Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
There were pink T-shirts everywhere in a patch of east London last week as South by South West, the music, film and technology festival from Austin, Texas, came to the UK capital. Clusters of brightly clad guides were on hand to direct festival-goers from Shoreditch to Spitalfields.
On the sunny first day of SXSW London, I wandered from a talk about how the Dutch brand Tony’s Chocolonely markets its chocolate to a show by an emerging R&B singer from Nottingham, taking in an interview with Sir Demis Hassabis, co-founder of Google DeepMind. Hassabis conjured an AI future in which “we have cured many diseases, or maybe all diseases”.
It was a pleasant break from an anxious world to get a shot of techno-optimism, accompanied by music, film and art in sanctuaries including Christ Church, Spitalfields, the 18th-century church by Nicholas Hawksmoor. Those with six-day £1,300 platinum passes, mostly covered by companies, could pick from events in 34 venues and hear more than 1,000 speakers.
Smaller festivals have struggled to recover from the pandemic, with 78 UK events postponed, cancelled or closed last year. The biggest names roll on, from music festivals such as Coachella and Glastonbury to business, technology and geopolitics conferences including Davos. SXSW, founded in 1987 around Austin’s music scene, stretches across boundaries.
One question raised by SXSW’s arrival in London is whether it is possible for another place to have the spirit of Austin, any more than Burning Man could move from Nevada to a new desert, or Glastonbury to another farm. Festivals have cultural and geographic roots in specific places; they are not just consumer brands.
In practice, east London felt like a natural home for SXSW last week. Hackney, the borough in which much of the event took place, has some of the same liberal, hipster culture as Austin, hosts many creative businesses and has long-established links with the festival. It opened a pop-up “Hackney House” at SXSW in 2013 to promote itself.
“These things do not happen overnight. They take a while to flourish,” Duncan Ray, who worked for Hackney Council on the regeneration of Shoreditch and nurtured the early SXSW relationship, told me. East London’s old churches and industrial buildings lend a resonance to what happens inside, from concerts to fireside chats.
The harder issue is what happens to festivals themselves as they globalise and become more business-like. SXSW is an example: it is controlled by Penske Media, which owns brands including Rolling Stone magazine and the Golden Globes awards. Penske first invested in 2021 as the festival was trying to recover financially from the pandemic.
The festival expanded to Sydney last year and has licensed the brand in Europe to SXSW London for 10 years. This licence is owned by Panarae, an investment firm founded by Ali Munir, who used to work in the City with the financier Guy Hands at Terra Firma. Munir was brought up in Saudi Arabia, educated in the US and has just moved back to London from Dubai.
“I’ve lived everywhere and London is the greatest city in the world,” he said when we met at the historic former Truman Brewery site in Spitalfields, which stopped making beer in 1989. But Munir’s interest is more than cultural and personal. He is a non-executive director of Penske Media and said that this had taught him “how financially and otherwise interesting the experience economy can be”.
The professionalism of the modern festival was evident from day one, with everything from WiFi to security gates and business stands in the former brewery up and running, and queues for big names. The staging was produced by Tait, a US live events company in which Panarae invested before it was acquired last year by Goldman Sachs’ private equity arm.
It is a big investment to start up a festival (albeit one with an established brand) and draw enough of a crowd to generate a buzz. Although this one sold £65 wristbands for three-day music access, and discounted some corporate passes, Munir said he still expected to enter profit “before year three”. If so, his faith in London will be rewarded.
But festivals have to keep their souls, as well as make money. SXSW London will be judged on both metrics, as will SXSW itself. It is a balance, and what is happening to smaller festivals indicates the peril of financial failure. For global ones, there is another danger.