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By Gerry Shih
AUSTIN, Texas, March 11 (Reuters) - Has "South-by" lost itsdirection?
For several years running, that question has hovered overthe iPhone-clutching tech cognoscenti who made the annualspringtime pilgrimage to the mecca of geek- and hipster-dom inAustin, Texas.
In 2007 the South by Southwest Interactive festival - thefive-day digital offshoot of SXSW, the two-week-long gatheringfor music and film lovers - solidified its reputation as theplace for entrepreneurs and tech investors to see and be seenafter the conference helped boost a then-little-known servicecalled Twitter to prominence.
Since then, the interactive festival's popularity and itsticket prices have skyrocketed - and so have complaints from thegeeks that it has become too big, too crowded, too expensive andtoo hopelessly awash in corporate sponsorship money.
The anxieties hit new highs this year as app makers largelyeschewed using the event as a launching pad, even whilemarketing dollars from consumer brands such as Oreo, AmericanAirlines and General Motors' Chevroletseemed to flow as freely as company-expensed margaritas.
Greg Cohn, a Los Angeles entrepreneur who recently launchedBurner, an iPhone messaging app, decided to forgo the festivalfor the first time since 2005, saying he felt the conference hadbecome overwhelmed by large advertisers and was increasinglyirrelevant for startups jostling to get their name out.
"It's a lot less intellectually stimulating, a lot lessorganic and authentic," said Cohn, who opted to attend a newconference in Portland, Oregon, called XOXO, started this yearby disaffected SXSW veterans. "It feels like SXSW has gonebankrupt, and it needs a new start."
In Silicon Valley - where embracing the new and ditching theold can sometimes be a serious sport - more than a few sniffedat SXSW.
"It's jumped the shark," said Mike Volpi, a partner at IndexVentures, who stayed home.
Eric Eldon, co-editor of startup blog-of-record Techcrunch,reluctantly said he was headed for Texas - "but only for Musicand Film," he quickly added. (Techcrunch later published a postheadlined: "No Hot SXSW App This Year? Here's Why.")
The startup world may have cooled on Austin, but thefive-day festival, which ends on Tuesday, is still plenty hot.Almost two decades after it began, SXSW Interactive has grownvastly more diverse in subject matter and more mainstream, withdozens of do-it-yourself workshops and "meetups" to accompanythe panels. This year it is on track to break the 25,000attendance record it set last year, organizers said.
OREOS AND VIDEOS
Above all, it was the brand marketers who were this year'sstars, evidenced by Oreo Cookies' mascot strolling through theAustin Convention Center and the "grab-and-go" cookie packs thecompany gave away. Chevrolet offered rides in cars equipped withvoice-recognition software and parked two model cars in front ofthe convention center, while Target transformed the rearof a restaurant into a "Tarcade" hall filled with videogames.American Airlines and AT&T held a joint "hackathon."
Hugh Forrest, a former alternative newspaper journalist whohas organized SXSW Interactive since its inception in 1994, saidhe "frequently hears criticism" about the festival's evolutionbut noted that it now offers a head-spinning 800 panels andevents to choose from, compared with just 16 two decades ago.
"Is there a larger presence of corporate sponsors? Yes,"Forrest said. "But also there are more smaller, indie,bootstrapped things as well. Sponsors help us out with a lot ofthings we couldn't do before."
Sitting in a "Gold Lounge" with Doritos and a dozen otherlogos plastered on the wall inside the Austin Convention Center- an irony he pointed out with a chuckle - Forrest noted thatthe advertising-supported business model should be somethingmany app makers at SXSW understand well.
"We'd be silly and naïve to think marketing is not a bigpart of new media and culture and business at this point,"Forrest said. "That's how many, many things get paid for."
As SXSW's programming has ballooned in recent years, itsofferings have been fleshed out by a surging number ofsub-topics, such as health and medicine or public service andactivism. Even the startups sphere has expanded, there have beenan increasing number of advanced design-related programs.
Since it was introduced in 2010, the news and media trackhas in particular become a cornerstone of the festival'sprogramming, as digital outlets and traditional newsorganizations alike flock to Austin to discuss theirfast-changing industry, said Jennifer 8. Lee, a former newspaperreporter and volunteer SXSW organizer.
Lee noted that with the growing corporate presence, thefestival's culture has become more free-spending in recentyears, even though she argued that its overall quality is stillrising.
"The difference is that this once was a place where peoplepaid their own way, or you somehow got a badge by doing apanel," said Lee, as she doled out drink tickets Saturday nightto a party crowd that included CNN Digital Managing EditorMeredith Artley and New York Times Executive Editor JillAbramson. "Now you come with a bunch of co-workers and expenseit," Lee said. "It's like spring break for adults."
MEETING AND GREETING
One of the companies with a big presence was the advertisingagency JWT, the WPP Group subsidiary, which flew morethan 60 ad execs from its offices around the world.
The agency started what it called a five-day "pop-up" adagency that took several dozen pitches from startups in Austinand offered its marketing services for free to a chosen winner.
David Eastman, the chief executive of JWT North America,said firms like his relished a lucrative marketing opportunitylike SXSW, though he saw the irony in his presence.
"The bad side of all this is that SXSW used to be indie, forthe folks who didn't want to be mainstream," Eastman said. "Whenthe brands arrive, the money arrives as well."
Still, the cynicism wasn't nearly so pervasive among theyounger generation, especially the enthusiastic attendees ontheir first or second trips.
"I haven't seen any new startups make their big launch here,but it's been great for meeting people and making new friends,"said Sahil Lavingia, the 20-year-old founder of Gumroad, afast-growing online payment-processing startup backed by venturecapital firm Kleiner Perkins Caufield & Byers.
Then there were those who shrugged off SXSW's fading appeal- then showed up anyway. Then there were those who just showed up for - what else? -the parties.
Nick Denton, the Gawker Media founder, pondered the matteras he ducked into a downtown hotel elevator Saturday night.
"People have been asking that for a while," Denton said witha smirk. "So maybe the question's jumped the shark."
