STRATEGIC MUSIC FESTIVAL MANAGEMENT IN THE NETHERLANDS;
WHAT MAKES SPONSORS SAY YES?
MASTER THESIS BY ANNEMARIE P.G. HOFMAN
UNIVERSITY OF GRONINGEN FACULTY OF BUSINESS AND ECONOMICS
MSC BA STRATEGY & INNOVATION FIRST SUPERVISOR: DR. VAN DER EIJK, R. SECOND SUPERVISOR: DR. McCARTHY, K.J
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ACKNOWLEDGEMENTS
It is my great pleasure to present you my MSc-‐masterpiece. It might not necessarily be the quality of the thesis, but to me it is mostly the process of writing it that makes this document one to be very proud of.
I was lucky to learn to always do what you love. The topic of this thesis is therefore one close to my personal interest. And, I am therefore happy to know that while conducting the research, numerous music festival organizations and other cultural organizations have shown interest in the results. It is not only the exact results of this particular research that could be highly relevant for music festival managers to generate resources. Also, the created awareness around the need for an increasing business-‐minded approach in my view will help music festival organizations to survive in this industry for which The Netherlands has always been known to be so outstanding. I hope to get the opportunities to be able to continue to do what I love. It is my desire to continue working with this business-‐minded approach in environments as creative and innovative as the music festival industry. Therefore, I am thankful for the many meaningful possibilities that occurred while writing this thesis. I truly believe to have gained unique and valuable insights in the industry and the challenges it faces.
Gaining these experiences and the process of writing the thesis has not always been as easy as I would have liked it to be. I could have never faced all challenges by myself, and I am sure I haven’t been the easiest person to be around with. For this I owe many people my deep gratitude.
Firstly, I would like to thank my parents. My parents are the best parents I could wish for and the two most important people in my world. I am grateful, that you have provided me with an education in this way, and for never pushing, judging or doubting me. The amount of trust you have given and shown me is incredible. Thank you for being the best teachers at the University of Life.
At the University of Groningen, I could not have been at this stage without my first supervisor Dr. Van Der Eijk. Your patience, understanding and flexibility have truly meant the world to me. You have been able to motivate me with wise words – both academic and on a more personal level. I truly hope you realize what a difference you have made in the most difficult time in my life. Thank you.
Many friends, my boyfriend, family -‐and most likely my neighbors, too-‐ were part of my struggles when writing this thesis. Thank you Danielle, for the coffees, talks, our everyday and extraordinary travels. Thank you Annemiek, Jorgen, my incredible sister Brenda, Sebas, Anna, Lianne, Gepke, for the small things that were great.
ABSTRACT
The music festival industry has become a prominent example of a market with transforming structures, and increasing competitive dynamics. Sponsoring has become an increasingly important way of generating a sustainable competitive advantage for music festival organizations. One of the most common reasons for music festival failure can be explained by a weakness of the festival promoter to attract sponsors (Getz, 2002).
The aim of this research is to provide vital, pragmatic, knowledge for music festival organizations in order to be able to design their event such they have an increasing chance on successfully developing a sponsorship relationship. It answers the following research question: “Which music festival attributes determine the formation
of a sponsorship relationship between sponsor firms and music festival organizations in The Netherlands?”
Interviews have generated in-‐depth knowledge on the formation phase of a sponsorship relationship between music festival organizations and sponsor firms. It has become clear that the motivation to sponsor is economic-‐ based, which starts with defining the wishes of the sponsor firm concerning the characteristics of the music festival. These characteristics determine the degree of resource complementing which both parties seek.
A questionnaire distributed among 50 managers within firms that sponsor music festivals provides in-‐depth information on these relevance and preference on these characteristics. The research distinguishes the following subdivisions within the sample (n=27): sector, firm size, industry, number of employees occupied with sponsoring, number of sponsoring applications granted yearly, average budget per year for sponsoring purposes, and the role sponsoring plays within their firm.
From the collected data can be concluded that, when organizing a small music festival at an urban location, with a theme or message, chances on a successful formation of a sponsorship relationship are largest.
Small firms excluded, the location is considered the most important music festival attribute in determining the formation of a sponsorship relationship between firms and music festival organizations in The Netherlands. In order to be optimally attractive to sponsors, music festivals should be organized in urban locations. Also highly important for sponsors to decide to participate in the formation of a sponsorship relationship, is the theme or message of a festival. Sponsor firms find music festivals with a theme or message attractive when determining the possibility on a sponsorship relationship. The third most decisive music festival attribute is the visitor capacity. The largest chance on resource complementing is when the visitor capacity, and thus event size, is small. Sponsor firms consider the ticket price of a music festival as least important in determining the formation of the sponsorship relationship. The creation of an integral understanding of the formation phase would be relevant for further research. Understanding sponsors’ preferences by finding correlations could deepen and broaden the research, too. Methodology applied can be applied to other events, and results can be translated into other fields of study.
