners; we work very closely with them.” . “They’re still assembling their team, but I think they’ve already shown that they have great ambition, and they’ve been doing things that are not particularly easy to do, so I wouldn’t bet against them. I think they really are in the zeitgeist of youth today, and if they can get everything aligned in the way they are setting out to, I think it’s going to be very lucrative.” . “[The risks to the model include factors like] if they paid too much for any events, and if there are any more issues around public safety, or if the U.S. government decides it’s going to crack down on any of this stuff, or if it becomes a political punching bag, or if anything bad happens at any of the events—they’re some of the bigger risks.” . “The industry’s growing, but eventually [SFX is] going to run out of things to buy. So it’s a significant challenge [to maintain growth], but [SFX founder and CEO Robert] Sillerman’s a very resourceful guy.”

3. Business development officer for a consolidated media company Sponsorship deals between $8 and $12 million are possible for large EDM festivals. While not on par with sports events, this is large for music and when combined with smaller deals, point to considerable profitability. This source’s agency does not specifically steer clients toward EDM; rather, it presents sponsorship as a solution, and increasingly is used as a tool. Worldwide sponsorship as an /promotional tool shows about 5% annual growth. The audience is huge and largely social, evidenced by YouTube views and the social media following of its DJs. The millennial market is very appealing to sponsors, and SFX’s most significant opportunity is online, either as a content platform or in streaming live events. Sponsorship . “There’s an increase in the overall sponsorship market. Global sponsorship is growing faster than traditional media. Right now it’s a $50 billion market Depending what you’re globally while the total ad market is $500 billion, but it’s a huge amount in sponsoring, somewhere any case.” between $8 and $12 million . “The amount that’s spent on music sponsorship has been increasing quite deals are not out of the significantly. It’s about $2 billion in the US. We don’t measure outside the question. Compared to other US but I’d say it’s at least double.” . “Clients aren’t interested in EDM, per se. It doesn’t work that way. They’ll sponsorship areas, compared come to us with a problem and it’s up to us to recommend a solution. to sports teams and Formula Sponsorship is an increasing part of the solution. That’s borne out by the One, with sponsorships of $75 fact that sponsorship is growing relatively significantly, by about 5%t.” million, $8 to $12 is small. But . “We do YouTube, radio, Facebook sponsorships; all of that.” they’re a big deal in music, and . “[EDM is] starting to develop into a space of its own which is quite a unique position to be in. All of the potential is there, the big trick is how to pull off.” there are a lot of smaller deals . “We know the audience is definitely big. It is hugely social, and just look at around. the number of YouTube views of EDM-based content. Tomorrowland has Business Development Officer reached 100 million views [on YouTube]. If you look at the social media Consolidated Media Company following that some DJs have, they’re in the tens of millions. [EDM DJ] is almost as high as Justin Timberlake.” . “It is a 100% millennial market, which is part of what makes it appealing. The Live Nation audience was born on the internet. If you’re an advertiser it can be a difficult audience to reach; they’re not congregating en masse on broadcast TV, they’re all over the place.” . “The millennials market is huge in terms of spending power, and EDM is the music of the millennial generation and EDM is really crossing into the mainstream, like crossed from urban to mainstream.” . “The most listened to on Spotify last year was [EDM artist] ’s ‘Wake Me Up.’ So it’s really moving into the mainstream.” . “I think it’s here to stay, the way Elvis was a proponent of rock’n roll and Beatles of pop and Jay Z with hip hop, the big DJs are out there driving EDM and it’ll be a cultural force.” Brand Engagement

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SFX Entertainment

. “The brands are basically soft drinks like Coke and Pepsi, the waters, energy drinks. Alcohol in terms of beer and spirits, Belvedere Vodka, for example. Automotive to an extent, financial services most definitely, mobile telecoms.” . “Probably the biggest markets outside that are not yet tapped into are clothing and wider technology.” Metrics . “Depending what you’re sponsoring, somewhere between $8 and $12 million deals are not out of the question. Compared to other sponsorship areas, compared to sports teams and Formula One, with sponsorships of The great advantage that a $75 million, $8 to $12 is small. But they’re a big deal in music, and there company like SFX has is are a lot of smaller deals around.” significant rights over the . “Traditionally in EDM and with music sponsorship, there’s very in-venue on- content. They’ve got all of this the-ground festival sponsorship, live venue sponsorship. That’s where the content and don’t know what to likes of, say, Live Nation is getting its money, generating $240 million in sponsorship revenues with small on-the-ground activations of maybe $2 do with it. They have to get it on million each. On a per-person basis, the amount they’re generating is quite a platform that’s monetizable. significant.” Business Development Officer SFX Entertainment Consolidated Media Company . “The next really big opportunity is not in just the festivals which are only one platform. If you look at SFX as an example, it has a live global festival and events platform which is reasonably significant. Where they can really generate [revenue] is with the right sort of content platform where the eyeballs are going. That’s where YouTube, Twitter come into play, you can monetize that.” . “The real trick is actually for SFX to own the platform, whether they build one from scratch and get all of the audience, or partner with someone like Machinima. That’s where the opportunity is.” . “The great advantage that a company like SFX has is significant rights over the content. They’ve got all of this content and don’t know what to do with it. They have to get it on a platform that’s monetizable.” . “A third area is streaming music itself. Not all festival owners and event owners do that. Certainly companies like SFX can do that.”

4. CEO of a U.S. creative and content agency specializing in technology, entertainment and social media Consumer brands are entering the EDM festival space, but entry is slow. Car companies Hyundai, KIA and Toyota are moving in, as are Procter & Gamble, General Mills and Samsung. Global brands are slow to move despite the huge opportunities to reach this audience, partly because they are innately conservative and too big to be nimble. Another major hurdle to rapid sponsorship growth is a lack of metrics by which to evaluate the value of festival sponsorship to the bottom line, both on the brand/agency side of the equation, as well as from the promoters. SFX may reach $100 million in sponsorship revenue in the next couple years, though it has yet to come up with a formula for success of the brand. Sponsorship . “We are very involved with EDM. We’re getting more and more involved with the [EDM festival] space. We have relationships with the top 50 EDM artists Sponsorship is not going to be and we are also setting up an event which mashes legacy music and EDM, where we have major brands looking [to sponsor the event] such as Diageo, sexy and cool unless the CMO Coca-Cola and Toyota, just to name a few.” can get something out of it. The . “With TomorrowWorld what amazed me is they have such a huge number of brands and agencies don’t represented countries—more than 200, which is more than any event in the have the metrics [to evaluate world. It outpaces the World Cup and the Olympics.” sponsorship opportunities]. We . “Heineken’s one of the major leaders in the category, Coca-Cola’s dabbling in it, Procter and Gamble is slowly moving into the space [with Cover Girl], are literally forming strategies car companies are slowly moving in—KIA is definitely moving in, Hyundai has for brands and telling them that moved in—and Samsung. I know that Diageo’s also highly interested in this this is what they need to do. space, and General Mills is another one. You’ll see more of this. Some are going to be jumping a little bit more, some a little bit less. [But] they’re going CEO, Creative & Content Agency U.S.

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SFX Entertainment

to crawl, walk then run. I don’t see any of the brands taking it on with full force.” . “I am always surprised that so many brands don’t jump, with this kind of amazing opportunity with millions of viewers guaranteed. But sometimes the brands just don’t jump because they’re a slow boat. They’re like the Titanic, and if something’s not already built into their strategy it’s hard for them to take a chance, because [the decision makers] don’t want to get fired over it.” . “So I think when you ask, ‘Are they going to jump in to this space?’. No. Will they crawl, walk, then run? I think so. It takes an agency bold enough to take a chance.” Brand Engagement . “It’s really about integrating product in a smart way, which brands haven’t really figured out yet. They’re still way behind. You’d be surprised by how many years behind; they’re afraid and very conservative.” . “We look at views and subscriptions to a channel. So if you look at a channel like Coca-Cola or or a channel like the Cimorellis who are out in California, they can outpace any other brand in America [in YouTube views], and they’re just a group of six girls. This is what we’re showing to brands—artists like this have six hundred million subscribers. What do the brands have that’s comparable? The brands aren’t doing it right. Their strategies are off, they’re not connecting the dots.” Metrics . “Sponsorship is not going to be sexy and cool unless the CMO can get something out of it. The brands and agencies don’t have the metrics [to evaluate sponsorship opportunities]. We are literally forming strategies for brands and telling them that this is what they need to do.” . “We guarantee distribution, we guarantee eyeballs, and we have a call to action. It’s really about how many eyeballs can be quantified in any media buy. [Metrics around festival] sponsorship is about the people there. Do they have the experience of that brand, and how do they connect and what is meaningful? So what’s the call to action? Is it more just about awareness and education? Is it more about sampling? What is it at the end of the day, what is the KPI [key performance indicator]?” . “[To have an effective sponsorship campaign] you need to know all of these measurables. And then you also look at what is of residual value [from a festival]. So if Honda or Toyota is involved, what does that mean to their Brands don’t know what they’re dealerships? What does it mean to their brand? What is the touch point or doing [in the area of metrics] multiple touch points.” and that’s the problem. They . “Brands don’t know what they’re doing [in the area of metrics] and that’s the need to have key measurables problem. They need to have key measurables [like eyeballs] to justify the [like eyeballs] to justify the investment.” . “We measure eyeballs mostly on YouTube, on Facebook, on Twitter, investment. … We measure sometimes Pinterest.” eyeballs mostly on YouTube, on SFX Entertainment Facebook, on Twitter, . “$100 million [in sponsorship] is possible [in the next year or two]. I’m on sometimes Pinterest. the front lines pitching with some of the biggest [marketing] stars on my team, and sometimes clients take six months or a year to figure it out. CEO, Creative & Content Agency Sometimes it’s three months.” U.S. . “You have to have a formula [for how the metrics and deliverables work] and you have to keep pitching. And then someone [in the agency and brand HQ] has to have the budgets and the heuvos to say ‘yes let’s do it.’” . “[SFX] doesn’t yet have a formula for success for the brand. They’re just saying, ‘look this is cool and sexy for the demographic, for the target audience.’ But they haven’t really figured out a way to impact the brands, to create sales.” . “It’s going to come down to how good [the SFX sponsorship team] is, and also the value proposition. If I were Coca- Cola and I were to spend $5 million—so a million dollars for each festival—what do I get? Yeah, I get some stage time and banners and blah blah blah, and maybe some video. But at the end of the day, I think brands are going to be measuring the success of their sponsorship campaigns by the number of eyeballs. How much sharing goes on. How much engagement goes on. How many impressions. Because it’s still going to come back to what they traditionally know from broadcast.”

