The legendary Hultsfred festival closes the gates after years of declining attendance and increased competition.

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Due to declining ticket sales and increased competition from smaller niche music events, the iconic Hultsfreds festival will be cancelled this year and the company behind it, Rockparty, has filed for bankruptcy.

"Up until the end of last week we thought we would break even," Håkan Durmér at Hultsfred festival told the TT newswire. "It was a decision which had to be taken. A board which had not acted in this situation would have rendered themselves guilty of a crime."

Since the first festival in 1986, its attendance has increased from 7,500 visitors to approximately 32,000 people in 2005. Due to an increase of ticket pricing and what the public recognized as a poor lineup in 2007, festival attendance has been declining in recent years. This year, only 5,000 tickets were sold two weeks prior to opening.

The festival's finances has also been hit by rapidly increased costs for artists, who are looking to compensate for declining record sales, and wobbly $US exchange rate.