Jim Carroll reports on acts big and small at the Texas city's 20th South By Southwest Festival

AT FIRST, you figure that the 15-foot high banner hoisted firmly in the middle of Austin's Sixth Street must be promoting some band or other. South By Southwest (SXSW) has taken over the Texan capital, so every square inch of streetspace is covered in posters, stickers and flyers hawking shows by one band or another.

This banner reads "The Choice Is Yours - Damnation or Salvation". An unwieldy name to be sure, but SXSW's dancecard also features I Love You But I've Chosen Darkness, Get Cape. Wear Cape. Fly and You Say Party! We Say Die! So that name could fit right in.

It's when you clock the little fellow standing on a stool bellowing into a bull-horn about heaven and hell and the other banner quoting the Ten Commandments that you realise there's at least one set of street preachers in Austin tonight not trying to coax you into a club.

This year was SXSW's 20th run-out. When the music conference and festival kicked off in 1987, 142 acts played, 700 people showed up and the focus was firmly local.

These days, SXSW is the biggest gathering of its kind on the planet. The event brings in $35 million (€29 million) to the local economy thanks to some 1,350 bands playing in 64 venues to some 14,000 delegates and punters who come from all parts east and west, north and south.

There is a sense, however, that SXSW has grown too big for its own good. While the festival sells itself as a talent-spotting beano, there's an increasing number of established acts using an appearance to bolster coverage for forthcoming releases, thus robbing rising acts of promotional oxygen. Too many people on the streets means getting into certain shows becomes a chore involving lengthy queues.

However, it's the rapidly changing scale of SXSW which is the most daunting prospect of all. When you add the huge number of day-time parties and gigs (dozens and dozens each day, hosted by different magazines and labels) to the night-time schedule, you could well be watching bands from early morning until very late night.

It quickly has an effect on you. By the second day, you've stopped fretting about the bands you're missing. By the third day, you've developed museum legs. By the fourth day, you've begun to believe there are bands soundchecking in your hotel room.

Yet, there is more than just live music to SXSW. The Austin Convention Centre is where you'll find panel discussions on the state of the industry, various workshops and big-ticket interviews.

Here, Neil Young was the main draw. Interviewed by journalist Jaan Uhelzski, with film-maker Jonathan Demme (who shot the Young documentary Heart of Gold) playing the amiable sidekick, Young provided fascinating fare as he yakked about the creative process.

"I really try not to think about it," he said about songwriting, "because the more you think about it, the worse it gets. If you try too hard, you're not going to get there."

Others offering pearls of wisdom at the festival hub included Morrissey, who told Rolling Stone's David Fricke about his love for the Eurovision Song Contest, turning down $5 million to reform The Smiths and how he wished he had never opened his gob about celibacy. Also: Kris Kristofferson, Ray Davies, kd lang, Billy Bragg and The Pretenders. The latter interview was delayed initially when an irked Chrissie Hynde objected to having to sit in a leather armchair. The audience was not told if she also threw a hissy fit at being given green M&Ms.

Those seeking insights into the future of the music industry headed to panels on such topics as podcasts, blogs and the state of the indie label sector. By and large, though, they provided little fresh insight. Unlike other festivals, it seems little care or attention is given to the content and make-up of these discussions, and they're treated almost as contractual obligations. New voices and opinions are desperately needed.

There were also some glaring oversights. For instance, while there was a number of technology discussions, no Apple or iTunes representative turned up. Such an omission was puzzling, especially as every single panel mused about Apple's future intentions in the music space, and a notion that Apple could well purchase one of the major labels was heard again and again. It was unclear whether Apple had blanked SXSW or the other way around.

Out on the streets, it was a SXSW dominated by secret shows from not-so-secret acts. The Flaming Lips (filling the venue with giant beachballs and opening with the most joyous cover of Bohemian Rhapsody you'll ever hear), The Beastie Boys (proving that three mouthy MCs and a set of turntables are still your only man) and My Chemical Romance (taking goth-pop into the mainstream) were just three acts hunkering down to fit into venues they'd long outgrown.

But the unknown acts were still everywhere singing for their suppers. While you could have armed yourself with tips like a Cheltenham punter, the best thing to do was to hop randomly from venue to venue.

Such a method paid dividends with The M's, a Chicago mob playing psychedelic pop-rock with a trawler's worth of hooks. It also led to Ester Drang, Oklahoma daydreamers with the kind of shimmering drones and elegant grooves once the domain of Talk Talk and Spiritualized.

Anyone offering tips had Tapes ON Tapes near the top of their list. The Minneapolis act may be taking their cues from the usual indie suspects (Pixies, Pavement, Wire), but it's still fascinating to hear how they join up all those loose ends. Though at times a little too much Clap Your Hands Say Tape for comfort, they're probably destined to be this year's SXSW breakout act.

However, that tag should really belong to Jakobínarína, six Icelandic teenage urchins who play buzzy, punky pop as if it had just been invented. The lead singer dances like a man possessed and does a fine line too in unexpected crowd-invasions. They may well yet become your favourite new band.

There was more, much more, The Subways and Lady Sovereign among them. Richard Swift put vaudeville exuberance into songs from The Novelist, his magnificent '05 album. The Boy Least Likely To filled a venue to the brim with believers in their extra-large, quirky, hugely melodic acoustic pop. Lenine had all who saw him raving for hours afterwards about how the Brazilian merged classy funk with native sounds and rhythms. Cocky Aussie 12-year-olds Flairz served up punchy garage-rock. Metric threw magnificent shapes with their plugged-in electro; Blockhead's orchestral strung-out hip-hop got heads nodding; and Hot Chip made music to dance to like a robot from 1984.

At SXSW, such variety really is the spice of life.