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5. Marketer specializing in music partnerships for leading brands Many brands have yet to understand and realize the full potential of music sponsorship and activations across all the available platforms. This relates to a strategy and activations before, during and after the actual event. Brands are starting to wake up to the EDM genre, but there is a dearth of metrics around what these festivals and other music events can deliver. Sponsorship strategies need to be activated and measured around social media. Sponsorship . “Daft Punk’s [hit track Get Lucky] was an amazing uplift for the genre this past year, and I think a lot of brand managers are going to start to see this as mainstream.” . “The sheer number of people going to these festivals, and the number of festivals around—and whether they’re attended by 10,000 or 20,000 or many more. These numbers start to add up as not just a fad. So we’ve got the numbers, and there’s the opportunity to get in early.” Brand Engagement . “Telco companies that give free wi-fi, or Cover Girl that does free make-up—these are great examples of [brand engagement], but obviously that’s going to be category specific.” . “I worked with Heineken way back when it was first getting into the music space, and what I know is that [any successful campaign] has to be a sustained process. The brand managers, most of these people are typical MBAs from great universities who have a book sense of what these things are, but not necessarily a lifestyle sense.” . “What it boils down to, it’s not just about what’s going on at the venue, but also how you can activate around the festival and use the brand’s messaging far beyond the venue—before and after. In your print, TV—how do you maximize all of this around music? How do you maximize the music equity for your brand?” . “I worked with Trojan condoms on [music and extreme sports festival] the Warped Tour. The creative agency I was working with negotiated the deal and just wanted to put up a tent and hand around a few condoms. I knew there was so much more we could do. So I interviewed every band that was involved on the tour and did PSAs with them, and had the artists talk about safe sex—because the whole Trojan campaign was about safe sex.” . “It was serious stuff, and I got all the bands to participate. So we got great content for the brand, using product, and created these amazing videos, which I ended up using as part of our media campaign.” . “[Festival goers] are much more likely to listen to what their favorite artists are saying than hearing something direct from the brand as to what they should be thinking. It’s about letting the artist communicate [to the kids] rather than having some brand telling them what to think. You don’t need to be a music expert [to do more sophisticated activations like this at festivals], but you do need to understand what passion points are.” . “Music is the most social content, period. And not only is it a content platform, but it’s a media platform. Everyone’s catching up, but I think it’s a mistake a lot of brands and advertisers miss, is that everywhere music is, is somewhere a brand could be. It’s ubiquitous. It doesn’t just sit on your desktop it doesn’t just sit on a screen, it’s in in-venue, it’s on your call waiting, it’s everywhere.” Metrics . “There’s a grand opportunity [for revenues] here that needs to be looked at beyond just ticket sales [and direct sponsorship revenues]. There are all kinds of opportunities around music rights and other things, and in the U.S., traditional marketing metrics are still being applied against this stuff. Sometimes it is hard to measure, but you need to measure a lift in the overall campaign.” . “That lift can come in a number of ways—through measuring social chatter, so people talking about it online: Facebook, Instagram, any of these things. That’s one way of doing it. Are you seeing a lift in sales around where the target audience might be? So with EDM, people are going to get the beverages in-venue, but where are the connection points for pourage and lift in case sales in certain markets? Do you see a lift in sales based on the fact that there’s a lot of noise around the event? And then how is that messaging being migrated across all areas?” . “It’s complex, but you have to apply metrics to these projects, and sometimes it has to be over a sustained time. Red Bull did a great job of sticking themselves into action sports. It used to be Mountain Dew in the States and all over the world, but Mountain Dew sort of gave it up when Red Bull came around, and Red Bull has sustained it with all of their very extreme activities [sponsorship], whether it’s jumping out of a plane or a rocket ship.” SFX Entertainment . “So for someone like SFX, traditionally a concert promoter, look at the brands that are there—the Red Bulls and alcohol brands—should they be there? And once you are there, what are you doing, and what have you done before you got [to the venue]?”

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. “So it’s much great than just a dollar or two dollars a head. What can they be doing on the activation part of it? This part of it can be expensive, and sometimes brands might not feel like they’re getting much of a lift, but that’s often because it’s not done right [and it’s also not measured right]. It needs to be focused and activated around social media.”

6. Director of account services for a West Coast out-of-home agency None of its clients have moved forward with a campaign for an EDM festival despite representing brands like Heineken, that are traditionally EDM-friendly. EDM festivals are ripe for guerilla marketing, but this agency is constrained by limits on the types of campaigns it can conduct and apparatus it can bring in. The reputation for drug use at these festivals further discourages advertisers. Sponsorship . “Coverage of EDM festivals has occasionally been requested, however, none of my accounts have moved forward with a program.” . “Typically the festivals are held in areas where traditional [out-of-home advertising] OOH is limited and the number of constraints placed on what type of belongings can be taken into the festival limits our availability to execute a guerilla campaign.” . “Due to the all-night nature of these festivals and notorious reputations they have for being drug friendly, this poses a challenge in reaching a receptive audience, one that wants to be engaged with advertising.” . “I think it’s a combination of brands and agencies deciding that these festivals aren’t the best fit/representation of their brand. Also, with the limited number of opportunities on-site/in the market, this also poses a challenge.” Brand Engagement . “The only requests I’ve received for EDM festival coverage is from music categories.” Metrics . “Regarding sponsorship dollars, this is hard to assess as it will depend on the scope of the program like how many festivals, what is included—on site signage, online/ offline advertising, etc.” SFX Entertainment . N/A

2) Festival Promoters All five sources said EDM is becoming mainstream. Festivals are the best place to reach coveted millennials, opening up potential for brand sponsorships. Sources were split, however, over the current growth of sponsorships. Three said sponsors were on board with EDM festivals, while two others said deals were more difficult to secure. Sources highlighted electronic cigarettes and gaming as potential sponsors in 2014, while bigger names like AT&T and Verizon are likely to be more cautious due to safety and liability concerns. Live streaming was mentioned as an important growth aspect for these festivals in the near future. Sources estimated sponsorship revenue per attendee in the $1-$2 range per sponsor, while another said cumulative sponsorship revenue per attendee is as high as $15, which is the goal of all promoters. Two sources believe SFX can reach $100 sponsorship revenue levels, while one source is more skeptical.

KEY SILO FINDINGS Sponsorship - All sources agreed there is room for growth of EDM, and that EDM festivals are the best place to reach millennials. EDM is becoming mainstream, and is here to stay. - 3 sources said sponsors are on board with EDM festivals, but two suggested that sponsorships are hard to secure due to liability concerns and because ad agencies don’t want client money going to third party. - 2 sources stated that audiences support brands at festivals. - 1 source noted the opportunity for significant growth of live streaming of EDM festivals. Brand Engagement

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- All sources said alcohol, tobacco, and non-alcohol beverage sponsors are mainstays of EDM festivals. One source suggested that larger brands, such as AT&T and Verizon, are more cautious about sponsorship. - 1 source predicted that electronic cigarettes will become a big sponsor in 2014. - Another source suggested that gaming is becoming an important sponsor, and is a good match for EDM audiences. - 1 source pointed out that once they start, brands continue sponsoring year after year. The key is for a brand to connect with the festival community. Metrics - One said sponsorship revenue per attendee is in the $1-$2 range per sponsor, while another pegged cumulative sponsorship revenue per attendee at $15—the goal of all event promoters. - Another source said that sponsors with a product are making their money back at the festival itself. - 1 source pointed out that attendees spending minimum $500 to attend, which helps sponsors recoup their money. SFX Entertainment - 2 sources believe SFX can make reach $100 million sponsorship revenue levels, while one source is more skeptical. This source takes issue with corporations trying to profit off of the festival movement.

