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Rock gods and the faithful come to play in Austin, Texas

Jay-Z has flown in for a 40-minute show sponsored by American Express, Bruce Springsteen has given a keynote speech before embarking on a three-hour set, Leonardo DiCaprio dropped by to launch his new app and everyone from Jack White’s Third Man Records to Google is staging a party.

Welcome to South By Southwest, the festival that sets the agenda for trends in the global music industry.

It began in 1987, when a handful of local journalists decided to put Austin, Texas, on the map by staging a convention, inviting a few bands to play, and challenging some record industry executives to a round of golf. “That year we had 70 registrants, 200 bands and 12 clubs,” says Roland Swinson, one of the founders. “Today we have ... more.”

Walk down Sixth Street and you are assailed by the sound of music blasting from every bar and street corner as perky marketers give things away, and self-publicising musicians hand out CDs. In 2012, South By Southwest feels like the canary in the cage of popular culture: brash, technology-obsessed and, in spite of all the crassness that goes with it, exciting.

To get a sense of how wildly varied the festival has become, you need only compare the two hot tickets for Friday night. The first featured the Staves, the Watford-based folk harmony sisters who have just finished making an album with the Rolling Stones’ producer Glyn Johns and his son Ethan. Their gig took place in a church.

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“Do you think I could possibly have a little more ukulele in my monitor, please?” whispered the middle sister, Jessica Stavely-Taylor, in the middle of a gorgeous set that presented them as the female Crosby, Stills And Nash.

Half an hour later, 50 Cent packed out the Austin Music Hall to perform his breakthrough album Get Rich Or Die Tryin’. “Make some motherf***in’ noise!” he bellowed, before making way for his guest, Eminem. In the event, Eminem’s return to the public eye was low key, but it was significant that he chose to make it here.

Nobody is quite sure how many bands play at SXSW but Springsteen puts it at about 2,000. “Back in 1964, when I picked up the guitar, that would be an insane teenage pipe dream,” said Springsteen. “They hadn’t made that many guitars yet.”

Springsteen, who played a three-hour set that featured guest spots from Jimmy Cliff and Arcade Fire, was the big draw at a festival that was once about hearing new bands but is now dominated by famous acts. Still, there was plenty to discover, such as the Minneapolis band Poliça: two drummers, one bass and a singer who looks like Jean Seberg, putting her voice through all manner of digital manipulations.

To pick out a few bands from this endless parade of hopefuls is impossibly random, but there were some acts that everyone was talking about. Lady Leshurr, a Birmingham-based rapper, did a remarkable set in a room at the Driskill Hotel, backed by a tight reggae band — funny, catchy and charming. Jay-Z has already described her as one to watch. Equally exciting was Alabama Shakes, whose singer, Brittany Howard, manages to evoke the spirit of both Janis Joplin and Otis Redding and yet sound like her own person, too.

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The queues for Jack White’s Third Man Records showcase were going around the block by 6pm. White put in an astonishing two-part set, with a female backing band and then a male one. A lot of his label mates were not so amazing, such as the Nashville garage punk band the Black Belles. They looked great but sounded terrible. Their set was a true SXSW experience: lots of buzz, little value, but short enough to let the audience go off afterwards in search of the new.

SXSW: all the town’s a stage

Great new bands remain the most exciting thing Poliça, a quartet from Minneapolis, sounded like the future: two drummers, a funk bassist, and a gamine singer that put her light, pretty voice through all manner of digital manipulations. The rapper A$AP Rocky went on a crowd-surfing bonanza at his Thursday daytime show. Brittany Howard, of Alabama Shakes revived the spirit of Janis Joplin and Otis Redding. For all its ability to attract big names such as Springsteen and Jay-Z, SXSW still has its spiritual home in a grimy club, staging acts that offer the new.

Tom Morello stages Occupy SXSW Rage Against The Machine’s Tom Morello told the crowd at his Friday night acoustic gig at The Swan Dive venue that a “people’s stage” had been erected on the street outside to broadcast the show to Occupy protesters, above. Then he said: “I’m the pied piper of folk rock,” walked outside, and played Woody Guthrie’s This Land Is Your Land to a big crowd. The cops took a dim view of it and pulled the plug.

Bass culture at the Driskill Hotel The bar of the Driskill is the place where all the heavyweight deals go down, and this showcase for British reggae and the culture surrounding it was a small event that people went away from talking about. The highlight of the evening was a set by the Birmingham rapper Lady Leshurr that somehow got hardened, middle-aged record industry execs jumping up and down with their hands in the air.

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Bruce Springsteen gives a lesson in creative theft “Listen up, youngsters,” Springsteen said during his speech, as he demonstrated, with an acoustic guitar, how his entire songwriting career has been a product of ripping off songs by the Animals. As chance would have it, The Animals’ Eric Burdon was in town, so he repaid the compliment by joining Springsteen on stage that night.

Third Man showcase at East Sixth This was one in, one out by six o’clock in anticipation of Jack White’s debut solo set. The showcase included a pretty but unremarkable set of acoustic folk-pop by White’s former wife Karen Elson and a few country tunes from the actor John C. Reilly, but it was White’s greatest hits special at midnight that made queueing for more than an hour worthwhile. White is becoming the Prince of Garage Rock: a prodigiously talented polymath capable of building a musical empire.