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TABLE OF CONTENT
1. INTRODUCTION ... 6
1.1. GROWTH AND CHALLENGES IN THE DUTCH MUSIC FESTIVAL INDUSTRY ... 6
1.2. TRENDS WITHIN THE DUTCH SPONSORING INDUSTRY ... 7
1.3. PROBLEM DEFINITION ... 8
1.4. THESIS OUTLINE ... 9
2. THEORETICAL FRAMEWORK ... 11
2.1. MUSIC FESTIVALS ... 11
2.1.1. DEFINITION OF A MUSIC FESTIVAL ... 11
2.1.2. MUSIC FESTIVAL INDUSTRY CHARACTERISTICS ... 11
2.1.3. CONCEPTUALIZING THE MUSIC FESTIVAL AS A PRODUCT ... 12
2.2. SPONSORING ... 16
2.2.1. DEFINITION OF SPONSORSHIP ... 16
2.2.2. MOTIVATIONS TO SPONSOR ... 18
2.2.3. CONCEPTUALIZING SPONSORING AS A RESOURCE ... 18
2.3. CONCEPTUAL MODEL ... 20
3. METHODOLOGY ... 22
3.1. INTERVIEWS ... 22
3.1.1. SAMPLE DESCRIPTION ... 22
3.1.2. INSTRUMENTS AND DATA COLLECTION ... 23
3.2. QUESTIONNAIRE ... 23
3.2.1. SAMPLE DESCRIPTION ... 23
3.2.2. INSTRUMENTS AND DATA COLLECTION ... 24
3.3. PROCEDURE OF DATA ANALYSIS ... 25
3.4. VALIDITY ... 26
3.5. RELIABILITY ... 27
3.6. GENERALIZABILITY ... 27
4. RESULTS ... 28
4.1. INTERVIEW RESULTS ... 28
4.1.1. CHARACTERISTICS OF THE FORMATION PHASE ... 28
4.1.2. RELEVANT MUSIC FESTIVAL ATTRIBUTES ... 30
4.1.3. FOCUS OF THE RESEARCH ... 31
4.2.1. CHARACTERISTICS OF THE SAMPLE ... 32
4.2.2. RESULTS ON THE TOTAL SAMPLE ... 34
4.2.3. RESULTS PER SECTOR ... 37
4.2.4. RESULTS PER INDUSTRY ... 41
4.2.5. RESULTS PER FIRM SIZE ... 47
4.2.6. RESULTS PER ROLE OF SPONSORING IN THE FIRM ... 53
5. DISCUSSION ... 60 5.1. KEY FINDINGS ... 60 5.2. IMPLICATIONS ... 61 6. CONCLUSION ... 63 6.1. RESEARCH PROBLEM ... 63 6.2. APPROACH ... 63 6.3. FINDINGS ... 63 6.4. FUTURE RESEARCH ... 64
6.4.1. CREATING AN INTEGRAL UNDERSTANDING OF THE FORMATION PHASE ... 64
6.4.2. DEEPENING OF UNDERSTANDING OF SPONSORS’ PREFERENCES ... 64
6.4.3. BROADENING OF UNDERSTANDING OF SPONSORS’ PREFERENCES ... 65
6.4.4. DIFFERENTIATING ON OTHER CULTURAL EVENTS ... 65
6.4.5. TRANSLATION OF RESULTS INTO OTHER FIELDS OF STUDY ... 66
6.5. LIMITATIONS ... 66
6.5.1. GENERALIZATION ... 66
6.5.2. VALIDITY ... 66
6.5.3. RELIABILITY ... 66
5 QUESTIONNAIRE RESULTS #3: SUMMARY OF CONTROL DATA RETRIEVED FROM SPSS (ABSOLUTE
DATA) Error! Bookmark not defined.
1. INTRODUCTION
1.1. GROWTH AND CHALLENGES IN THE DUTCH MUSIC FESTIVAL INDUSTRY
The first major music festival in the world was Woodstock, in August 1969, which emerged from the hippie spirit of love, peace and joy. The first Dutch music festivals took place in 1970; The Holland Festival in Rotterdam, the same year as the inaugural edition of Pinkpop. The free one-‐day Parkpop festival began in 1971. Since then, The Netherlands has developed into being one of the leading festival markets in Europe in both density and age (Kruijver, 2009). Having experienced a significant growth of 40% between 1995 and 2007 (Kruijver, 2009), currently stabilization –according to some even saturation-‐ takes place within the music festival market in The Netherlands, and competition intensifies (Kruijver, 2009; Leenders, 2012). The trend of festival failure as a result of market saturation is not unique, and previously became apparent by the research of Collin-‐Lachaud and Duyck (2002) in their study of the French festival industry. In France, music festival market saturation has led to “financial difficulties and an identity crisis”.
