Does EDM Make Cents?

Live Nation is betting on it. The company plunked down a hefty amount (sources reported somewhere between $50 million and $100 million) to form a “creative partnership” with Electric Daisy Carnival promoter Insomniac Events earlier this year.

Robert Sillerman’s been bitten by the EDM bug as well.

At an age in his life when Sillerman might be expected to slow down, he’s ramped up with a new incarnation of SFX Entertainment that’s already made purchases including Tomorrowland promoter ID&T, Disco Donnie Presents, Life in Color, a string of Miami nightclubs and electronic download store Beatport.

On top of that, the company has filed for a $175 million initial public offering, stating proceeds would help fund deals with companies including Electric Zoo producer Made Event, i-Motion GmbH Events, which produces Germany’s Nature One festival, and Australia’s Totem Onelove Group that promotes the country’s Stereosonic.

Still, it’s unclear who, besides the artists themselves, will be able to make much money from EDM shows. The New Yorker recently had an ominous message for corporatized EDM concerts, noting that while the “business of dance-music promotion looks a bit like the business of rock-music promotion back in the nineties” the latter hasn’t fared so well.

Two years after Clear Channel purchased the original, rock-focused, SFX, “it wrote down seventy-five per cent of the value of its event business before spinning it out again as the mega-promoter Live Nation, which has not had a profitable year since,” the mag wrote.

Promoters like SFX and LN will find ways to make money off EDM shows through ancillaries, but the real dollars could come from tapping the subculture for advertising, marketing and sponsorship opportunities – if companies are willing to take the risk. Selling EDM on popularity alone certainly wouldn’t be a problem, but the genre has also unfortunately been linked to numerous, drug-related deaths.

This summer, Electric Zoo canceled the third day of a Labor Day weekend fest following two fan deaths and several other deaths at electronic shows were linked to ecstasy overdoses. ID&T Project Manager Shawn Kent told the New York Times the company took preemptive measures to ensure fan safety at the three-day TomorrowWorld near Atlanta Sept. 27-29.

The fest advertised a strict no-drug policy, searched cars and pedestrians for drugs and partnered with the nonprofit DanceSafe, which offered literature on how to avoid overdoses. Still, Kent added, promoters can’t keep all fans from making bad decisions. “This is a societal issue,” he said. “The way to help people who have these issues is to give them information. At some point, it’s individual responsibility.”

Time will tell whether corporate sponsors will agree, however, following this summer’s string of negative publicity. “I think what happened at Electric Zoo changes the game as far as sponsorship,” Josh Rabinowitz, a Sr. VP at advertising company Grey Group, told the New Yorker.

In other EDM news, officials at The University of Massachusetts Amherst recently canceled two upcoming concerts at the school’s Mullins Center over drug concerns – Above & Beyond Oct. 4 and Pretty Lights Oct. 30.

“We have grown even more concerned about ongoing reports of overdoses at such events,” the school explained in a statement.

“The molly-taking culture at these shows is real and now exceedingly dangerous to the health and safety of concert attendees.”

Promoter NV Concepts fired back in a statement Oct. 1 noting it maintains a “zero tolerance” substance abuse policy.

“We always put first the safety of our concertgoers and make every effort to ensure the venues we work with provide a safe environment as well,” the statement said. “We continue to develop new measures to provide a concert environment that is both safe and fun.”

Company founder Tim Bonito added that “Although UMASS has chosen not to collaborate with us on providing a positive experience for its students and other fans in the region, we do look forward to working with venues that share our mission and those professionals who understand that electronic dance music, its fans, and artists are not to blame for the tragedies brought on by individual choices.”