Key insights:
- Brand strategists felt Austin needed a consumer confidence campaign.
- A sense of local identity returns during festival time.
AUSTIN, Texas—It’s Friday, March 13.
Today, Austin would have kicked off South by Southwest. Instead, the city is scrambling.
Austin, the self-proclaimed “live music capital of the world,” is a booming tech city whose economy has come to rely on the visitors and revenue from the annual event. Last year, SXSW’s conglomeration of festivals brought an estimated $356 million to the city.
This year, for the first time in 34 years, it’s not happening.
As big-name sponsors dropped out, a snowball effect gained momentum. One Friday ago, Austin Mayor Steve Adler declared a local state of disaster in the city in response to COVID-19, effectively canceling what would have been two weeks of simultaneous music, comedy and film festivals with more than a dozen conference tracks and some of the ad industry’s most talked-about brand activations alongside marketing leaders.
Those people, more than 400,000 who normally make the trek, would no longer make it. In what the organization called a “heartbreaking” move, SXSW laid off around 50 people—a third of its full-time staff. A few days later, the city banned gatherings of more than 2,500 people through May 1.
Most larger brands are staying quiet about the loss and potential future of what would have been their SXSW activations, opting to wait until things stabilize to make a decision about trying to recoup a portion of preparation costs. On ground zero, the cancellation is pushing the generally laid-back hustlers to the brink. In the fallout after Adler’s announcement, bars and restaurants started to worry whether they’ll be able to make rent in a quickly gentrifying area. Venues have frantically rebooked scores of shows. But they’re hanging on to hope—and pivoting.
Virtual and ad hoc alternatives
SXSW EDU, the education-focused part of the festival, was slated to begin this past Monday—72 hours after the event was officially canned. But with dozens of would-be attendees already in town or on their way, an “unconference” was born, organized through a Slack channel.
Educators and researchers continued to meet earlier this week to share ideas and expertise. Several of the informal sessions were shared online so that registrants who didn’t make it to town could still participate, and those who came anyway met for smaller, in-person networking events.
A virtual alternative like what SXSW EDU attendees created for themselves is looking more and more like something that brands, agencies and companies may have to prioritize for the foreseeable future. While there are still a lot of unknowns regarding COVID-19, it doesn’t look like planning for in-person events is on the books.
‘We’ll have to tighten our belt’
For many bars and restaurants in Austin, that two-week bump in revenue makes up for the dry summer season, when college kids and a good chunk of staff from the University of Texas leave town and everyone else does their best to stay out of the sweltering heat. For Austin Beerworks, SXSW (known by some as South by) makes up the brewery’s biggest chunk of revenue for the year.
“It’s gonna be pretty devastating not to have South by,” said Austin Beerworks co-founder and brewing director Will Golden. “It’ll hurt. We’ll have to tighten our belt.”
For a brewery that’s become a local staple since it was founded nearly a decade ago, this setback won’t be entirely catastrophic. (It’s not the kind of business that relies on SXSW to make rent). Music venues and bars, however, have higher stakes. Austin’s Red River Cultural District is “the largest contiguous corridor of live music venues in Texas,” according to the executive director of the district’s merchant association, Cody Cowan.
“We kind of consider ourselves like the keystone of South by Southwest,” Cowan said. “It’s going to be rough. … We don’t know where they’re going to be at wrap of March.”
While venues are the center of operations for the music portion of SXSW, they’re also where a lot of brands host parties and activations throughout the festival. With the cancellation, venues saw 10 days of programming—that can account for as much as 50% of their annual revenue—disappear in an instant.
Putting on a solution hat
In a matter of days, venue owners have had to react and rebook that entire timeframe—contacting all the musicians who had planned to come to find out whether they were still touring and filling in those holes with local acts, when and where necessary. Mohawk, one of the venues along Red River, had been partnering with SXSW for over a decade.
“It’s a devastating loss in terms of economic impact to the city,” said Mohawk owner James Moody.