1. Las Vegas-based promoter with a global client base Outside of alcohol and tobacco brands, sponsorship has been tough in the EDM space. There are liability concerns, particularly relating to drug overdoses. EDM festival sponsorship is small compared to the bigger mainstream festivals like Bonnaroo and Summerfest, which leaves potential for growth especially as mainstream operators like SFX enter the space. But there are hurdles for SFX to overcome, not least of all the logistical expenses and problems that come with putting on festivals outside of major cities. Sponsorship . “In this genre of music in the U.S. at least, the festivals are getting bigger and more popular every year, and this will open more doors, and the Las Vegas in general has taken companies are going to see they need to be a part of this and be on board before someone else does.” such a drastic in the last . “The electronic dance scene is relatively new here [in Vegas]. I’ve been five years, to the DJ world, and working with several of them for about the last four years, and I think it’s has become more about the new in general to the U.S. compared to overseas—but it’s growing rather live DJs and electronic music, quickly here. I’ve worked with Electric Daisy Carnival, Nocturnal in San as oppose to live music with Bernardino California, and some smaller [EDM] festivals that were incorporated into other larger festivals—so not stand-alone like EDC.” bands. So we’re all kind of . “Las Vegas in general has taken such a drastic shift in the last five years, to forced to learn. … In the dance the DJ world, and has become more about the live DJs and electronic music, world, sponsorships have been as oppose to live music with bands. So we’re all kind of forced to learn.” tough. The feedback we’re . “The in general has changed because of social media. But getting from a lot of companies Las Vegas has done a 180 in the last five or six years; you used to be able to walk up and down the strip and see live bands almost anywhere you went. is concern with liability. Now it’s all about the DJs: Tiesto is king, and it was AM [DJ Adam Goldstein] Las Vegas-based Promoter With a before he passed away.” Global Client Base . “What we’ve seen as a trend from a sponsorship standpoint is that in the dance world, sponsorships have been tough. The feedback we’re getting from a lot of companies is concern with liability. While I’m at festivals and watching people, I don’t think people tend to drink as much at electronic music festivals or party as hard as people think, and certainly not as much as at say festivals. But because of the incidents which have happened around this country at least—whether it’s somebody that died of an overdose, or got hurt doing this or that—a lot of companies that I’ve spoken with over the last few years have been reluctant [to be aligned with these festivals]” . “When you get a company like a Live Nation, which has been around long enough and has a reputation like they do, more companies are going to be more open to giving sponsor dollars and are going to be more comfortable with giving sponsor dollars.”

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. “These bigger agencies [that handle the global consumer brands] are very tough to deal with. They’re very hard to get someone to sit down for five minutes on the phone with and have a conversation about the marketing side.” . “I started to think EDM was going to be a bit of a fad, but as long as electronic music shifts with the times, and they can keep the problems down, and the security tight and everything running smoothly, they’re going to be fine. But unfortunately a lot of major cities in this country have banned these festivals, and that’s a struggle they’re going to have to overcome.” . “It’s a very tough genre in the festival world to work with, because cities are banning these festivals, and the logistical problems that come when you have to put a festival 30 miles out of a city. But as long as [the EDM festivals] can keep coming in and prove they can make millions of dollars for cities and counties [like TomorrowWorld did in ], then they might be OK. In Las Vegas, you can do anything pretty much as long as people aren’t getting killed, so they’re going to do well here. But with regular cities—Atlanta, New York, , Dallas—it gets a little harder.” Brand Engagement . “I don’t want to name specific companies [that have had safety concerns], but industry-wide, the beverage companies have always been the easiest to work with. Likewise tobacco, because they don’t have as many outlets as far as an event that large. So they’re always easy to get.” . “But when you’re talking to a regular industry—let’s say a phone company like AT&T or Verizon: they get a little pickier as far as what they’re sponsoring and who they’re working with. Really, anything outside of [alcohol and tobacco] is where I start running into a lot of brick walls.” Metrics . “I think the $1 to $2 per head amount is about right for what we see here in the U.S. I’ve seen higher and lower [for music festivals generally]. Festivals like Bonnaroo in Tennessee and Summerfest in Wisconsin are huge and in high demand [with sponsors] so you’re going to pay a premium—more like $2 a head. A Summerfest in Milwaukee is 11 days long and brings in upwards of 1.5 million people over the course of the festival.” SFX Entertainment . N/A

2. -based independent tour promoter and sponsorship specialist Brands are sold on this space as a way to reach millennials, but there are obstacles to marketing spend being allocated to festivals. Marketing budgets often are split between the major ad agency and smaller shops which get the budgets for special events. Some larger agencies will steer clear of a festival if it means a chunk of its clients’ dollars are going to be funneled to a third party. Electronic cigarette brands are the major newcomer on the EDM festival scene in Miami. Sponsorship . “There’s a growing feeling among advertisers and brands that this is the best space to reach millennials now. They’re not easily targeted, because they’re not watching any more, but they’re obsessed with music—it’s the best way for brands to have an impact.” . “Bacardi at one point headlined a festival in Miami that was all DJs, about three years ago. I’ve since approached Bacardi to talk about different There’s a growing feeling opportunities but they’ve told me is that they’re artist-specific now—so going among advertisers and brands with the artist rather than getting involved with the festivals.” . “I’ve been involved with a Latin [EDM] artist that did a recent tour. The that this is the best space to sponsors there were a car brand and a cell phone/wireless telco company. reach millennials now. They’re They were more interested in being involved with the festival tour rather not easily targeted, because than the artist, however part of what the tour sponsorship involved was they’re not watching television having the artist in some commercials.” . “In Latin America, if I was going after a sponsor, I’d be going after the any more, but they’re obsessed brand—that’s as an independent person representing the tour. But as a local with music—it’s the best way for promoter, you normally have relationships directly with the sponsors, brands to have an impact. because first of all you’re living in the same city, and also if you’re a sponsor you’d want to stick to the local promoter, because he’s going to get you Miami-based Independent Tour Promoter & Sponsorship Specialist involved with all the other things he’s involved with.”

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. “There are a couple of smaller boutique agencies that represent the brands for these festivals and handle their marketing budgets. This [results in a situation where] often [the main] agency will chose not to do an event because the dollars will be funneled [out of the main agency].” . “An ad agency sometimes doesn’t want to necessarily direct a client towards an event, because maybe they don’t get commission from it, or they’re not the media buyer, or don’t control that money. This is not the case with most beer brands, which have their marketing in-house or with one main agency.” . “For example Budweiser is direct. Coca-Cola is direct. Heineken has different boutique shops that represent them. A lot of times it will be advertising agencies for national accounts, then different boutique agencies will be used for special events, because they’re different budgets.” Brand Engagement . “The brands [that I’m familiar with] that go into these festivals, they want distribution. They don’t just want to give you $5,000 to be seen at a concert The promoters will calculate a and maybe be available at happy hour; they want pouring rights. So it’s not figure of $15 a head in terms just always dollars. Brands will try as much as possible to give free product of what [all sponsors] will as part of the deal. The free product is then sold by the [festival] producer. spend on advertising. That’s And this can be a cell phone company as much as a Heineken—they’re always want to give you product over cash when they can, because that what a promoter [ideally looks] costs them nothing.” to bring in per person for any . “Brands are getting much more savvy and their activations are a lot more given festival. intricate these days. They’re a lot more integrated with social media.” . “What I’ve noticed coming into EDM festivals in terms of sponsorship is a lot Miami-based Independent Tour Promoter & Sponsorship Specialist of electronic cigarette brands. It’s a huge industry, it’s growing and not yet regulated. In Miami, they’re everywhere.” . “Southern Comfort [is a repeat sponsor for festivals generally]. It’s the brand a lot of college-age students drink. They produced music festivals all over the country in the past, and must have spent millions of dollars.” Metrics . “The promoters will calculate a figure of $15 a head in terms of what [all sponsors] will spend on advertising. That’s what a promoter [ideally looks] to bring in per person for any given festival.” . “The information I’m seeing on what these festivals are asking for key sponsorships—it’s in the region of $500,000 and I’ve seen sums as high as in the millions for presenting sponsors.” . “A client out of the UK with a major liquor brand approached me about six months ago, interested in getting involved with Ultra. That deal was about $150,000 in sponsorship over three years.” . “[Some brands] are going to want to give as much product away as they can in place of cash, because it’s branding. If you’re Heineken, you might give the festival promoter bottles at 50 cents each; the festival can go and sell that for $5. The promoter stands to make a lot of money, the brand is selling tons of product.” . “I’ve had Budweiser tell me [for some promotions] that they won’t put down cash, but will sell me their kegs very cheaply. Because [beer company marketing execs] are responsible for seeing distribution numbers rise, so if they can give away their product at a very good price, still get paid for it and be part of a festival—what’s better than that?” SFX Entertainment . N/A

3. Managing partner, Euphoria Music Festival There is considerable momentum among EDM festivals and SFX undoubtedly will benefit in the form of significant sponsorship revenue. Opportunities exist in both large and small festivals. Ground-floor sponsors are returning to larger festivals like Tomorrowland regularly, while new sponsors have difficulty breaking in. Rather than scare sponsors away, safety concerns create branding opportunities. Any product or service (from vodka to insurance) that would interest millennials are appropriate for EDM festivals, which provide a new venue for guerilla marketing to brand-loyal millennials. Sponsorship . “There’s substantial ground that corporate sponsors have covered in the last year. I believe there’s triple or quadruple the amount of expressed interest in even smaller festivals.”

