The Austin City Limits Music Festival in Austin, Texas, will announce this week that ACL Fest will be the latest major festival offering a cashless option for concessions and merchandise purchases.
Considering that promoters only make 15% or less of their money from ticket sales, ancillary revenues from sources like parking, merchandise and concessions are critical. As in the rest of the live business, technology is changing the way fans spend money at concerts and, right now, tech is leading live entertainment towards cashless events.
Jacob Smid, managing director of live events, North America, for EDM fest producer/lifestyle brand SFX, says cashless falls in line with other tech-driven trends like fan-facing wi-fi to social connectivity that mark the way a new generation of fans experience live music, especially festivals. “The decision to go cashless is in line with how this new generation consumes, and provides us with the ability to deliver a better fan experience overall,” he says.
On a recent earnings call, SFX revealed that when its Mysteryland festival offered a cash-less experience this year with RFID bracelets connected to cash or credit accounts, attendees spent double on merch and concessions than attendees of comparable events. Other fest producers are also in the game, with Front Gate Tickets, a division of Austin-based promoter C3 Presents, rolling out a cashless solution for ticketing clients and C3 events alike, including Counterpoint, RBC Bluesfest, Center of the Universe, and Lollapalooza, along with the just-announced program at ACL.
Both Front Gate’s and Mysteryland’s cashless systems rely on simplicity, making use of RFID (radio frequency identification) technology via the chips already embedded in the wristbands used for festival entry. Front Gate’s turnkey technology sells the tickets, scans at the gates, runs the box office and, now, operates the cashless system, reporting everything together within the Front Gate solution. When fans receive their wristband in the mail, they register for cashless if they choose, entering credit/debit card info and creating a PIN. (Card info is not stored on the chip but, rather, with the credit card company.) On-site, fans order at the counter, tap their wrist, enter their pin, and a receipt is immediately emailed to the patron. While Mysteryland was 100% cashless, Front Gate says about one-third of patrons opt in for cashless at their events where it’s available.
SFX partnered with Intellitix and their Intellipay product on the RFID implementation for Mysteryland, with more than 200 points of sale (POS). “It was the first year of the festival, so the number of POS was driven more by factors such as vendors and site layout with regards to the transaction locations,” Smid says.
Beyond ease for fans, the system benefits the promoter, “including the reduction of on-site cash management and expanded analytical opportunities allowing for proper placement of product and inventory management to always give the people what then want, when, and at which location,” Front Gate president Maura Gibson tells Billboard. She adds that the impact on sales at Lolla was “significant,” with the fest experiencing substantial per cap growth year-over-year. “One-third of the increase is directly attributable to cashless,” she says, adding the rest of the increase could be be related to indirect cashless benefits like faster, more efficient ordering.
While Smid declined to release sales information for Mysteryland, he did cite “strong” per capita spending from festival goers. “It is fair to say that Mysteryland was at the higher end of the curve when it comes to other comparable festivals,” he says.
At Mysteryland, integrating cashless with vendors curated by Smorgasburg gave those vendors instant sales reporting beyond what would be possible in a cash environment. “Cashless does provide us the ability to ensure that the product mix and production are in line with what the audience wants,” says Smid. “If we sell 400 tofu wraps in the first couple hours and were expecting to sell 50, we can work with the vendors to adapt production and increase the vegetarian options for that edition of the festival.”
Gibson says the primary challenge is messaging and making consumers comfortable with new technology, but the adoption rate at both Counterpoint and Lolla was eye-popping, with 33% of all concessions revenue coming through the new cashless system. Gibson expects adoption rates to increase in the coming years as fans get used to the new technology and cashless gets rolled out at more festivals.
Another challenge is the typically problematic wireless connectivity at festivals that fans are well familiar with — there were reports of the cashless system going down at Electric Zoo and Mysteryland. Gibson says, “Front Gate has developed an off-line mode to allow for transactions to never fail. Ever. Therefore, the patrons can consume and the festivals can provide, no matter what. Similar to Front Gate’s walk-through and hand-held RFID gate and social media check-in solutions, technology is worthless if it doesn’t work. Front Gate makes sure it will, planning and developing for edge cases.”
Smid notes that going cashless is not that dissimilar from the inherent challenge of fests rolling out credit card terminals at over 300 points of sale in a remote field. “Power and connectivity are usually the primary technology concerns, but even from Mysteryland to TomorrowWorld, in conjunction with Intellitix, we have worked together to improve the off-line capability of the system,” he says. “Consumer adoption based on the experience of Mysteryland was very high and relatively friction free, which is definitely a promising indicator.”
The end game is to “make things easier, always,” says Gibson. “We want to be leaders of technology, but also to be strategic, not just throw things into the process because it’s new and ‘techy,’ but to actually solve a problem. In this instance, it’s [patrons] not having to carry around cash/cards that could be misplaced easier than a wristband, while speeding up the process of purchasing on-site goods, and sending instant receipts per transaction to patrons so they can keep tabs on spending.”
Both SFX and C3 will implement the cashless system at other events, including TomorrowWorld near Atlanta for the former, and the upcoming ACL fest in Austin for the latter. Gibson says Front Gate has, “a bunch more business lined up in 2015, after the massive success of these festivals this year.”
A version of this article first appeared in the Sept. 13 issue of Billboard.