One of the most common reasons for music festival failure can be explained by a weakness of the festival promoter to attract sponsors (Getz, 2002). Sponsoring has become an increasingly important way of generating income for music festival organizations. Like the music festival industry, sponsorship activities are as well subject to currently unstable economic conditions and have influenced decision-‐making around sponsoring portfolio development. However, for firms in the Dutch business sector, sponsoring could function as a resource in order to create sustainable competitive advantage. In current turbulent conditions for both sponsors and music festival organizations, it has become highly relevant to act in such matter that both parties can optimally benefit from sponsoring. Below, backgrounds and challenges become clear by briefly discussing the characteristics and trends in both industries.
Music festivals deal with the production of social meaning (Hesmondhalgh, 2002), and provide an important part of the cultural calendar in many cities. They deliver significant economic, socio-‐cultural and political impact on their destination (Leenders, 2010). Previous growth in the music festival industry in The Netherlands can be explained from both the demand side as well as from the supply side; there has been an increasing availability of time and financial resources for leisure and a demand for culture. From the supply side, organizations have earlier been attracted by the possibility of gaining high rents on the production of music festivals (Frey, 1994).
The music festival industry is nowadays a prominent example of a market with transforming structures, and increasing competitive dynamics. Three significant challenges are identified:
7 industries, and creating an economy of scale would led to only a slight cost reduction. This shows a problematic cost structure, identified by Baumol and Bowen (1965) as “economic dilemma”. According to Baumol and Bowen (1965), higher price settings could turn this mechanism.
However, an increase of ticket prices could again be associated with again a decrease in turnout of audience (Leenders et al, 2011). Purchasing power of consumers has dropped, which is recognized as the second challenge affecting the music festival industry. Total costs and hereby often ticket prices increase faster than the consumer index, while at the same time consumers experience a decrease of available resources. A turnout in audience has yet been experienced, since some music festivals have difficulties in getting their events sold out (Leenders et al, 2011). Music festival tickets are a luxury good; demand increases more than proportionally as income rises (Schumpeter, 1934). The current decreasing demand is thus highly influenced by the declining consumers’ purchasing power.
Thirdly, the current governmental policy to drastically cut cultural expenses has its influence on the transformation of the music festival industry. Policy on arts and culture in The Netherlands is based on the premise that the state should distance itself from value judgments on art and science. Though according to the PVV, a ruling right-‐wing party in the Dutch government, “arts subsidies provide only the rich with entertainment, lead to “bad” art, create networks of power and are a waste of money” (Marbe, 2010). The PVV is the main advocate behind the recent decision for the annual decrease of 200 million euro in the budget for culture, meaning 20% of the total, being a structural process until 2015 (OCSW, 2009). In the new policy, a number of grant possibilities disappear, affecting music festivals such as Amsterdam Dance Event and EuroSonicNoorderSlag (Griffioen and Zwennes, 2010). The new policy also introduced a tax increase from 6% to 19% in the VAT rate for performing arts and commercial suppliers. As well, benefits for taxes in cultural investments are cancelled (OCSW, 2009).
Hit with rising costs, rising ticket prices, declining subsidies and an audience with declining purchasing power, the industry is in difficulty. According to the Dutch government, cooperation between business sector and cultural institutions is one way in which the industry could generate more resources (OCSW, 2009), and music festival organizations could enlarge their focus on sponsoring as a key line on income statements (Daellenbach, 2006; Olsen, 2010).
1.2. TRENDS WITHIN THE DUTCH SPONSORING INDUSTRY
tourism, infrastructure and the growth of the region (Lidstrom, 2002). Researchers such as Finkel (2010), Meerabeau et al. (1991) and Farrely and Quester (1997) consider the option of sponsoring of music festivals relatively inexpensive and highly effective, and even consider the music festival environment one of the best places for advertisement due to the positive atmosphere. The field of sponsoring is dynamic; Leclair (2000) has indicated how industry development and competitors’ activities are subject to the amount of corporate contributions to cultural activities. Changes in economic conditions and the power of trade act as a mechanism in both growth and maturing of the sponsoring relationship (Comwell and Maignan, 1998). This is also currently becoming obvious since due to the current changing economic environment, sponsors are presently reconsidering their portfolios. The SponsorTribune (2010) benchmark held among Dutch sponsors illustrates that sponsoring of performing arts in general has declined with 9% in 2010 (Podiumpeiler, 2011). In 2009, 75% of Dutch sponsors in all industries did not intend to adopt a new sponsee. In addition, descending/and or annual contracts could be problematic, since 68% of current sponsors indicated to not renew their sponsoring activities, mentioning the financial crisis as the main reason.