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. “I’m a smaller festival of about 10,000 [attendees], and I’ll try to get everything sponsored by somebody. Close to 20% of our whole budget is sponsored. For a larger festival like Electric Daisy Carnival, those numbers range from 5% to 50%. Name a platform and someone’s sponsoring it.” . “Global brands get in at the ground floor to solidify their stake in it and same goes with corporate sponsors. Your chance of getting into Tomorrowland if you weren’t there five years ago is slim to none.” . “The response is so good and the ROI is sometimes measurable to a certain extent, you do get a lot of repeat sponsors, especially ones in the music industry. As for more corporate sponsors like Dove, Sprite, Coca-Cola, it’s more a branding issue where the name is associated with a popular youth culture.” . “Smaller festivals have an opportunity to go after more music-related industries that want involvement. We partnered with a tutorial music website.” . “Tomorrowland I think brings an estimated $50 million dollars into a city, so companies like Sheraton Hotels get a piece of the pie. You’re bringing 300,000 kids to a city; and if you tell them where to go they will do it.” . “There are situations where it’s a strategic partnership, like a ticketing agency that gives you no fees but for a five- year deal, or a staging deal where you get three stages free and pay for two.” . “It’s the new way to do your guerilla marketing. It’s in your face, around exactly what [attendees] love doing. The culture behind EDM is very supportive of brands getting in and them getting involved with it.” . “Global festivals are for global brands. They have to be very demographic-specific when it comes to regional sponsorships. Red Bull has come out with specific stuff for regions, let’s say a brand specifically for Texas with a Lone Star theme.” . “[Safety concerns are] a huge branding opportunity. Sponsors can come in to be known as the company to educate on health and wellness. Beer companies have been very cognizant of drinking and driving.” Companies target the . “I think music festivals are here to stay. And if one genre becomes millennial demographic with unpopular, something will replace it. We’ve seen in last five years two subgenres of EDM come and go, and Trap.” products and services they use Brand Engagement outside, like insurance, Bath . “Companies target the millennial demographic with products and services and Body Works, Mac, makeup they use outside, like insurance, Bath and Body Works, Mac, makeup companies. Anything to do with companies. Anything to do with youth culture is most likely involved. I’ve had youth culture is most likely contact me, and T-Mobile. As long as your target market is millennials, you should be at music festivals.” involved. I’ve had Comcast . “Beer companies come in every year without fail. There’s not anyone contact me, and T-Mobile. As specific who’s being really aggressive except for those sponsors with long as your target market is products millennials use in that arena, the beer, vodka, rum, energy drinks.” millennials, you should be at . “I’ve not heard of one company that shelled out money and didn’t do it again, or did it five years ago and isn’t doing it now. Heineken obviously music festivals. … I’ve not miscalculated how big would be, but I don’t see why they wouldn’t heard of one company that do it again.” shelled out money and didn’t . “We’ve had investors come in all the time, like Citibank wanted a five-year do it again, or did it five years plan.” ago and isn’t doing it now. . “The biggest things are obviously what you would use at a festival, like beer, liquor, music, apparel. Then anything with infrastructure like tents, Managing Partner platforms. Some festivals get sponsored by carnivals and circuses. We had Euphoria Music Festival a this year and we’re not paying a dime for it.” Metrics . “If you have a product or sell a service people use at the festival, those metrics are the bottom line. If I give you $1 million will [attendees] buy $1 million in beer? Every single one of our vodka sponsors has made their money back.” . “On the other side where your brand is associated with the festival, those metrics are very theoretical. Dove is one of our sponsors, and they’ll probably not see a great influx of people buying their product in the Austin area, but they’ll get brand recognition which is harder to measure.” SFX Entertainment . “No doubt they can reach [over $100 million] in sponsorships.” . “I know [Sillerman] is trying to do exactly what he did in the 80s and 70s when he bought out radio channels and sold out at the right time.”

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. “EDM is here to stay, and as long as youth culture embraces music festivals, he has the opportunity to be successful.” . “SFX highly overpaid on almost everything they bought, like Dayglow. He bought the number one EDM online retail store where anyone who does EDM goes to find the number one song. I think they were posting a $2.1 million loss and he bought it for much more than it would ever produce, but he wants to push the artists that come to his festivals. In the long run I’ll be interested to see what he does with all that power; he’s borderline going on a monopoly.” . “Tickets average $250 to $280 for the bigger festivals. Overall, the average attendee will spend anywhere from $800 to $1500 in amenities, eating, drinking, merchandise.” . “I have worked with them directly on occasion, through my marketing branch. It’s nothing more than $10,000 to $20,000 in revenue for me. I work with them indirectly pretty much every day. What doesn’t he own for me not to be involved indirectly?” . “I’ve not seen a lot of jobs lost. He buys out the whole management team, creative team, bought the makeup of company itself.” . “Very nice people overall.” . “The only company that profits from flights is Tomorrowland in , which has its own airline. They partner with Airline.”

4. President for a promotions, merchandising and EDM app development company Nothing prevents SFX Entertainment from achieving a high level of sponsorship revenue. This mid-20s EDM entrepreneur observes that brands must contribute to the atmosphere of an EDM festival, which he suggested most brands and advertisers do not yet fully understand. Considerable sponsorship opportunities exist in live streaming, which is only now taking off among EDM promoters, and on such platforms as YouTube and AXS. The average festival-goer spends as much as $1300 between tickets, merchandising, food, lodging, etc. Drugs are part and parcel of EDM festivals, which likely discourages some brands. Sponsorship . “Without a doubt. EDM’s not going anywhere, though it’s changed little by little. Think of the ‘70s and Studio 54 and discotheques, then the ‘80s Latin freestyle then the ‘90s underground scene. 2000 grew into EDM. If anything it might change into a new genre, but , freestyle, pop, all those genres fall under EDM.” . “Not a lot of companies have live streaming but they’re starting to [on YouTube and AXS], and finding sponsors.” Brand Engagement . “Brand exposure depends on you are trying to market. You’re not going to market Babies R Us. You have to be conscious that a lot of people are doing drugs at these events—I wouldn’t say half, but a heck of a lot of them. It makes the business what it is.” . “Some industries will stay away from that altogether, but it can be great for alcohol, fashion, energy drinks, as long as they’re willing to take the ride. This last year several festivals had to close due to the deaths of some young adults.” . “EDM’s about people with imagination, like Pasquale Rotella [CEO of Insomniac Events] and me. Once we’re successful, then [advertisers] want our attention. [Rotella’s] not selling himself short.” . “Unless the suits and ties [go to festivals and] understand what the average person wants, they’re not going to be able to [succeed in advertising].” . “This entire [EDM] industry is about peace and respecting each other. If you’re not creating that atmosphere, only paying attention to the percentages, nobody’s going to buy your crap.” Metrics . “The major tours’ presale ticket value may be $180 for a couple of minutes then $250, and that might last for a couple of weeks. Final general admission is $300 to $500.” . “The average person is spending a minimum of $500, and then between travel, hotel, lodging, drinks, drugs, merchandise and souvenirs at least $600 to $800.” . “At the Electric Daisy Carnival promoted by Insomniac everything is at least $10. A beer is $10, a hot dog is $10.” SFX Entertainment

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SFX Entertainment

. “I attempted to get SFX’s attention [for my app], which has several thousand ddownloads. I’m just riding the wave, and maybe I’ll get my turn. SFX is buying up a lot of things.” . “I don’t see why they couldn’t reach over $100 million in sponsorships.”

5. President for a music event production and promotions company Even non-EDM events like Bonnaroo are now incorporating EDM acts. EDM is very economical compared to, for example, producing a Christina Aguilera concert. The demographic is as young as 16, up to 25, and brands are interested in capturing that younger demographic. Gaming and non-alcoholic beverages are the most up-and-coming sponsors. This source believes that the more powerful metrics for sponsors are from the Facebook and Instagram communities as well as Twitter followers. SFX is a more corporate-motivated company compared to Live Nation, and he takes issue with its attempt to capitalize on the EDM community. EDM is strongly tied to the drug culture which may scare off some sponsors, or divert others away from smaller festivals and to larger ones like Live Nation events. Sponsorship . “EDM absolutely has room to grow.” . “If there’s been a big trend in EDM in the last three or four years, it’s this: EDM came out of dance clubs and underground spaces, warehouses, unaffiliated with the national promoters or Triple A radio or major labels. It’s been mostly and underground phenomenon. The productions reflected that to some degree; you had primarily DJs playing in clubs with DJ booths.” . “When it became obvious that tons of young people would pay to go to events like this, major promoters like Live Nation and AEG realized there’s this whole new market. Rock and roll wasn’t going to make them money anymore, and they saw a major movement in music and adjusted to it.” . “The last 10 to 15 years I’ve been involved with the Bonnaroo festival, which is the signature national event. The sponsors used to fit a rock and roll vibe, and there was always a wireless sponsor that had phone charging stations, Now because Bonnaroo is and Major League Baseball was a sponsor. Now because Bonnaroo is going going more towards pop and more towards pop and EDM, everybody’s trying to follow Coachella’s lead.” EDM, everybody’s trying to . “Festivals that used to be groovier, crunchier are going EDM and pop. The follow Coachella’s lead. … sponsors are jumping in with these events now because they’re tied in less with a niche underground musical scene. They’re tied into pop acts played Festivals that used to be on Triple A radio.” groovier, crunchier are going . “Sponsors are jumping on board with the festivals because they all want to EDM and pop. The sponsors reach the same 16 to 25 demographic.” are jumping in with these . “The all-ages venues are the biggest, the ones that are the most events now because they’re competitive. There are only so many Christina Aguileras, but if you can put five DJs together you can fill a 15,000-person arena without paying for tied in less with a niche Christina Aguilera’s production. It makes tremendous economic sense.” underground musical scene. . “Safety is the elephant in the room. There are real safety concerns. EDM to They’re tied into pop acts some degree has a drug culture tied to it. Safety issues have always been played on Triple A radio. the fulcrum by which entrenched powers will push back on a new cultural movement.” President, Music Event Production & . “The music hasn’t been artist driven, it’s been scene driven and drug driven. Promotions Company The early EDM movement was tied to MDMA and Ecstasy being available.” . “This has the potential to scare off brands. It’s certainly a political chip that can be thrown on the table for any local city council person who wants to scream ‘Think of the children!’ because the demographic is so young. But adult sports fans die at stadiums every year and nobody says ‘Think of the sports fans!’” . “It might make the sponsors less inclined to invest in an independent promoter or new event, but they’ll invest in the Live Nation or bigger guys with more resources and experience in mitigation and safety planning. More insurance.” Brand Engagement . “The people that get the sponsorships typically are the theatres, tents and large venues. That’s why Live Nation gets into it—they can guarantee the sheds will be filled so Budweiser or Miller will get much more return.

