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Secrets of the Most Successful Touring Band of All Time

August 24, 2010

Tags Free MarketsMedia and CultureEntrepreneurshipMonopoly and Competition

 What Every Business Can Learn From the Most Iconic Band in History

"There are a lot of Deadheads in finance," claims CNBC's big-government cheerleader and economics reporter Steve Liesman. On the financial network's website, he relates a story about having "really good seats at a Dead show once, and I was never so recognized because of all the Wall Street guys had all the upfront tickets to the show. They were as surprised to learn that I was a Deadhead as much as I was surprised that they were Deadheads."

The uninitiated wouldn't associate the Grateful Dead with finance or commerce or business practices of any sort. But this impossible-to-categorize, San Francisco Bay–area band is, in its various iterations, the most successful touring band of all time.

By no means the best instrumentally or vocally, the band built its success on an approach to the music business that was 180 degrees from their competitors. While other bands posted signs at the entrances to concert venues saying, "Recording and photography of tonight's performance is strictly prohibited," the Grateful Dead encouraged fans to record their concerts and shoot pictures of the show.

I remember flying from Seattle to Las Vegas, the night before a Dead show, with a plane full of Deadheads. The guy next to me said he was "Jonesin' for some Hornsby" (Bruce Hornsby, who played over a hundred shows with the Dead, from 1988 until founder Jerry Garcia's death in 1995). My fellow passenger proceeded to pull down a suitcase from the overhead compartment; it was filled with cassette tapes — all labeled and sorted by concert date and location.

Did this taping hurt album sales? No. It served as free marketing for the band. And as David Meerman Scott and Brian Halligan point out in their new book, Marketing Lessons from the Grateful Dead: What Every Business Can Learn From the Most Iconic Band in History, the band went as far as to set up special sections for tapers in 1984. These sections were behind the band's mixing board and would form a "forest of professional-grade microphones rising to the sky."

So if there were all these bootleg tapes floating around, has anyone been buying Dead albums? I guess so: the band has had 19 gold albums, 6 platinum albums, and 4 albums that have gone multiplatinum.

In their punchy little book, Scott and Halligan point out that the Grateful Dead turned the "the-band-tours-to-support-the-album" concept completely on it's head. For the Dead, the concerts are the experience they are selling. The scarce good is that particular night's performance, and the band makes each performance radically different. The band in its various forms has done over 2,300 shows, and no 2 are alike. Not only have the song lists been different each night, but the band plays different versions of all the songs. Instead of only touring periodically in support of a new album, the Dead has toured constantly.

Committed Deadheads have followed the band around to see hundreds of shows. In some cases these fans support their Dead habit by selling merchandise or food items in the parking lot, and this activity is endorsed by the band. Like Amazon with its affiliate program, the Dead supports anyone who sells band merchandise.

Because the concert experience is the product the band is selling, "technology has continued to be an essential element of live shows," write Halligan and Scott. "In the 1970s it was live concert technology and in 2009 it was a real-time iPhone application."

Early on, the band took control of selling tickets to their shows. They cut out the middlemen (such as Ticketmaster) and were able to ensure that their most dedicated fans purchased the best tickets, nurturing enormous amounts of fan loyalty. So, the Wall Street guys that Liesman saw at the concert in the front rows were likely real Deadheads, not casual fans who paid through the nose for tickets from a ticket broker.

In the chapter "Upgrade to Premium," the authors explain the band's ingenious way of selling professional concert recordings. During recent tours of two modern versions of the Grateful Dead — The Dead, and Further — fans could buy a three-CD set of the concert they were attending. Deadheads would pay $20 for a wristband prior to the show. After each set, crew members would make 1,000 copies of that set, and after the last encore they'd produce and copy the third CD. The three CDs were then bundled and rushed to the merchandise table, where fans would trade their wristbands for the professionally engineered CDs of the concert they had just enjoyed. During a 2009 tour, a similar program to sell concert photos was created in partnership with Blurb.

The authors estimate that the Grateful Dead has performed in the neighborhood of 500 different songs live, with 150 of those being original compositions. The band has always experimented: Sometimes it works. Sometimes it doesn't. The band has produced some shows that were duds, but, as Smith and Halligan point out, the band "didn't become conservative and stop experimenting." They quote Grateful Dead founder Jerry Garcia: "You go diving for pearls every night but sometimes you end up with clams."

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The Grateful Dead cultivated a following of fans that is still growing larger despite Jerry Garcia's passing 15 years ago. Playing in jeans and T-shirts and with a free-form style that is the antithesis of the slickly produced modern rock or pop concert, this band has maintained their popularity for 45 years and counting. Their success is obviously no fluke. Committed Deadheads and marketing gurus Scott and Halligan lay it out in their tiny book of common Deadhead sense that's not so common: Give away what isn't scarce, and make what is scarce — live performance — truly scarce and unique. Sell service and upgrades, and always foster loyalty.

Like a Dead show, Marketing Lessons from the Grateful Dead is quirky and fun. It may be a strange trip, but the advice is sound; there are plenty of pearls and only the occasional clam.

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