1.3. PROBLEM DEFINITION
It has become inevitable that music festival managements need to find new resources of generating revenue in order to survive in this highly competitive market. Current trends have increased the weight of integrating sponsoring in the music festival industry. Although firms see the profit of sponsoring, they have become more critical on their portfolios. For music festival managers it may therefore be relevant to adapt to the wishes and needs of potential sponsors, which is the starting point of this research. The question hence is, how can music festival organizations attract the sponsorship necessary to survive?
9 As a result of the current trends, relation of the two concepts and the lack of academic research on this field, the research question is: “Which music festival attributes determine the formation of a sponsorship relationship
between sponsor firms and music festival organizations in The Netherlands?”
Following sub questions have been developed in order to be able to answer the research question: 1. What are the characteristics of the formation phase of a sponsorship relationship?
2. Which music festival attributes are relevant in the formation phase of the sponsorship relationship? 3. Which music festival attributes are of importance to potential sponsors?
4. Which characteristics of the music festival attributes do potential sponsors prefer?
5. To what extent can the outcome of the analysis be translated into an imperative in strategic music festival management?
The aim of this research is two-‐sided: (1) this research attempts to translate a collection of data into an imperative in strategic music festival management, and thereby contributing to reducing the gap between arts and culture, (2) aiming towards the development of managerial implications for music festival organizers. It attempts to provide vital, pragmatic, knowledge for music festival organizations in order to be able to design their event such they have an increasing chance on successfully developing a sponsorship relationship.
1.4.
THESIS OUTLINE
Figure 1 shows the steps taken in order to be able to answer the main question of this research.
Figure 1: outline of the thesis
Definitions, characteristics of the industries and the theoretical framework are presented in Chapter 2. This forms the basis for the variables this research focuses on. Here, the conceptual model is drawn.
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2. THEORETICAL FRAMEWORK
As described in chapter one, both the music festival-‐ and sponsor industry are facing challenges. It has become inevitable that music festival managements need to find new resources of generating revenue in order to survive in this highly competitive market. This chapter elaborates on the approach towards the problem given. The theoretical framework provides a thorough insight on the topics of sponsoring and music festival management. In this chapter, sub questions one and two will be answered.
2.1. MUSIC FESTIVALS
2.1.1. DEFINITION OF A MUSIC FESTIVAL
Within the "arts", a distinction can be made between "high art"— which contains dance, drama, classical music, literature, art exhibitions, and museums— and "popular" art—of which music festivals are a part (Meenaghan, 1998). Music festivals are part of the cultural (or “creative”) industry, defined as “those industries which have their
origin in individual creativity, skill and talent and which have a potential for wealth and job creation through the generation and exploitation of intellectual property”. The cultural industries combine creation, production, and
distribution of goods and services that are cultural in nature and usually protected by intellectual property rights (Caves, 2000). Music festivals as we understand hence can serve as a showcase, creative destination and an attraction for visitors (Van Aalst and Van Melik, 2012). Additionally, Getz (1989) distinguishes festivals from permanent cultural events by their uniqueness, affordability and flexibility. In current literature, the definition of Kruijver (2009) is often applied. He states that a music festival is “a usually open to the public, with an entrance fee,
musical event presented under one umbrella, where several (minimum of two) musical performances are given by various artists at indoor and/or outdoor locations that are linked or within walking distance from each other”.
Additionally, Noordman (2004) states that a music festival distinguishes itself from a regular event by its regularly recurring character. Noordman (2004) also concluded that a music festival does not necessarily require an entrance fee. Taking Parkpop as an example, this free and recurring musical event encompasses all above described characteristics of a music festival. Taking this into account, the definition of Kruijver is modified. The definition applied in this research is as following: “A music festival is a recurring, usually open to the public, musical
event presented under one umbrella, where several (minimum of two) musical performances are given by various artists at indoor and/or outdoor locations that are linked or within walking distance from each other.”
