Austin and SXSW's Waning Weirdness? Blame Spiking Real Estate Prices and a Tech Industry Influx

Sam Newman/WireImage
Atmosphere during 20th Annual SXSW Film and Music Festival on March 18, 2006 at 6th Street in Austin, Texas. 

Forces stronger than art are putting the city's famed music scene under heavy pressure.

On Feb. 12, Sergio and Monica Lejarazu arrived at Jumplin, their beloved Austin piñata store, only to find it razed. Amid conflicting reports of what actually happened -- their realtor said they were behind on rent, among other complaints. It was rumored the tech company behind the demolition was planning to use the space for a South by Southwest event (they weren't). One narrative emerged from the dust-up: the locals that had kept Austin so proudly "weird" were becoming a victim of their city's success.

"The personality and fingerprint of this city is unlike anywhere else," Dave Grohl told Rolling Stone last November. "The preservation of that needs to be a priority because if you're not careful, that could be wiped away and you're left with just a strip mall." 

No small part of Austin's (literally) changing landscape can be attributed to SXSW, which kicks off its 28th edition today, Friday the 13th, bringing with it several hundred thousand mostly out-of-state attendees for 10 days of all-you-can-withstand panels, official showcases, and unofficial parties across tech, film, and music. Not to mention the enormous cash flow. According to 2014's SXSW economic impact analysis, the conference and festival brought in $315.3 million to the city of Austin that year through impacts both direct (big brand sponsorships) and indirect (Uber surge pricing). SXSW's ten days deliver one-third of music's yearly economic contribution to the city -- $1.6 billion in 2013, according to a study that year by local planning and development firm Pegasus. 

"Austin's losing some of the funky, small town character that's associated with it," says Charlie Duncan, a fair housing planner at the Texas Low Income Housing Information Service. "A lot of the people coming here seem to be in two main groups: musicians who are generally low-income and just want to take advantage of the vast musical community here, and the other group -- very affluent, well-educated people largely involved in the tech industry." (A recent editorial in the Austin-American Statesman classified the tech industry as part of the creative class, though everyone who Billboard spoke with presented them anecdotally as separate.)

In October of 2014, the Austin Board of Realtors reported that real estate prices jumped 16 percent from the year previous. Duncan tells Billboard he personally was outbid on four offers on houses by a cash-carrying buyer each time, "which is real disheartening," he admits. Though evidence directly linking Austin's skyrocketing real estate prices to its burgeoning tech class is hard to pin, it's not hard to draw comparisons between Austin and San Francisco, which several years ago went through what the former seems to be undergoing.

One San Francisco-based artist, who predicts she'll be priced out of her home there, told Billboard last summer that the city was being bifurcated into the tech titans and those that serve them as baristas or bartenders. A similar phenomenon may be happening in Austin. The aforementioned Pegasus study, which advocacy organization Austin Music People conducted to support their initiative for a $65 million housing bond (that was approved in 2013, contributing to the construction of the city's first affordable downtown unit in 45 years, Capital Studios), estimates that most of the 23,800 jobs added from 2012 to 2013 were low-wage.   

"As you know, [musicians] aren't the ones at the top of the corporate pyramid with a seven-figure income," says Jennifer Houlihan, executive director of AMP. "They're the ones working for tips of minimum wage and making this extraordinary contribution to the economic health of the city." 

Houlihan is ambitious, to put it mildly. Local musician-related issues she wants to tackle in conjunction with the Austin Music Office (which operates on a budget of $77,000 a year, which Houlihan acidly notes is "still safely under six figures" despite being a $30,000 increase from a year ago, which was "crazy") include getting safe late-night transit for bands de-loading from bars at 2 a.m., looking at how local music businesses have been affected by the rise of streaming, bringing a vinyl pressing plant within city limits, and a grant program offering $2,500 to musicians who work with local producers, publicists, album cover artists, and the like. She's also keeping an eye on the Department of Justice's ongoing review of the consent decrees in Washington, D.C., and what the pending changes might mean for local artist compensation. 

Her loftiest goal is to bridge the divide between local artists and those in the tech industry. According to the U.S. Census, 45.6 percent of Austin residents hold a bachelor's degree or higher, one of the highest rates in the country. But Houlihan points out that such an education isn't even necessary for a career in tech -- consider the rise of weeks-long coding boot camps.

"Obviously we'd love to see prices go down and better health care, but we'd also love to see more opportunities for [musicians] to get a job that pays really well," she says. "Maybe instead of working 40 hours a week, they can work 25 hours a week as a coder, make the same amount of money, and put time back into their craft and musicianship."

Bobby Garza, former city council member and now general manager Transmission Events, which books downtown Austin venues Red 7 and the Mohawk, still thinks that's not quite enough. "If you're looking at a holistic experience for creatives, what you really want is someone who can find a living through their art," he tells Billboard. "When you think of the amount of time it takes to produce a good product and the financial pressures of the artist, the quality product Austin trades in is at risk."

The recently appointed head of the Texas Music Office, Brendan Anthony, doesn't have such a romantic view. Then again, with a $20,000 quarterly budget drawn from Texas music license plate sales, he can't really afford one. "Naturally, the cost is going up," he tells Billboard. "Austin's grown to become one of the cooler places to live. It was never easy to make a living playing music, and it's getting more difficult by the day." 

Anthony replaced the well-liked Casey Monahan in the job, who was by some accounts unceremoniously ousted by new Governor-elect Greg Abbott after 25 years in office. "This is a serious blow for Texas music," said SXSW managing director Ronald Swenson in a statement at the time. "Casey has helped countless Texas musicians and music companies from around the world to bring business to Texas. He's helped SXSW navigate the waters of Texas state government for decades."

Anthony seems to have dodged any hard feelings about the ouster. At this early point in his tenure, he's still making plans, focusing on collecting data to better serve his music-minded constituents and leveraging Texas' music as "a marketing tool" to bring in-state musician services and revenue generators like publishing and licensing entities. "We're putting one foot in front of the other," he says. 

Inching along might be a more appropriate metaphor; the state legislature meets once every 18 months, frustrating Garza, who's trying to make his own mark on the city by working with legislators to ease some of the financial pressures on venues. On top of the disputed 14 percent mixed-beverage state tax vendors already pay ("that really kills your margins," Garza laments), the recently unveiled Waller Creek development project could drive up property value, in addition to beautifying downtown Austin.    

"People have been paying rents that were at or a little above market rates, so if the market raises," says Garza, "venues are going to get priced out." 

Still, Garza't take to the notion of "saving" these performances spaces, which in just a few days will be packed with people ordering those expensive mixed drinks. While an initiative with that sort of language is gaining traction on Nashville's similarly iconic Music Row, he hopes it won't come to that on his watch.

"We get ourselves organized, do our research, and provide context for local leaders; informed solutions for discussion rather than saying 'We want you to save us,'" he says. "We don't want to get to a situation where we have to say, 'Save Austin music!'"