Well, I think you'd find if they didn't even more would be unemployed. It may sound unfair but for many, most in fact festivals are very hard to get work at. Hence many festivals offer unpaid spots for musicians to put their work on show so to speak. The alternative is busking (which for a good hard worker can pay fairly well) But playing free at festivals puts them on show to the right people, and with the increase in recent years of paying festivals, free ones are a very good stepping stone, as are the many unpaid open Mic clubs. It's quite simply a nessessay way to get your name out there