Peace, Love, and Corporate Sponsorship

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At the 2007 Glastonbury Festival, for example, luxury tents, each fitted with individual bars and a personal masseuse, could be rented for $12,000.

The financial rewards aren't limited to the festivals themselves. According to the Swiss office of consultants KPMG, economic activity generated by Hungary's Sziget Festival will reach $54 million by 2010, with much of that going to local businesses, such as hotels and taxi services. "The key to maximizing revenue from festivals is through other income sources," says Mean Fiddler's Benn.

Another source of music festival income is sponsorship. Companies from Coca Cola (KO) and MTV (VIA) to mobile giant Orange (FTE) and Britain's top-selling lager, Carling (TAP), have lent their names to European festivals, hoping to increase brand awareness through the rising interest in live music. While many companies have jumped on the bandwagon, none has embraced music festivals more than Virgin Mobile (VMED), a cellular subsidiary in Richard Branson's business empire, which created the V Festival in 1996 with the sole purpose of promoting the Virgin brand. Ten years on, the strategy has paid off: The event is now held at two sites simultaneously and attracts more than 130,000 music fans every summer.

Profits Keep Growing

The "corporatization" of music festivals hasn't been universally welcomed. Critics say turning concerts into a multibillion-dollar industry has taken away from the original ethos of live music, while relentless commercialization strips away the edginess that attracts many people to the music scene. "Companies have to be careful not to be too prominent [at events] or they will turn off their customers," says Mintel's Cope.

Despite these concerns, the business of music festivals doesn't appear to be slowing down. The summer concert season has already expanded into March and September, while new venues across Europe are sprouting up to meet the growing demand. Such prospects are a far cry from the hippie roots of the 1960s. But as long as music festivals provide strong returns for investors, the industry will continue to find backers throughout Europe.

For a tour of some of Europe's biggest and most lucrative music festivals, see our slide show.

Scott is a reporter in BusinessWeek's London bureau.