2.1.2. MUSIC FESTIVAL INDUSTRY CHARACTERISTICS
Firstly, the music festival industry is characterized by relatively high production and high marginal costs (Walliser, 2003). Production and reproduction costs are high, in other words; the ratio between these costs is relatively low compared to other musical industries such as the record industry (Walliser, 2003). Baumol and Bowen (1965) underline this when indicating how performing arts are “productivity stable”. This demonstrates how, unlike most other businesses, technological developments do not lead to a higher output for the music festival industry (Baumol and Bowen, 1965). Secondly, music festivals are an experience good and therefore its quality can only be determined after consumption. Because of the unknown consumers' response to a product on forehand, and afterwards, demand uncertainty occurs (Caves, 2000). The third economic law describes the value of an entrance ticket. Unlike in traditional industries, in which the product life cycle is applicable, a ticket is worthless immediately after the music festival has taken place. Fourth, after their performance, artists often sell complementary products as merchandising and cd’s, sometimes for higher prices than the common. A music festival is an ideal location for this. Florida (2002) states how "human creativity is the ultimate economic resource", indicating the high potential of activities within the cultural industry. Fifth, entertainment is a luxury good, and is consumed in a pro-‐cyclical manner. This makes the industry highly subject to economic welfare (Schumpeter, 1934).
The five economic laws that apply to the music festival industry clarify how the previously largely subsidized music festival industry is a highly unique and uncertain environment, asking for the integration of commercial features which stabilize the industry.
2.1.3. CONCEPTUALIZING THE MUSIC FESTIVAL AS A PRODUCT
This research asks for a clear delimitation of those factors that a music festival management can change in order to improve the festivals’ attractiveness for potential sponsors. Getz (1989) developed a framework that is applicable on music festivals, in which these delimited factors become apparent. This framework is given in Figure 3. presents five perspectives, approaching music festivals as a product.
The research distinguishes tangible and intangible aspects of the music festival. Not surprisingly, the “tangible products”-‐bundle [which is circled] embodies the core of the music festival, functioning as mechanisms in order to create the intangible music festival experience. Getz (1989) shapes the bundle of tangible products of a music festival as: product theme/image, visitor activities, merchandise and entertainment.
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Figure 3: Perspectives on the music festival as a product (Getz, 1989)
In other event management literature, dimensions of a festival are referred to as “push and pull attributes”. The position of these dimensions is part of the competitive advantage (Schofield and Thompson, 2007; Kim and Lee, 2002) of a music festival in the sponsor market. The nature of this competitive advantage can be approached according to the theories described by Daellenbach et al. (2006). The core of Getz’ model, the tangible products, is formed by “pull factors” (Schofield and Thompson, 2007). Pull factors are tangible attributes that embrace external drawing power. Push factors are intangible; socio-‐psychological motivators of which management have few or no control. In order to optimize success within the formation phase of the sponsoring relationship, music festival management has the ability adjust the pull attributes of their product. It is therefore, that this research focuses on the tangible attributes of music festivals.
Leenders et al. (2005) evolved Getz’ research and concluded that pull-‐attributes are allocated as the bundles “content” and “format” of the festival (Getz, 1989; 1991, Leenders et al., 2005). Hereby “content” focuses on the attributes “audience scope”, “line-‐up”, “age” and “theme/message of the music festival”, and “format” concentrates on the attributes “budget”, “ticket price”, “location”, and “visitor capacity”. The following figure matures the theory of Getz with the complementary insights of Leenders et al. (2005).
EVENT TOURISM -‐ Events as attractions -‐ Packages of events -‐ Desired impacts VISITOR EXPERIENCE -‐ Essential services -‐ Generic benefits -‐ Targeted benefits TANGIBLE PRODUCTS -‐ Theme/image -‐ Visitor activities -‐ Merchandise -‐ Entertainment ORGANIZERS -‐ Acquired resources -‐ Survival/growth -‐ Community support Target marketing Fostering and attracting events Assistance to organizers
Consumption of events Production of events
COMMUNITY DEVELOPMENT -‐ Community spirit/pride -‐ Cooperation
-‐ Leadership
-‐ Enhanced cultural traditions -‐ Control over development -‐ Environmental quality
Volunteer Support and Attendance
Figure 4: Redefined model of Getz (1989)
The understanding of the sponsor’s preferences based upon pull-‐attributes of music festivals helps to pragmatically define the optimal design and positioning of music festivals (Kim and Lee, 2002). The preferences of sponsors for various music festival attributes can be incorporated into the strategy of the music festival organization. This increases the foundation of the sponsorship relationship and consequently, the growth of income.
Consequently, by analyzing and rating the attributes of the music festival, music festival management can determine appropriate action in considering modifying their event before or during the formation phase of the sponsorship relationship. Earlier research has shown that consumers (in the context of this research: the sponsor) have preferences for attributes of products (in the context this research: the content and format of a music festival), and that the sponsor thinks of only one attribute at the same time in a rating order. Thus, attributes can be considered as separate components.
