Festivals may require the good will of local hostelries and some provide performance space for intimate concerts. The landlords particularly nowadays need the revenue for sales to help them survive in the current economic climate and the Free session which develop during a Festival help foster their good will.
So free sessions DO have their place in a Festival program.

They are also a good place to spot up and coming stars.

Just been to Celtic Connection s in Glasgow spent about ,25pounds to see Dervish . Joined a very late FREE session in a bar at midnight to find the entire band playing.