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. “These brands want you when you turn 21 to pick Budweiser and ask your parents for a Motorola cell phone. Who has disposable income in our culture? People out of college are broke. It’s the kids whose parents are supporting them.” . “One thing that’s really a big push on the sponsorship front is gaming, with gaming lounges at events. The same kids into EDM all have Xboxes. Gaming is a big part of the culture, and it’s probably as powerful an industry as the music right now.” . “Heineken was very much ahead with its early partnership of Coachella. They put that dome at all the EDM events very early. And Heineken has done a good job of establishing themselves as this low-cost refreshing beer that works well with EDM.” . “The number one is always beverage. The beverage tie-in is a perfect match. They can give you a bunch of money in return for buying tons of cases of One thing that’s really a big their product. What we’re seeing a lot of now is the non-alcoholic beverage market: iced tea, lemonade, coconut water. Those guys are getting very push on the sponsorship front interested in EDM because kids are dancing and under 21 and can’t drink. is gaming, with gaming lounges Obviously they charge a huge markup and it’s worth it to them if they’re the at events. The same kids into drink of choice. Vitamin Water went big after this, now we’re seeing coconut EDM all have Xboxes. … What water. Red Bull is the monster, and Rock Star energy drink.” Metrics we’re seeing a lot of now is the . “It has to do with the amount of registered users, what the frequency is of non-alcoholic beverage market: market outreach, what the typical open rate is on emails, the size of their iced tea, lemonade, coconut Facebook community, Instagram community, Twitter following; whether kids water. Those guys are getting are truly engaged in EDM brand or a promoter’s brand.” very interested in EDM because . “You want to invest your brand in a 20,000 person show, but invest in one where kids really love being there. Insomniac has done a great job defining kids are dancing and under 21 what they are, who their audience is and their audience is super- and can’t drink. enthusiastic about the company. They think of the owner as a rock star, it’s President, Music Event Production & personal to them, the fan base still feels like they have a personal Promotions Company connection to [CEO Pasquale Rotella].” SFX Entertainment . “They are buying up a lot of smaller EDM promoters to compete with Live Nation. It’s good business.” . “I have no idea if SFX can reach over $100 million in sponsorships. Any attempt to look at this music market that came out of this beautiful, positive attempt by outcast kids to connect as a way to make $100 million for your corporation is reprehensible. At least pretend that it has something to do with the community you’re serving.” . “I don’t think they’re spending that much. They’re not buying drinks, they’re not buying alcohol, they might be spending a lot on water. But due to safety reasons, most of the sponsors have water filling stations.”

3) Industry Specialists Three of four sources said the growth potential for EDM festivals is significant, and brands increasingly are interested in sponsoring the events as a way to reach millennials. As EDM becomes mainstream, it attracts more mainstream brands and looks to add non-alcoholic beverage companies and telecoms this year. One source believes Microsoft will enter the EDM sponsorship space, setting stage for a battle with Samsung, which would bring EDM further into the mainstream and would ramp up revenues quickly. Sources estimate total brand sponsorship levels in the $5 to $15 million range, though one source refutes assertions of $50 million in sponsorships for a single event. Another source said festivals have a production budget of $30 million, showing the resources available as well as the importance placed on communicating the lifestyle, experience and image of these events. It also indicates how SFX is working to clean up the image of EDM festivals, making them more attractive to sponsors that might otherwise be hesitant.

KEY SILO FINDINGS Sponsorship

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SFX Entertainment

- 3 of 4 sources said the potential of EDM festivals is significant, and brands are increasingly entering the space to reach millennials. On source suggested that growth potential in the U.S. is higher than in Europe. - 1 source said ad agencies want their clients in the EDM festival space. - 1 source suggested that brands don’t understand EDM, and thus are not taking full advantage of the opportunities EDM festivals—which are about a lifestyle and experience more than the music—can present. - 1 source said EDM festivals are coming to China. Brand Engagement - 3 sources noted that more mainstream brands are becoming sponsors, and one source said soda makers are likely sponsors in 2014. - 1 source said Microsoft likely will get involved, which could result in a showdown with Samsung. - 1 source noted that telecoms are looking for exclusive rights to stream festivals. Metrics - 1 source has heard of sponsorship deals in the $5 million to $15 million range, and one source said that EDM festivals have a production budget of $30 million for after-movie production. - Achieving $50 million in sponsorship revenue for a single festival is unrealistic in the U.S., according to one source, where competition for sponsorship dollars is fiercer than in Europe. SFX Entertainment - Aggregating festivals and events makes sense to one source, and will appeal to brands and sponsors. SFX also is bringing polish to festivals by highlighting the experience, not individual DJs. - 1 source suggested that it will be difficult for EDM festivals to get the same sponsorships as other mainstream festivals like Bonnaroo. Sponsors looking for more scientific metrics.

1. Consultant to brands and EDM festival promoters Consumer brands already have entered the EDM space in a big way, with Anheuser-Bush and Motorola the most visible and lucrative deals to date. A huge sponsorship development is Cover Girl’s sponsorship of EDM artists Nervo, a stamp of approval for the genre from a notoriously conservative brand. Mainstream brands increasingly are sold on EDM festivals as the gateway to millennials, to the extent that if they don’t have products which fit the festival audience, they are going into research and development mode to create new products for this market. At least one major soda brand is doing exactly this, and car brands are also moving in this direction. Sponsorship • “The size of the potential market in the U.S. is so much bigger than Europe and Australia. Here, you’re talking about a whole lot more people. [EDM festivals] have taken hold of the youth movement in America in a way that it never really has overseas. It might have been [as popular] in England in the late ’80s or early ’90s, but even then it was more of a subculture. EDM here in the U.S. is mainstream—not in terms of its mass reach yet, which is growing, but in terms of the people that are accepting it and taking it on. They’re not outsiders. It’s becoming part of being young in America to go to one of these festivals. It’s like a rite of passage. These festivals are so spectacular that I don’t see that falling out of fashion in the near future.” • “If you’re 18, these festivals are a whizz-bang experience. It doesn’t have to be in relation to your appreciation for the music on a deep level, it just has to be, ‘I want to go to some awesome place that’s all lights and sound with my friends and party.’ So I think that’s what makes the U.S. different [from more developed markets Australia and Europe].” • “Also, the marketing entities in the U.S. are a lot savvier [than other markets] about what it means to target millennials, and they have bigger budgets towards that. So consumer packaged goods could go there, CSDs [carbonated soft drinks] are going there. So [in the U.S.] it’s moving beyond just energy drinks and alcohol, which is what it’s always been traditionally overseas, because it’s incorporating this mass audience. Cover Girl, which is a Procter & Gamble brand and probably the most conservative company you can think of, is sponsoring Nervo—two really good-looking Australian DJs, and have done activations with them at festivals. So I think [these festivals] are breaking through [with brands] in a way that has not happened before.” • “The nature of the brands that want to get involved is different [to how other overseas markets have developed] because they don’t see this as a fringe group of kids but as mainstream kids that might go to the drug store and buy Cover Girl. You’re definitely going to see soda brands in the space this coming year, for sure; I know a couple of auto

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SFX Entertainment

brands that are looking to get involved and have already made commitments. And when you get brands and categories like that, it really changes everything because it’s serious money. It’s not just energy drinks and alcohol.” • “We did some research on who the EDM fans are, and the qualities that fans say they love about these festivals is that they are equalizing, that everyone’s in it together, that it doesn’t discriminate [based on sex, race, class, education], that it makes them feel energized and free. Those are all qualities that people point to as the reasons they like these festivals; it’s kind of utopian in a way.” • “Safety is absolutely a discussion with the corporate brands. But [the feeling in board rooms is that] all of this money coming in to the space has to be a good thing, because it serves [everyone’s] business interests to have safe events. • “I’m on an advisory board for a company which is looking at safety, and has a lot of experts on it—from doctors, to law enforcement, to people who know how to message kids about safety. So we’re seeing a lot of that kind of [head- on] approach to the issue.” • “At the same time, the worst possible thing that could happen did [the deaths at last year’s Electric Zoo festival in NY], and while the promoters shut down the third day of the festival and everyone took their lump, law enforcement and the Mayor of New York were supportive of the festival, saying everything was done that could be done. I feel like the stigma of these events is changing, and people are moving towards the idea of personal responsibility, which takes away a lot of the PR risk for [brands and promoters].” Brand Engagement . “In Cover Girl’s case, they’re looking for models for their creative, so they did in-book advertising with them, they did POP [point of purchase], drug stores, A lot of the brands are finding so that was their need for having talent. But when the need is for mass reach—100,000 people at once, then they might go to the festivals.” that they don’t have the right . “When you look at what SFX is trying to do, they’re saying, ‘If you give us X product for this market, and million dollars, we’ll give you the artist for the creative, and the places to put some that we’re dealing with the creative, and the activations on the ground and media, and everything are going into R&D mode to you could possibly think of.’” develop something over the . “I’m not seeing product sampling [in my brand consulting work for EDM festivals.] A lot of the brands are finding that they don’t have the right next couple of years, and that product for this market, and some that we’re dealing with are going into also speaks to how much this R&D mode to develop something over the next couple of years, and that market has grown and is [being also speaks to how much this market has grown and is [being taken taken seriously]. I don’t think seriously]. I don’t think it’s product-focused, I think it’s more branding it’s product-focused, I think it’s focused. The brands see EDM as a way to make themselves cool to 18-24 year-olds.” more branding focused. The . “For instance, the soda brands know that this target market doesn’t drink brands see EDM as a way to soda. So the brands are saying, ‘What should we do? Make an energy make themselves cool to 18-24 drink? A vitamin supplement drink and then market it to this audience?’ So year-olds. that’s the way the brands are thinking—they might have to come up with a different product, but as a brand they want to be associated with these Consultant to Brands and festivals. They’re totally sold on the idea that this is their way in with the EDM Festival Promoters millennials.” Metrics . “[With regard to sponsorship deal amounts] I’ve heard everything from $5 million to $15 million on U.S.-only EDM initiatives for consumer brands. Anheuser-Busch and Motorola have been the biggest deals in the space [with SFX and rival Live Nation, respectively].” SFX Entertainment . “[A global product director from a major international agency] told me that the SFX model of aggregating all these festivals and packaging them for brands makes a lot of sense because when [the agency] tries to buy [sponsorship and other media space], the problem is that the festivals are often so disaggregated—that it’s one artist and one tour, one festival, one market—so the ability to get them all in one fell swoop is really appealing [for a brand and its media buyer/agency].” . “Because most of SFX’s properties are international, they’re going to the global heads of [brand agencies’] marketing teams, and saying, ‘We’re looking for you to aggregate your millennial media spend across all your divisions and all

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your territories with us.’ Procter & Gamble did that for the Olympics, as did Anheuser-Busch—which is also SFX’s first client [a deal announced in December for an estimated $35 million].”

