I had the same thought about Glastonbury, when they were talking about not running it a few years back, because it had got too unwieldy and a lot of the regular goers were complaining it had sold out and become too big.

As you suggest, if you could split the festival (and the crowds) in two and have one festival cover all the larger (Lady Gaga, Oasis, Rolling Stones...) or more mainstream/hyped acts along with the people who primarily aren't interested in the more obscure bands/experiences to be had away from the main stages, that would then leave the rest of the festival to the regulars who want to wonder around the green/healing fields and see all the lesser known (but often better/more interesting) bands.

I'm not sure how the logistics (or planning) would pan out given that i suspect the majority of money the festival forks out are for the bigger acts. But if they were to run these two festivals in consecutive weeks perhaps the economies of that would make it more viable.

Fortunately Glastonbury has managed to stay resolutely non-corporate, unlike most of the larger UK music festivals (V, Reading, Leeds etc.) and still manage to host a shedload of really good bands across the fame/size spectrum.

But maybe, in a similar fasion, if SXSW were to split and leave the corporate shilling to the mainstream crowd/event, maybe the other half of the festival could return to more how it was, discovering new music with people who care about new music and not having to queue for ages for the privilege?