The rating of the separate attributes allows music festival management to assess whether it operates from a position of strength, or if it is vulnerable. From here, implications on (re-‐) designing the event can be developed. The attributes that Leenders et al. (2005) apply in their publication are the considered variables in the current research. In assessing both content as format of music festivals, in relation to sponsoring, academic debates take place and should therefore firstly be discussed before adopting them as variables in this research.
EVENT TOURISM -‐ Events as attractions -‐ Packages of events -‐ Desired impacts VISITOR EXPERIENCE -‐ Essential services -‐ Generic benefits -‐ Targeted benefits CONTENT -‐ Audience scope -‐ Line-‐up -‐ Age -‐ Theme/message ORGANIZERS -‐ Acquired resources -‐ Survival/growth -‐ Community support Target marketing Fostering and attracting events Assistance to organizers
Consumption of events Production of events
COMMUNITY DEVELOPMENT -‐ Community spirit/pride -‐ Cooperation
-‐ Leadership
-‐ Enhanced cultural traditions -‐ Control over development -‐ Environmental quality
Volunteer Support and Attendance
Host-‐Guest Relations Community Relations
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2.1.3.1. AUDIENCE SCOPE
To start with, Farelly and Quester (1997) conclude that access to a specific event audience is one of the most important factors assessing the worth of a sponsorship. Some festivals have a broad audience, while others focus on an audience that appeals more to a specific taste. Leenders et al. (2005) and Quester (2001) indicate that mainly the latter, focused (niche) festivals are more successful and therefore more attractive to sponsors, than those with a large audience scope. On the contrary, Baumol and Bowen (1965) suggest that the focus on a large audience scope could change the economic dilemma that music festival organizations face. Quester (2001) states that a broad audience scope can create access to large media coverage, which according to could be attractive to commercial sponsors. Anyhow, audience differs on demographic factors or interests and is hence interesting for different types of sponsors. According to the perspective of a sponsoring organization, a strategic fit between the demographic profile of its own target segments and the profile of the music festival audience is vital. Therefore, it is of high importance for arts festival managers to gain detailed information on the demographic structure of their audience (Oakes, 2003). Since strategic fit is a situation-‐dependent concept, generalization on this topic is reasonless. It is however relevant to examine the audience scope (broad vs. niche) as a factor related to the likeliness of the formation of a sponsorship.
2.1.3.2. LINE-‐UP, TICKET PRICE AND TOTAL BUDGET
2.1.3.3. AGE
Concerning the age of the event, other cultural disciplines show that building a certain reputation could enlarge success; in theater for example, revivals are likely to have more success than other shows (Basuroy et al., 2003; Simonoff and Ma, 2003). However, Leenders et al (2005) conclude that newer festivals are likely to be more successful. The interviews held showed that the opportunity of building a trustworthy relationship is an important aspect for sponsors. A good reputation can be built over time, and thus might an older successful festival be preferable for potential sponsors.
2.1.3.4. LOCATION AND VISITOR CAPACITY
According to Leenders et al (2005), the location of a music festival is a relevant feature since it influences aspects such as accessibility and maximum visitor capacity. Van Aalst and Van Melik (2012) conclude that the importance of location of a music festival is becoming weaker. In few cases, the location of the event might influence content, since they offer tangible and intangible experiences that connect people to places. Nonetheless, Van Aalst and Van Melik (2012) also emphasize how many music festivals are highly standardized and therefore the need to be located at a specific location is reduced. Although location and visitor capacity can be correlated, in this study they are treated as separate variables.
Maximum visitor capacity has been described as “having an admission limit” (Van Aalst and Van Melik, 2012). Visitor capacity thus measures the size of the event. The concept of “location” in this study measures a preference for an urban or rural location for a music festival, which is not necessarily an indicator for event size.
2.1.3.5. THEME AND MESSAGE
A festival is considered to have a theme when it has been organized because of a certain subject or event or when it chooses to have a special topic. The festival has a message when the festival is organized not only to stage music but also to spread ideas of a social, political, or religious nature. A theme could contribute to the festival experience. Leenders et al. (2005) predicted that a festival with a theme or message would attract a larger audience. This prediction is however rejected. As Getz (1989) stated, a theme or message could also serve as backdrop for programming. This does not indicate that the theme or message is necessarily correlated to the line-‐ up.
