In the 1960s, the small town of Woodstock, New York, 40 miles north of New York City, nourished a small but growing community of folk musicians including Bob Dylan, the Band, Tim Hardin, and John Sebastian. In 1969, Michael Lang, a young entrepreneur who had promoted the Miami Pop Festival the previous year, decided to open a recording studio for the burgeoning music community of Woodstock, which would double as a woodland retreat for recording artists from New York City. Lang pitched his idea to Artie Kornfeld, a young executive at Capitol Records, and Joel Rosenman and John Roberts, two young entrepreneurs interested in unconventional business propositions. Together they formed a corporation, Woodstock Ventures, to create the studio/retreat. They also decided to organize a Woodstock Music and Arts Fair to promote the opening of the studio.

As their festival plans grew in ambition, they realized that the small town...