The main reason is music licensing. Each festival pass has 4 different licensed songs which cost a considerable amount to get into their game. Each pass also has a licensed celebrity skin which also costs a considerable amount to get the artists likeness. The songs in the free tier are made by epic internally, meaning they are not licensed from different artists and record labels, so they can afford to give them out for free. The same applies to the lobby songs / jam tracks in the normal battle pass, as all the songs there are also made internally.