The Jaipur Literature Festival, which starts today, has more than a fair share of heavyweight authors, controversies, media coverage and more than 100,000 visitors. The one thing it lacks, surprisingly, is profitability. In the last six years, the festival has seen 100% increase in attendance every year —starting with  7,000 people in 2006 and 125,000 last year. But the festival has so far been unable to generate enough revenue to cover its costs.

The eighth festival began today with a significant lineup of authors including the Dalai Lama, Booker winner Howard Jacobson, Pico Iyer, Abraham Verghese, Zoe Heller, among others.  However, it will “lose a ton of money this year.” Those are the words of Sanjoy Roy, the managing director of Team Work Productions, the company that organizes the Jaipur Literary Festival, also known as JLF. Since its ethos lies in making itself accessible to as many people as possible, the festival is not ticketed and visitors are allowed free entry. This leaves sponsorship as the only source of revenue and in India where supporting the arts is seen as a charitable decision and not an investment one, it has been struggling to get companies to come on board. “This year, it has been especially harder because of various reasons, including the slowdown in economic growth.  A lot of companies were willing to negotiate barter deals, but very few were interested in paying money to be a part of the festival,” Roy told Quartz. This year’s list of sponsors is a veritable mixed bag —makers of steel to whiskey—such as Tata Steel, Google, mobile company Airtel, Coke, Rajasthan Tourism,  Glenlivet, among others.

In many ways, the unprecedented growth of the festival is partly responsible for its poor economics. Costs have gone up from $250,000 in the first year to more than $1 million in 2012. While a significant proportion of the budget is airfares and hotel costs for the authors, each visitor comes at a price, too. And as the number of visitors grows, the cost of setting up the infrastructure goes up proportionally. When the festival first started, organizers did not anticipate it would grow so big, so soon. “But the person who perhaps did think that was the promoter of the real estate company, DSC,” Roy says. DSC was the first sponsor and also took a lien on the sponsorship for 10 years. When that lien expires, Team Works should be in a better position to negotiate a higher sponsorship fee from other interested parties.

Despite the lack of profits, the success of JLF is also that it has spawned a host of literary festivals in India—most of which suffer from its same economics. There are over 25 festivals of various size in all parts of the country now. The business idea behind these is to build a brand that will eventually survive a shakeout of festivals. In Mumbai, media conglomerate Times Group hosts a festival, in Kolkata a business house that also runs a chain of book stores hosts another, and in Chennai, another newspaper company, The Hindu, has its own festival. Smaller towns too have their share of festivals—Agra, Bhubaneswar and Trivandrum host literature festivals. Even Dantewada, a small town which has witnessed several massacres by and of Maoist insurgents, had a literary festival last year. Most of these have a theme and a mix of foreign and Indian writers with discussions on various aspects of literature and other arts and culture.

In Delhi, there is also a special literature festival focusing only on children’s literature. Organized by Venkatesh M and Swati Roy, who co-own a children’s book store, and Jo Williams, a former organizer of the Red House Children’s book award in the UK, this festival draws up to 14,000 visitors over three days.  Despite catering to a niche market and being able to access a lot of urban parents who are willing to spend as much money as it takes to give their children a “well rounded” upbringing, the festival known as “Bookaroo” does not make anything by way of profits. “It is an expensive festival,” says Venkatesh. While Insurance major, Aviva, was the main sponsor from 2009 to 2011, it pulled out suddenly at a very late stage last year. “All told, it costs around $100,000 and thanks to the support, we manage to reduce our losses. In the last four years, we managed to get a marginal surplus only once,” he says.

The only aspect of literary festivals that is profitable is the bookstore in the venue. Priyanka Malhotra is the director of Full Circle, a Delhi-based book store that runs festival store in Jaipur. “In the five days of JLF, we sell books worth a little less than $100,000. This is what one store would notch up in a month in Delhi,” she says. (The festival organizers share a percentage of this revenue. ) But the logistics involved in setting up the store is enormous. Often a lot of the books by the participating authors do not have an Indian edition and these have to be imported. Publishers aren’t able to deliver the quantity that Malhotra estimates. And very often, their predictions of which books will sell go awry. “Last year, we managed to get Oprah’s authorized biography the morning she was here. And despite the fact that thousands of people turned up to see her, no one bought her book,” says Malhotra.

This year Malhotra hopes Booker shortlisted author Jeet Thayil, the Dalai Lama and Delhi-based William Dalrymple to be big sellers. “Unless, of course, someone says something really controversial. That always helps,” Malhotra says.

While Jaipur’s festival has made “literature sexy in India,” as Roy puts it, there is still no government support for any of these festivals. There are no grants that support the festivals, not even tax exemptions on activities related to the festival. In comparison, the Scottish Government actively raises money for the Edinburg festival through the Edinburg Festival Expo Fund. The benefits of the festival to the local community are also enormous. In Edinburgh, the festival contributes to around GBP 175 million to local businesses during the fortnight. A sample survey conducted by Team Works suggests JLF adds $32-40 million to the city. (The survey covered hotel booking, spends on after-parties and shopping for textiles, jewelery, carpets and silver).

Despite the lack of early financial success and government apathy, Jaipur has gotten too big not to eventually make profits. But for the others, it’s uncertain how many of them will remain after the Indian literature festival bubble breaks.

 This story originally appeared on Quartz, a Skift content partner.

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Photo credit: Pico Iyer in coversation with Akash Kapur, at the Jaipur Literary Festival, earlier today. Courtesy JLF's Facebook page.

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