2. Creative agency contracted by major EDM festivals Advertising agencies representing brands want to get into this market, and the festivals’ careful of a wholesome image is a huge part of the story. SFX and Live Nation are spending increasing amounts of money on high- end festival footage for live streaming and the after-movie experience. This is all part of the shift to cleaning up the image of dance music festivals, and taking the focus away from individual artists and towards the overall festival experience, which is all about youth lifestyle. China is the next frontier for the EDM festival scene. Sponsorship . “We’re aligned with a lot of the big [advertising] agencies that want to get into this market. All I hear from the agencies is, ‘Yes—we want to do We’re now being asked to do festivals’.” the first EDM festivals in China . “We work with all the big festivals, including TomorrowWorld, Sensation, EDC [Electronic Daisy Carnival], Insomniac, Hard and Ultra. We shoot most that are now happening—they’ll of the main festivals, and we not only shoot them live, but we also do post be the very first on a stadium footage for marketing. We also get involved in building the creative aspect of level. the concept of these shows. Part of our mandate from the SFXs and Live Nations is: ‘Make it look like an incredible high-end, hip commercial.’” Creative Agency Contracted by Major EDM Festivals . “There’s a lot of money going around, the reason being that the demographic has been identified—18-25 year-olds is a core demographic that the Fortune 1,000s are going after—which of course are the sponsors. An important part of these festivals is the post-show footage, which is what we do.” . “Although this scene has been around for quite a while, especially in Europe, it’s really starting to break out here in the United States, and everybody’s trying to climb aboard.” . “The promoters use us because we have a very cinematic way of shooting. We use cinema cameras, and so it looks really beautiful and high-end. That’s how we started with the dance promoters, but now SFX and Live Nation use us to make beautiful looking content. [The demand for what we do] has ballooned.” . “We’re now being asked to do the first EDM festivals in China that are now happening—they’ll be the very first on a stadium level. So the post footage is very important, the live stream is very important. We do festivals in Europe, we do a big one in the UK. Last year, viewership for [that particular] festival in the UK went up from 200,000 views of one show to 1.3 million.” Brand Engagement . “We’re involved with , who’s probably the number one DJ The production budgets for in the world right now. He’s doing a world tour, and the unusual thing is he’s EDC [Electric Daisy Carnival] or a DJ who’s headlining arenas, and in some cases multiple nights at arenas TomorrowWorld are about $30 like Madison Square Garden and the Forum in LA.” million. That’s a lot of money . “With the Armin van Buuren tour we have Heineken and Philips, KLM and a being put in just the production water company [as sponsor partners]. Those companies have put a lot of money into this tour, so there’s a lot of [sponsorship and other] activity just of these events. … We’ve gone going on around that artist.” from just making cool-looking . “We do TomorrowWorld, Sensation, and I’ve been to these festivals footage to now making these recently. The vibe is really fantastic at these places. In Europe it’s all a bit festivals look as wholesome jaded, but TomorrowWorld [in Atlanta], the kids had never seen anything like it; I can’t even explain how in the middle of the rural and intriguing as possible, and countryside, they’ve built from scratch—I mean the attention to detail, make the experience not about you’re talking about themed pontoon bridges going across lakes to the DJs, but more about the transport people from one stage to another; lasers going through the experience. bridges and fiery monsters coming out of the water.” Creative Agency Contracted by Major EDM Festivals

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SFX Entertainment

. “The concessions are all branded—even down to the wrapper that’s around the hot dog. If you want to go camping, you buy a branded tent that you take away with you.” . “We aren’t asked to home in on a Coca-Cola cup; we’re asked to make [the footage] as wholesome and wonderful experience as possible. With TomorrowWorld, Georgia’s [local government bodies] had a press conference saying what an incredible event it was, how positive it was for the state, and how much employment it brought, what a great message it was, and what a total success it was. So it dispels all the worry about how it was going to be a big drug event.” Metrics . “The production budgets for EDC [Electric Daisy Carnival] or TomorrowWorld are about $30 million. That’s a lot of money being put in just the production of these events. So you can imagine how much money the sponsors are putting in for the [promoters] to be able to recoup those costs. Those kind of festivals, that’s a five-year plan for ID&T and SFX.” SFX Entertainment . “Since the corporations [like Live Nation and SFX] have come aboard, our tasks have changed, and we’ve become a key part of what they’re trying to do marketing these events. We’ve gone from just making cool-looking footage to now making these festivals look as wholesome and intriguing as possible, and make the experience not about the DJs, but more about the experience.” . “So unlike rock festivals, this is chiefly about being part of the experience. [The kids] are not going to see any particular band or any particular DJ. Don’t get me wrong—the line-up of the DJs is important, but it’s really about the organization and what people get to experience when they go to these festivals.”

3. Sponsorship consultant specializing in sports and entertainment SFX’s Rock in Rio has come into the U.S. market with the unrealistic expectation that they can reap the same level of sponsorship dollars as they’ve seen in and elsewhere. The United States is an extremely competitive market when it comes to sponsorship, and festival promoters in North America are going to have to come up with a more sophisticated level of science and rigor to justify the dollar amounts they’re asking. There definitely is potential for more consumer brands to come into the space, but risk-averse brands are going to be looking for proof of success from early adopters with deep pockets, like Budweiser and Red Bull. A battle for dominance between Samsung and Microsoft could prove one of the more interesting developments. Sponsorship . “Brands don’t really understand this space yet, the concept in general. It’s the habit of a lot of brands to always compare and contrast against something else. The money is definitely potentially there, but there’s a lot of I think you’re going to see hand-holding necessary to [get consumer brands over the line with regard to Microsoft invest in this space, significant sponsorship deals].” . “The brands with deep pockets are going in first, the ones who are willing to and that it’s going to be a take a risk—those are the brands that SFX can benchmark against and show battle between Samsung and the success to other brands and categories that are a little bit more frugal Microsoft. Microsoft is getting and hesitant to make a large investment. So a Budweiser, they’re in it.” more and more into the . “In the music world, this is still relatively niche, despite the massive crowds that it generates. Are people going there for the music? For the experience? sponsorship space. … The Are they going there just for the party and couldn’t care less about the telcos are [obvious major music?” sponsors] as well. If they can . “There are so many factors that go into it, and part of a successful get exclusive deals on the sponsorship is really understanding the consumer that’s attending these rights to live streaming and types of events, and what they want and what they need; how they’re going to react to certain corporate sponsors that are going to come in. Do they block everyone else out, that’s even want sponsors to come in, and if so potentially how many?” a hot one for them. Brand Engagement Sponsorship Consultant Specializing in . “I think you’re going to see Microsoft invest in this space, and that it’s going Sports & Entertainment to be a battle between Samsung and Microsoft. Microsoft is getting more

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SFX Entertainment

and more into the sponsorship space; they’ve secured a big NFL deal, but I think they need to get into the music market in a big way too, to target the We’ve heard figures like $50 consumer from that angle. I think Microsoft is a little behind right now, but they’re just getting all their ducks in a row.” million for the amount of . “The telcos are [obvious major sponsors] as well. If they can get exclusive sponsorship dollars that [SFX deals on the rights to live streaming and block everyone else out, that’s a partner] Rock in Rio brings in. hot one for them. They’re heading to Las Vegas . “So you really need a brand proof point as to, ‘Yes Red Bull, [the festival goers] really want you to be here. Yes Nissan, they want you to be here.’ Is it [in 2015] and expecting those something that’s going to happen overnight? It’s hard to say. I think there’s same kind of numbers, but it’s going to be a surge eventually, but then it’s also how long can they hold on unrealistic. There’s so much to that surge.” more competition for Metrics sponsorship dollars here in the . “We’ve heard figures like $50 million for the amount of sponsorship dollars that [SFX partner] Rock in Rio brings in. They’re heading to Las Vegas [in U.S. 2015] and expecting those same kind of numbers, but it’s unrealistic. Sponsorship Consultant Specializing in There’s so much more competition for sponsorship dollars here in the U.S.” Sports & Entertainment SFX Entertainment . “You’ve got the NBA, NFL for a start, not to mention Bonnaroo and Coachella. I think SFX will struggle to find sponsors for anywhere near those amounts.” . “I think also that [North American agencies and their clients] are looking for more science and rigor to go with their sponsorship spend than [overseas festivals like Rock in Rio] are used to providing [as part of their sponsorship packages].”

