There are still large festivals around the world that occur without incident. They don't get the hype here. Also they seem to have gone more to older niche audiences (because face it, kids today are too lazy to make music themselves and won't seek out something other than what everyone else is already buying off the charts).
Touring festivals also diminish the need for some of the humongous ones.
Here's just a brief list of some of the more notable festivals these days:
Last year's Coachella Festival was stronger and included the first Iggy Pop & The Stooges reunion since the early 1970s.
http://www.coachella.com/lineup.html All Tomorrow's Parties has a different "host" every year (last year's LA show was designed by David Bowie; Matt Groening also got to pick the line up one year). The Stooges played this one too.
http://www.atpfestival.com/index.php The New Orleans Jazz Heritage festival contains a lot more than just that:
http://www.nojazzfest.com/ There's also the New Orleans' Voodoo Music Festival (which also hosted a Stooges reunion last year).
http://www.voodoomusicfest.com/ England continues to hold the Reading Festival
http://www.readingfestival.com/pages/index.asp There are also some big multiband bills hosted in San Diego and I think Portland.
Thanks for the links. My employer used to go to Reggae Sunsplash. Now she goes to the Essence Music Festival as well.