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IPO marks Wall Street's unlikely love for rave scene

Calvin Harris, the highest paid EDM DJ in the world, spins onstage at the Firefly Music Festival at The Woodlands of Dover International Speedway on June 21, 2013 in Dover, Delaware.

Strange things can happen when traders meet ravers. Electronic dance music -- or EDM -- event company SFX Entertainment made its Wall Street debut Wednesday. Its initial public offering is just the latest example of Wall Street’s desire to cash in on the exploding popularity of EDM and its giant dance parties.

Big EDM events draw tens of thousands, paying $100 and up for tickets. Top DJs get six-figure appearance fees and lucrative endorsement deals. The festival scene electronic music thrives in is the rare bright spot in the long-troubled music industry.

“People obviously are not spending much money purchasing music, but they’re certainly spending a lot more money participating in, kind of, lifestyle events surrounding music,” says Josh Rabinowitz, senior vice president and director of music at the ad firm Grey Group. “The EDM world is certainly one of the principal ways that people are throwing down some cash.”

The phenomenal growth in spending on EDM has captured Wall Street’s attention. But like any investment, there are risks. Drug use is common in the scene and was apparently connected to the two deaths that caused the cancellation of the final day of the EDM festival Electric Zoo in New York over Labor Day weekend. News like that makes investors jittery.

Plus, fans could tire of the EDM genre, leaving Wall Street with nothing more than a headache to show for an awkward visit to the dance floor.

Mark Garrison: You’re at a massive event with tens of thousands gyrating around you. It’s loud, there are whirling lights and the crowd’s having a blast. But something’s weird. Way up in the VIP box, a bunch of old dudes, not dancing at all. But they like what they see. That’s Wall Street, a newcomer to the EDM scene. Josh Rabinowitz, director of music at the ad firm Grey Group, explains why.

Josh Rabinowitz: People obviously are not spending much money purchasing music, but they’re certainly spending a lot of money participating in, kind of, lifestyle events surrounding music and the EDM world is certainly one of the principal ways that people are throwing down some cash.

Big EDM events draw tens of thousands, paying $100 and up for tickets. Top DJs get six-figure appearance fees. Numbers like those get Wall Street’s attention. But EDM is risky. Drug use is common in the scene. Recent high-profile overdose deaths worry investors. Plus, fans could tire of the genre, leaving those Wall Street dudes with nothing more than a headache to show for their awkward visit to the dance floor. I'm Mark Garrison, for Marketplace.

About the author

Mark Garrison is a reporter for Marketplace and substitute host for the Marketplace Morning Report, based in New York.
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