Does it surprise you that The Grateful Dead was one of the world’s most profitable bands? If it does, you probably weren’t a deadhead or you didn’t know someone who was. If it doesn’t, you most likely know why – the Dead were passionate about their music, but they were far more passionate about their fans.
This month’s Atlantic Monthly magazine features a fascinating article by reporter Joshua Green on the remarkable business visionaries these folklore heroes really were.
The initial recognition of the Grateful Dead’s marketing management strength came in a 1972 article by University of North Carolina sociologist Rebecca Adams. Adams noticed the deep bonds formed between Deadheads, even though they did not live near each other.
These “lifestyle enclaves” didn’t fit the conventional thinking that consumers couldn’t possibly form meaningful relationships without living near each other.
Recognizing both the reality and the power of these connections of their most loyal fans, the band pioneered ideas in the 70s that are now just becoming understood and accepted today. As Nova Southern University business professor Barry Barnes put it, “they were masters at creating and delivering superior customer value” to their most loyal fans.
The Dead established remarkable tools, resources, and practices that helped engage its prime loyalists to immerse themselves in the brand and more importantly to energize their network of family and friends virally. “They established the first-ever telephone hotline to alert deadheads to its touring schedule ahead of public announcements, reserved for them some of the best seats in the house, and capped price of tickets.”
Arguably, their most important and significant marketing practice is so controversial today that very few practice it. The band was famous for permitting fans to tape their shows and share it with friends, family and neighbors.
The practice was considered heresy because it meant giving up an enormous revenue source. Still, according to Barnes, “it reflected the band’s shrewd assessment that tape sharing would widen their audience…” Moreover, because they knew their loyal fans so well, they realized that anyone who taped a show represented found money, not lost money because those fans would spend money on merchandise and tickets.
The focus on loyal fans and then energizing those fans to share and spread the music catapulted the Dead to one of the most profitable bands of all time. The band’s songwriter, John Perry Barlow says, “if I give away my song to 20 people and they give it to 20 people pretty soon everybody knows me.” But more importantly, Barlow points out, “my value as a creator is dramatically enhanced.”
That’s The Dead’s true value. They’re a band that creates music, a feeling, a lifestyle. As a result, The Dead thrived for decades in good times and bad. The Dead’s “strategic improvisation” allowed it, even required it to adapt to its audience and the economic situations. As The Dead proved, the key to being an effective strategic improvateur is your ability to know your most loyal fans and be able to adapt quickly and relevantly to them.