Music festival – a source of income for the state or for business

It is quite expensive to hold a music festival of high quality, and it is quite difficult to find money for such event. If a sponsor does not realize that the festival is commercially profitable, he is not willing to spend money; so it is necessary to plan the event in order to make it interesting for the sponsor.

An author of a good idea often has only the idea, but no money. In this case he applies to the government for assistance. But it is not easy to convince the government to spend taxpayers’ money for the festival. The founder of the Alter Vision company, Achiko Guledani, says that it has taken him 4 years to convince the government. Finally, he has managed to hold the first Open Air festival with the budget 800 000 GEL.

How can one convince the government?

First, a good music festival will have effect on the image of the country. The image does not imply returning of money into the budget the same year, but in a long-term prospect, it can lead to a positive outcome for the state, in terms of tourism.  

Second, it may be money, spent by a visitor at any specific event, which finally returns to the state budget. The more visitors are at the festival, the more money will enter the budget. The more money is spent for the festival arrangement, the more qualitative it will be and therefore, the more visitors will attend it. The circle will be closed up by returning money into the budget.

If the festival is successful, it is noticed not only by its visitors. There appear companies, which consider the event as an attractive market for the profitable sale of their own production. More money from the private sector allows to reduce gradually share of the government. The Open Air festival has proved that reduction of the government’s participation may be more profitable. Achiko Guledani, the organizer of the festival, says that the festival used to have the largest budget, when no state money was spent. Thus, it is assumed that the private sector prefers not to share business with the government: the company has more space for its own PR, especially, if the festival has already occupied its place in the music market.  

The fact that depending only on the state budget is less profitable, is confirmed by the organizer of the festivals, which are financed by the government. Giorgi Kereselidze, the founder of the company “Eastern Promotion”, says that the festival is profitable for the state, as the spent money returns to the budget through tourism and sold tickets.  

If a taxpayer sees that the number of tourists increases in his region during the festival, he concludes that spending money from the budget does not mean wasting money. On the other hand, the fact that it prevents the private sector from getting profit through spending money, does not clear up the question, whether the government should participate in the festival arrangement or not.    

Finally, everybody agree that the government should promote music festivals, but not exceed the limits – there should be space left not only for sponsors, but also for service companies, which will bring to market their own products during the festival. Achiko Guledani is talking about achievements in this regard. Since 2009, when even the stage for the festival had to be rented from Ukraine, the situation has changed and today the local companies can offer required services or products.   

Festivals have become a source of income for small entrepreneurs, who get certain profit in a short period of time through offering their own production to large number of visitors. If the festival lasts all night long, the local entrepreneurs take care of the guests’ catering.   

Should the government spend money on such festivals, which are not profitable, but promote maintaining the certain sector – it should do it, but not continuously.  

Nika Rurua, the former Minister of culture, sees an optimal solution in motivation of the private business to finance culture. He believes that motivations may be caused by adopting tax benefits. 

The article was drawn up in cooperation with the EU-Eastern Partnership Culture and Creativity Programme

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