2.2. SPONSORING
2.2.1. DEFINITION OF SPONSORSHIP
17 Supporting a music festival could firstly connote a philanthropic theme. Organizations can receive voluntary transfers of wealth from a donor. Secondly, organizations can receive support from national, regional or local governments. The subsidy spending of governments is based on strict cultural policies, which are often not structural. Subsidies are often seen as a form of philanthropy (Bulut, 2009). Thirdly, organizations can receive sponsorship funds from corporations. Kirchberg (2003) refers to sponsorship as a corporate contribution, which is considered a mutually beneficial interaction. This reflects the phasing out of the donation mentality. Sponsorship is not equal to philanthropy (Cornwell et al., 2005; Javalgi et al, 1994), since return of expectations, motivations and decisions differ in the mode of support.
Considering all views of sponsorship, its definition should embrace the notion of sponsoring as a commercial concept, implies a broad interpretation of the investment, and includes the possibility for marketing and communication as a motive or output. The definition of Meenaghan (1991a) is therefore representative for sponsorship as we understand it: “Sponsorship is an investment, in cash or in kind, in an activity, person or event
(sponsee), in return for access to the exploitable commercial potential associated with that activity, person or event by the investor (sponsor)”.
Despite the increase of relevance of sponsoring in the cultural sector, review of the literature on sponsoring shows that prolific research has been focused mainly on sports sponsorships. This is not surprising since sports have been the prevailing sponsorship context. By looking at its basic concept, Meenaghan’s definition of sponsorship applies to both arts and sports, since sponsorship of arts has shifted from philanthropic to market-‐driven (Farrely and Quester, 1997). Farrely and Quester (1997) state that since objectives are equal, namely market-‐driven, beneficial learning by transfer of knowledge could take place between managers in sports and cultural settings. Initial management techniques on sponsorship in the cultural sector have been largely borrowed from those of sports sponsorship, and sponsorship literature comparing cultural and sports sponsorship could be of direct interest to festival managers.
sponsoring (Simmons and Becker-‐Olsen, 2006).
2.2.2. MOTIVATIONS TO SPONSOR
Since the 1970’s, sponsorship has grown from a small-‐scale activity into a global industry. The development and wide range of definitions on sponsorship reveals the general embracing of sponsorship as an economic-‐based partnership between sponsoring and sponsored organizations (Cornwell, 2008; Meenaghan, 1998; Thwaites, 1994). O’Hagan (2000) stresses that in the relation of a sponsorship, a company gives mostly financial resources, goods or services or expertise, in exchange for a promotional or image transfer from the non-‐profit organization. However, sponsorship involves more aspects than solely promotional purposes. Sylvestre and Mouthino (2007) comprise the variety of possible benefits by defining sponsorship as a two-‐way commercial exchange, which is beneficial to both the sponsor and the organizers of the sponsored activity. According to Dolphin (2003), sponsorship refers to the financial support given by an external organization with a definite commercial goal in mind, if only with the intent of creating goodwill and good public relations. Meenaghan (1998) neglects the aspect of goodwill, and suggest that sponsorship is only utilized as a marketing or communicational tool.
The concept of sponsoring has shifted from a philanthropic activity into a vital element of companies’ marketing and communication mix (Wallister, 2003; Daellenbach, 2006). Motivations to engage in sponsoring are broadly examined and provide an insight on the nature of the concept (Olkkonen et al, 2000). Existing research shows how the attitude of the business community is the most important factor of determining the birth and degree of corporate sponsoring (Comwell and Maignan, 1998). Walliser (2003) emphasizes how sponsor motivations display a consistent focus on employee related issues, organizational management interests or the promotion of the company’s brand or image (Daellenbach et al, 2006) and thereby underline the commercial nature of sponsorship (Olkonnen et al., 2000).
2.2.3. CONCEPTUALIZING SPONSORING AS A RESOURCE
The work of Daellenbach et al. (2006), Olkonnen et al (2000) and Walliser (2003) has put emphasis on the development of sponsorship processes by the embedding of sponsorship relationships in their research. According to them, viewing sponsorship from many perspectives provides knowledge on better recognizing the value of sponsorship relationships and thereby opportunities. Daellenbach et al. (2006) provide an extensive overview of existing frameworks and clearly embrace the view of conceptualizing the process of a sponsorship relationship as a life cycle. Here, Daellenbach et al. refer to the fundamental “organizational life cycle” of Quinn and Cameron (1983).
19 as a core competitive advantage for the sponsor. The institutional theory emphasizes how firms give meaning to social behavior, by reflecting societal norms on strategic decisions of companies. The resource dependency theory shows a perspective of an organization as a system subject to both internal as environmental influences, which is dependent on other organizations as resource providers. Finally, framing a sponsorship relationship according to the social network theory, managers seek whether and how organizational actions are embedded in networks, in order to enlarge chance on achieving strategic benefits. Daellenbach et al. (2006) suggests that a combination of above frames provides an extensive understanding of the initiation and management of a sponsorship relationship.