4. Vice president of marketing for a digital content agency Metrics and measurables are largely digital, relying on page views, reach and impressions. Sponsorships are easily found for SMS push messaging at live events, for example. The EDM audience tends to be platform agnostics, and effective sponsorships run across several platforms at once. Sponsorship . “EDM is a lifestyle genre, something people live with 24/7.” . “You’re talking about a very compelling genre of music but one’s that’s centered around community. It’s not just about the music but the lifestyle and experience. It’s closely tied to lifestyle, and many brands, if not most, are selling some kind of lifestyle.” . “The power in sponsorship is because of the feeling of connection. You can Reach and impressions are communicate it in so many digital ways, and you’ve got that real digital experience, which cannot be duplicated.” important. Depending on what . “The goals of a particular brand are so specific.” the brand goal is, it might be . “Regional and global sponsorships are equally appealing to different brands installs of an app or views of a and their goals. Global sponsorships obviously require a global brand. You particular advertisement, that’s wouldn’t extend the effort and cost of reaching out to a particular country pretty easily quantifiable. without an audience there. I don’t think global, regional or national, any one of those dominates.” There’s a wonderful metric . “A great sponsorship can take a one-day event and make it a global event. called ECPE, basically the cost That’s why digital is so powerful. It’s not limited.” per engagement on a digital Brand Engagement platform. Great sponsorships . “I think because of the younger audience, and all-ages events, of course run on several platforms at non-alcoholic beverage [sponsors] are interested.” . “Any sponsor will be interested that can appeal to what’s important to a once. millennial audience and their different priorities.” Vice President of Marketing Metrics Digital Content Agency . “Reach and impressions are important. Depending on what the brand goal

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SFX Entertainment

is, it might be installs of an app or views of a particular advertisement, that’s pretty easily quantifiable. There’s a wonderful metric called ECPE, basically the cost per engagement on a digital platform. Great sponsorships run on several platforms at once.” . “A sponsorship around a festival might involve a website, possibly a mobile application, an SMS with push messaging, even something as antiquated as email which is still an effective marketing tool.” . “Users don’t differentiate with how they experience something, with a phone or a laptop. The customer has an experience and the platform is way less important to them than us. We find ourselves measuring disparate types of metrics. We could be measuring page views.” . “We could measure physical attendees against the number of attendees that engaged with whatever on-the-ground thing you were doing. If you had a brand tent how many people came in? if you were trying to generate leads, how many did you pick up?” . “A lot of times we collate these into digital impressions, but it is a collection of experiences across platforms. How many times does a consumer touch your brand in multiple ways?” SFX Entertainment . N/A

Secondary Sources The following five sources show SFX Entertainment landing major sponsorships, and the multitude of sponsorships for EDM festivals and DJs to target 18-25 year-olds.

SFX The following three sources shows SFX’s overall company plan to expand and the growing EDM music scene, and SFX landing major sponsorship deals with Anheuser-Busch and Clear Channel.

Sept. 30 2013 Buzzfeed article SFX Entertainment is utilizing the fastest growing music scene, electric dance music, to expand its business through sponsorships, expanded festivals, and its online DJ store and news site Beatport. While seeing over 2.8 million fans coming out for its festivals, SFX Entertainment will try to grab more market share of the EDM industry that is set to be worth $4.5 billion this year. . “SFX Entertainment, which says it’s the biggest producer of live events and content focused on electronic music culture, plans to go public in about a week. The company says the electronic dance music industry will be worth $4.5 billion this year.” . “You may not have heard of SFX Entertainment, but you’ve probably heard of some of the electronic music festivals it has the rights to, like Tomorrowland and Electric Zoo, and perhaps Beatport, its online DJ store and news site.” . “The company is aiming to consolidate the operators of the world’s biggest electronic dance music festivals, leading to more lucrative sponsorships, and creating new events around the brands in other geographies — for example, TomorrowWorld, an incarnate of Europe’s popular Tomorrowland, took place in Georgia, about 40 minutes outside of Atlanta, this past weekend. It’s also aiming to juice more money out of existing festivals by adding extra days and increasing capacity, and exert influence in the DJ community through Beatport.” . “SFX’s completed and planned acquisitions include , Sensation, , Q-Dance, Stereosonic, Decibel, , , and Ruhr-in-Love. The cost of buying the rights to these festivals is one reason the company is not yet profitable, according to the documents.” . “Its shows drew 2.8 million fans last year, a 22% increase from 2011, including acquisitions that have yet to close.” . “‘Tomorrowland sold out all of its approximately 180,000 tickets to the 2013 festival in Belgium in one second and saw significant demand from U.S.-based fans, each seeking to purchase multiple tickets.’ In the U.S., 200,000 fans sought Tomorrowland tickets, and only 2,000 succeeded, the company said.” . “‘Total attendance at what are currently the five largest U.S. EMC festivals grew 41% annually from 2007 to 2012 (although there can be no guarantee these growth rates will continue in the future). This compares to 2% annual revenue growth for the overall North American concert market during the same period, according to Pollstar, a concert industry trade publication.’”

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SFX Entertainment

. “Illegal drug use at SFX’s festivals may result in ‘negative publicity, adverse consequences (including illness, injury or death) to the persons engaged in the illegal activity or others, and litigation against us.’” . “‘Beatport has more than 200,000 registered DJs and a Klout of 91. Spotify also scores a 91 and iTunes has a 93, showing Beatport is “comparable with other high profile music services,’ SFX says.” . “‘We use social media, engaging content and our online property, Beatport, to maintain an active relationship with trend setters and influencers in the broader EMC community, including professional DJs, bloggers and passionate consumers. While Beatport experienced net losses of $1.5 million in 2012 and $1.4 million in 2011, we believe our ability to create closer partnerships between Beatport and the most important EMC festivals and events will enable us to deliver more to the EMC community between and around live events.’” . “It manages a bunch of clubs in Miami that connect it to ‘vibrant, new EMC trends and up-and-coming DJs. These include LIV, at the Fontainebleau Miami Beach hotel; LIV Sun Life Stadium, where the Miami Dolphins play; and STORY, which opened in December in Miami Beach.’” . “Electronic music has uniquely global appeal, less dependence on individual ‘star’ talent over experience, and costs less to make than traditional music.” . “‘The electronic music industry is not driven by sales of studio-produced , and therefore the music has lower production costs and lead time. Social media, live performances and online sites like Beatport are the primary marketing and distribution channels for electronic music. As blogs, a growing online community, recommendations of friends and word of mouth have become key drivers of artist and festival success, the need for traditional record labels’ costly artist and repertoire functions is greatly reduced.’” . “SFX’s main competitors include Live Nation, AEG, Warehouse Live, Insomniac, Kaos Entertainment, C3 , Real Music Events, Slow Motion Music, SDC, Gritsy, and Reverse.” . “Anheuser-Busch, Heineken, Labatt, and Samsung are among SFX’s corporate brand partners. SFX is in advanced talks with advertisers dubbed ‘revolution partners’ who are willing to support multiple free events, sponsorships, and ‘other fan-friendly initiatives,’ based on the ‘value of the experiences’ SFX offers. It also got a strategic investment from advertising agency WPP in April.” . “SFX says Tomorrowland’s 2012 festival had 7.9 million live views on YouTube and its official long-form after-movies have had more than 157 million online views.” . “Dance/electronic music had the highest growth of all music genres in 2012, with a 36% increase in digital music track sales in the U.S.”

Dec. 23 2013 Sponsorship article SFX landed a sponsorship with Anheuser-Busch for an estimated $25 million this year and $35 million in 2015, while Live Nation Entertainment landed Motorola on as a new sponsor. More sponsors are expected to strike deals with the two companies as EDM festivals grow in popularity with millennials. . “As electronic dance music festivals grow in popularity, they are attracting affluent new participants: corporate sponsors.” . “SFX Entertainment, a dance-focused new company founded by the media mogul Robert F.X. Sillerman, announced on Monday that it had struck a global marketing partnership with Anheuser-Busch InBev, whose brands also sponsor mainstream events like the Super Bowl and Major League Baseball games.” . “Terms of the deal were not disclosed. Benjamin E. Mogil, an analyst at Stifel Nicolaus in Toronto, estimated that Anheuser-Busch’s sponsorship could be worth as much as $25 million next year and $35 million in 2015, as SFX’s events grow.” . “The news follows an announcement last week by Live Nation Entertainment, the world’s largest concert promoter and an SFX rival, that it had made a deal with Motorola. As part of that deal, Live Nation’s dance festivals will include a six-story LED tower from Motorola and the Moto X Kandi Shop, where revelers can design their own bracelets.” . “The recent deals with SFX and Live Nation may signal that big sponsors are willing to enter the dance business. Music and sponsorship executives say many more such deals are expected in 2014 as the dance world grows.” . “But for marketers, the demographic of the young fans of star disc jockeys like Skrillex, and Tiesto is hard to ignore. The IEG Sponsorship Report, a trade publication, said $1.24 billion in sponsorship money had been spent on music events this year. Another study estimated the global dance market, including recordings, concerts and brand sponsorships, as worth $4.5 billion a year.” . “In an interview, Mr. Sillerman said that “the ability to authentically attract the attention and affection of the millennial audience’ would lead SFX to strike more corporate sponsorship deals than his competition.”

