We never saw this coming: scholars studying the business model of the Grateful Dead. But a handful of fans did. They saved four decades’ worth of recordings, reviews, business records and correspondence.
Emerging from this archive is a portrait of visionaries in what’s now called customer value, social networking and strategic planning.
Here’s how the Dead pioneered business practices embraced much, much later by corporate America.
First, in a preview of the 80-20 rule, the band focused intensely on its best customers, activating a hotline to alert fans about upcoming shows, reserving them some of the best seats and capping the ticket price. The most dedicated Deadheads didn’t have to travel or camp out to get good seats.
Second, the Dead were smart about merchandizing, vigorously suing copyright violators while letting fans tape live shows. Getting free music allowed fans to spend their money on merchandise or more tickets—a strategy that’s just catching on. Yet the Dead thrived for decades, even when the economy skidded, becoming one of the most profitable bands ever.
Using free products as a lure is like religion to Internet marketers, not least of them the band’s lyricist John Perry Barlow, who became a web expert and wrote in 1994 that in the information economy, “the best way to raise demand for your product is to give it away.”
Not everybody bought that idea in 1994 or even in 2004, but in 1974 it was considered downright weird.
“What people today are beginning to realize is what became obvious to us back then—the important correlation is the one between familiarity and value, not scarcity and value,” Barlow says. “Here’s the thing: If I give my song away to 20 people, and they give it to 20 people, pretty soon everybody knows me, and my value as a creator is dramatically enhanced. That was the value proposition with the Dead.”
— Adapted from “Secrets of the Grateful Dead,” Joshua Green, The Atlantic.