Urriolagoitia and Planellas (2006) evolve existing theories of Daellenbach et al. (2006) by approaching the sponsorship relationship as a life cycle creating opportunities for competitive advantage for sponsors. They emphasize on how current sponsors need and seem to recognize the strategic role of sponsorship in order to maximize the desired value. As where Daellenbach et al. approach sponsorship as an opportunity for strategic actions, Urriolagoitia and Planellas (2006) consider sponsorship as a strategic alliance and thereby sustainable competitive advantage.
The framework of Daellenbach et al. (2006) provides the combination of several views on gaining understanding on the concept of sponsoring. Urriolagoitia and Planellas (2006) have founded an evolved context of the framework of Daellenbach et al. (2006). In here, the emphasis is on creating sustainable competitive advantage as an outcome of sponsoring by optimally using an organization’s key resources in all phases of the sponsorship relationship. This leads to approach the concept of sponsoring according to the resource based view.
Urriolagoitia and Planellas (2006) propose a “sponsorship relationship life cycle model” that is used as a guideline in the current research.
Figure 2: Sponsorship relationship life cycle (Urriolagoitia and Planellas, 2006) This environment of trust was based on mutual
respect for, and understanding of, the positions and needs of the respective parties to the relationship. From the Guinness side, the scale of leveraging activities and expenditures was significant, and undertaken with the view that a beneficial long-term association would continue. For its part, the GAA, as a property owner and an amateur sports organization, was reliant on the marketing capabil-ities of Guinness to promote the game of hurling, and its ability and willingness to undertake such activities in a sensitive and mature manner. Sus-taining this environment of trust and mutual dependence required continuous attention to the dynamics of interactions between the parties, including changes in personnel representing the parties, reaction to external media attention and criticism, and the renewal of rights.
3. The life cycle of a particular strategic alliance: The sponsorship relationship
As illustrated by the life cycle model represented
in Fig. 1, sponsorship relationships go through
three developmental stages: formation, operation, and outcome. We argue that each stage has its own necessary characteristics and that a sponsorship relationship cannot move to the next stage unless certain characteristics are present. As previously highlighted, specific relational investments, knowl-edge-sharing routines, complementary resources and capabilities, and effective governance capture the key aspects of sponsorship relationship char-acteristics. Therefore, we maintain that these variables evolve dynamically over time, signifi-cantly influencing the developmental process of sponsorship relationships.Table 1summarizes the
Figure 1 The sponsorship relationship life cycle.
Table 1 Characteristics of the sponsorship relationship in its life cycle
Formation stage Operation stage Outcome stage
Specific relational investments High level of leveraging activities High level of leveraging activities Necessity for investments slows down
Knowledge exchange routines Interactions start Increase and intensify Intense and stable
Complementary resources Complementary strategy is defined
Organizational complement is created
A unique and valuable synergy is achieved
Governance structure: Fragile Strengthening Strong and stable
Formal mechanisms Outlined Developing Balance between formal
and informal
Informal mechanisms Negligible Taking shape
This evolved model shows three developmental stages: formation, operation, and outcome. Known by Quinn&Cameron (1983) as the “entrepreneurial stage”, “existence phase” (Churchill and Lewis, 1983) or “birth phase” (Lippitt and Schmidt, 1967), the formation stage of the sponsorship relationship life cycle marks the beginning of the development. Specific relational investments, knowledge-‐sharing routines, complementary resources and capabilities, and effective governance capture the key aspects of sponsorship relationship characteristics in the formation phase.
Urriolagoitia and Planellas (2006) argue that each stage has its own crucial characteristics, and a sponsorship relationship cannot move to the next phase until certain characteristics are present. During the formation phase, the managerial challenges lie in engaging in an explicit dialogue, formulating objectives and decide on the conditions. These conditions encompass adapting to the needs of both sponsor and sponsee. Specific relational investments are numerous in this phase, however knowledge-‐sharing routines are not yet been developed. In the formation phase, building the foundation of possibilities around combining complementary resources is of importance. Hence, in this period, the foundations for creating a sustainable competitive advantage are built.
2.3. CONCEPTUAL MODEL
The variables discussed lead to a concrete conceptualization of the research. These variables are generated from developed theory of Getz (1989) and Leenders et al (2005). The theory of Urriolagoitia and Planellas (2006) provides the context and scope of the formation phase of a sponsorship relationship as the independent variable. This research aims to investigate the relation between music festival attributes and the formation phase of a sponsorship relationship between sponsor firms and music festivals. The following conceptual model illustrates the dependent and independent variables of this research:
Figure 5: Conceptual model MUSIC FESTIVAL ATTRIBUTES
FORMATION OF A