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SFX Entertainment

Jan. 6 Billboard article SFX has entered into a partnership with Clear Channel to launch three new entities through its social media Beatport; a national DJ contest, a live even series, and a Top 20 Countdown show. This a huge move from SFX to push EDM into the mainstream since Clear Channel has a developed reputation from its shows such as American Idol. . “The just-announced SFX-Clear Channel partnership ‘came together rather quickly,’ says John Sykes, Clear Channel’s president of entertainment enterprises, in part to match the speed of EDM’s development.” . “‘[EDM] is the fastest-growing music genre in America and is moving rapidly from the alternative to the mainstream,” said Sykes. “For that reason we want to be the best destination for it.’” . “The deal with SFX -- mogul Robert F.X. Sillerman’s roll-up of EDM entities, which he took public last year -- includes the creation of three new products branded by SFX-owned Beatport, including a national DJ contest, a live event series and a Top 20 Countdown show that could be a game-changer for the industry.” . “Founded in 2004 and acquired for $50 million by SFX last year, Beatport is primarily an online marketplace where DJs get the latest and greatest dance music, posting over 20,000 new tracks for sale per day. But over the years it’s also become one of the strongest and most popular brands in dance music.” . “‘We’ve been aware of Beatport’s power and credibility not only within the EDM world, but also as an audience leader across genres,’ says Sykes. ‘Forty million unique users per year is the gold standard for what’s happening in EDM, and makes them a perfect companion for our other countdown shows like Ryan Seacrest, which give an accurate read of what’s trending in America.’” . “Powered by Clear Channel distribution and syndication, the new Top 20 Countdown could make stars out of acts like deep house outfit Dusky, which topped the chart for four weeks last year with the dreamy ‘Careless,’ and , the chart’s current No. 1 with the hard-hitting ‘We Like To Party.’ And it will give additional national exposure to more established chart regulars like , Avicii and .” . “Clear Channel has already put down stakes in EDM, launching dance-dedicated brand Evolution as two terrestrial stations in Miami and Boston, and a channel on iHeartRadio, which Sykes says became the digital platform’s most popular upon its premiere.” . “‘This is a really exciting step forward for the genre as a whole in the U.S.,’ said one major label executive of the Countdown Show. ‘Ticket sales and streaming numbers make it obvious that there is an audience here to support these ‘club’ tracks as songs on the radio. Many of the types of tracks that chart highly in the Beatport Top 10 go on to become radio hits in Europe, so this could, potentially, finally, be the conduit we needed to have the same types of successes on this side of the pond.’” . “Having been an owner of ‘American Idol’ and seeing the power of letting people select winners -- we’d always get more votes in presidential election years than who voted for the President -- there’s a major difference here, but one that speaks to the power of Clear Channel as a terrestrial and digital powerhouse that’s just simply putting it all out there, not for the purpose of creating great TV; this is about the music pure and simple. I think it’s going to be pretty powerful.’” . “SFX quietly announced Anheuser-Busch InBev as its first major brand partner over the holidays, in a global deal that could be worth up to $35 million, according to . Sources say that Corona could be the cornerstone brand of that deal.”

SPONSORSHIPS FOR EDM FESTIVALS AND DJS The following two sources show the multitude of sponsorships, mostly beer and liquor companies, landed by EDM festivals and DJs as the rising interest in EDM continues to grow and sponsorships look to target 18-25 year-olds that can pay high ticket prices.

2013 Event Marketer article Major brands like Hyundai, Red Bull, and Heineken are sponsoring projects and events that are linked to EDM festivals, including a documentary, music workshops and festivals, and the festival respectively. Corporate sponsorships are also seeking out the EDM DJs themselves with DJ Calculus landing Monster Energy, DJ Tom Thump landing Sol Republic Headphones, and DJ Tiesto landing Heineken. These sponsors all seek the dedicated or well-off 18- 25 year olds that can pay high ticket prices, which are around $250 per event. . “Major brands have begun taking notice, too. And not just small underground labels, either. Fortune 500 companies are now looking at this space and trying to figure out the most effective way to market to the EDM generation,

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SFX Entertainment

including Hyundai, which last October funded the Re:generation project, a documentary about electronic music that included top DJs like Skrillex and Crystal Method.” . “Artist endorsements aren’t new to the music industry, but they are gaining momentum in this space thanks to brands like Monster Energy and Sol Republic Headphones, which sponsor DJ Calculus and DJ Tom Thump, respectively, among others. Armani Exchange recently got in on the trend, holding in-store consumer facing events and releasing exclusive music through its apparel stores.” . “The Red Bull Music Academy is a global series of music workshops and festivals featuring two groups of 30 EDM artists, which will visit this summer for two weeks of recording sessions, lectures by music legends and late night jams, all designed to pair Red Bull with some of the hottest rising stars in EDM before they get huge.” . “One of the earliest believers in the potential power of EDM as a brand activation platform was Heineken USA, which is a long-time sponsor of the , one of the largest EDM festivals in the world. The brand first got involved in the space in the 1990s and today sponsors Tiesto, arguably the world’s biggest DJ and certainly one of the most recognized. According to Pattie Falch, brand director-sponsorships and activation at Heineken, ‘Our consumers are really passionate about music and EDM allows Heineken to engage with them at their passion points.’” . “The EDM consumer, he says, is 18 to 25 years old and well-off (or dedicated) enough to pay the high ticket prices, which can run around $250 per event. ‘It’s a valuable, trendy consumer base that is willing to put their pocketbooks behind their passions,’ he says.” . “The Ultra Music Festival is also one of Heineken’s biggest activations in the space. This year, the festival changed its venue to account for the incredible growth of the scene, and to match, Heineken revamped its traditional experience, too. The festival took over (and closed) Miami’s Biscayne Avenue for the weekend, so the brand set out to give attendees who were spending all weekend on their feet, dancing till dawn and walking around from stage to stage to catch as many of the DJs as possible a VIP-style break.”

Jan. 8 Spin article Sponsorships deals are increasing for EDM festivals and DJ’s alike, particularly alcohol-related companies like Heineken, Anheuser-Busch, Estrella Damm beer, Absolut, Molson Coors, and Carlsberg. The break-through of large corporate sponsorships like Anheuser-Busch, Heineken, and Absolut show a growing interest in companies targeting 18-34 year- olds and trusting their images will not be hurt by deaths and drug-use related to these festivals. . “SFX signs $25 million deal with Anheuser-Busch InBev, while Heineken and Armin van Buuren urge clubbers to 'Dance More, Drink Slow'.” . “If Heineken has its way, ravers will begin paying special attention to the first two factors in that equation, and do a little less of the last. The beer maker has launched a new campaign called ‘Dance More, Drink Slow,’ which a press release explains, ‘focuses on making moderate drinking an aspirational behaviour when enjoying a night out, highlighting the importance of staying in control.’” . “To reinforce the message, Heineken has tapped the Dutch DJ Armin van Buuren, long a vocal proponent of moderation. (‘I've never used drugs in my life,’ he told Fusion TV last year, reiterating a point he has stressed throughout his career.) The video for his new single, ‘Save My Night,’ doubles as a PSA to drink responsibly; it accompanies an even more explicit Heineken video called ‘The Experiment,’ which purports to prove that revelers can have more fun while drinking less by comparing two nights in a single club.” . “‘I think the experiment worked, for sure,’ says van Buuren in the closing voice-over. ‘Because I think if the music is good, people hit the dance floor. And the more they dance, the slower they drink.’” . “Of course, Heineken being Heineken, it has a vested interest in clubbers drinking something, and preferably from a green bottle. Selling alcohol to dance-music fans is big business, and it's getting bigger.” . “While SFX's Anheuser-Busch InBev deal represents a significant development in the maturation of the electronic- music-culture marketplace — as the Times points out, the beverage company is already a sponsor of the Super Bowl, Major League Baseball games, and Jay Z's Budweiser — it's not so much a sea change as a rising of the tide.” . “Overseas, electronic- and alternative-music events have long banked on liquor sponsors, from 's FIB Benicàssim festival (which, for 10 years, was officially known as FIB Heineken) to 's Sónar, whose principal sponsor is Estrella Damm beer, and Primavera Sound, sponsored by Heineken.” . “Stateside, Heineken is a longtime sponsor of Miami's Ultra Music Festival, and the company also sponsored the Heineken Dome stage at Las Vegas' Electric Daisy Carnival in 2011, while Molson Coors sponsored this year's ill- fated Electric Zoo in New York.”

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SFX Entertainment

. “And beer and liquor companies are increasingly attempting to reach EDM fans via deals with individual artists: Heineken and Audrey Napoleon, Carlsberg and , and Absolut and , whose song "Greyhound" doubled as an advertisement for the vodka brand. The deals And beer and liquor companies aren't limited to mainstream EDM, either: Even Axel Boman's Studio are increasingly attempting to Barnhus label participated in a Swedish campaign for Carlsberg.” reach EDM fans via deals with . “The most interesting point about the SFX/Anheuser-Busch InBev deal, in individual artists: Heineken and fact, might be that the news went largely unnoticed, particularly compared to this week's heavily-reported deal between SFX and Clear Channel to bring Audrey Napoleon, Carlsberg a Beatport top 20 countdown to radio stations around the country.” and Axwell, and Absolut and . “The fact that they "quietly announced" the news during the holidays, as Swedish House Mafia, whose Billboard noted, may indicate that SFX doesn't want to overplay its growing song "Greyhound" doubled as ties to the alcoholic-beverage industry, given that a sizable proportion of its an advertisement for the vodka consumer base remains under 21. According to a soon-to-be-published study conducted by a team of industry veterans, American EDM fans are brand. The deals aren't limited predominantly 18-34, with a median age of 27.” to mainstream EDM, either: . “But the Anheuser-Busch InBev deal also suggests that corporate sponsors Even Axel Boman's Studio are increasingly willing to bet on a youth-culture segment that has, fairly or Barnhus label participated in a not, been dogged by associations with recreational drug use and plagued by Swedish campaign for high-profile, substance-related emergencies, from the deaths at Electric Zoo to an all-ages concert on Long Island where alcohol poisoning was the Carlsberg. primary cause of its premature shutdown.” Spin Article . “But judging by SFX's recent deals, corporate sponsors are increasingly willing to accept those risks, given the gargantuan sums of money on the table. And that could be a good thing: In a best-case scenario, increased corporate investment leads to a too-big-to- fail scenario for SFX and other large-scale entertainment companies. Think of it like this: The more money gets pumped into their events, the greater the financial risks associated with an Electric Zoo-style shutdown, which means that SFX will have to do everything in its power to pursue harm-reduction policies related to drugs and, yes, also alcohol.”

Additional research by Emily Carr and Dann Maurno

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