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Clockwise from top left: Fans shade themselves at Lollapalooza Chile; Perry and Etty Farrell; Farrell and his sons Izzadore (center) and Hezron (right) at ­Kidzapalooza; Farrell performing at Lollapalooza in 1992
Ian O’Connor(3), Perry 1992: John Storey/Time & Life Pictures/Getty Images

Unfortunately, by the end of the ’90s, the party began losing steam. A combination of factors was responsible for Lollapalooza’s decline: Alternative rock — still the festival’s foundation, despite its embracing of hip-hop and electronica — was seemingly dead in the water (the record skipped a little after Cobain’s suicide, then screeched completely with Pearl Jam’s boycotting of Ticketmaster, a move that essentially ?prevented the group from touring major venues nationwide); copycat festivals like Lilith Fair and the Vans Warped Tour were diluting potential audiences; and the concert industry — specifically tour promotion and venue management — had become big business run not by hippie holdout superfans willing to open their backyards to 30,000 screaming kids but by corporate suits who cared more about profits than paloozas. The amps were unplugged on Lollapalooza in 1998.

“One of the stipulations I always had for Lollapalooza was: I don’t play anywhere with screwed-in seats,” Farrell says. “You find me a field. I’d rather be [there] than in an amphitheater. As a musician, I have certain insights. You cannot have a great party when people are just sitting there and are not allowed to move left or right before the usher comes over and says, ‘Behave yourself!’ That’s not Lollapalooza. But we began to have no choice; there were fewer and fewer fields. And then it became a business where we weren’t building it and putting our money into it — the corporation would tell you how much money you had to play with. I wasn’t enjoying the idea of it anymore.”

A five-year silence followed. But a funny thing happened to the music business in its absence: file sharing. Suddenly, music was being downloaded for free with reckless abandon (it still is) and the record labels, either through legislation or business models, couldn’t figure out a way to stop it or make money from it (and they still can’t). Profits plummeted, leaving musicians to begin earning the bulk of their incomes from touring and merch sales instead of record sales. That bid seemingly well for Lollapalooza. In 2003, it returned — ironically enough as a platform to launch Jane’s Addiction’s reunion. Unfortunately, it was only to modest successes, and a year later, weak ticket sales forced its cancellation yet again.

“It broke my heart,” Farrell recalls. “That same week, my guys in Jane’s Addiction announced to Rolling Stone they were leaving to start another group. It was probably the saddest week of my life. You have to understand, musicians are full of themselves. However, we are probably the most insecure human beings. We constantly need our egos stroked. For good reason — you have a career that is riding on your current record. If it doesn’t do well, your record label drops you, what are you going to do? You can’t even go work in a record store: There aren’t any left!”

It wasn’t until 2005, when Farrell teamed up with Capital Sports & Entertainment (now C3 Presents) to stage the festival as a one-off weekend in one location in the grand tradition of the world’s most successful music festivals, like Glastonbury and Reading in the U.K., and Roskilde in Denmark, that Lollapalooza pumped up the volume again. Farrell and C3 scoured the country looking for the perfect field. Farrell found it in Grant Park, where the festival has thrived ever since. “We went to all the major cities in the United States, but Chicago had its own charms, similar to Chile,” explains Farrell. “Since the ’70s, [Santiago] has had a democratic attitude and it honors its arts. Art changes the character and the consciousness of its citizens. And they are on to it.”

Farrell counts Lollapalooza’s rebirth in Chicago — and now Santiago, where the raging success of this year’s event bodes well for future festivals — as his most unlikely achievement along the way. “My biggest triumph was resurrecting Lollapalooza from the ashes, because in this business, you don’t get second chances. Once your festival goes down in this business, it’s never the same. I don’t know how I’m so fortunate. I’ll have to sit down some day and think about it.”

Lollapalooza and Chicago have agreed to their musical marriage through 2018. After that, Farrell isn’t worried. “I hate to come off with such a relaxed attitude about something as heavy as Lolla, but when we get there, we’ll either renegotiate with Chicago or try to find some other field.”