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Doing business The Grateful Dead way

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02/17/2010

The Grateful Dead was famous for letting their fans tape their live shows. I remember being on a flight to Vegas from Seattle with a planeload of Deadheads and the guy next to me had a suitcase full of live concert tapes that he had recorded with each tape meticulously labeled with the concert date and location.

The Dead recognized that allowing fans to record for free widened their audience and the band became one of the most profitable groups in history. The band’s lyricist, John Perry Barlow, went on to become an Internet guru.

Barlow wrote in Wired in 1994 that in the information economy, “the best way to raise demand for your product is to give it away.” He explained to Joshua Green of the Atlantic: “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. Adam Smith taught that the scarcer you make something, the more valuable it becomes. In the physical world, that works beautifully. But we couldn’t regulate [taping at] our shows, and you can’t online. The Internet doesn’t behave that way. But 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.”

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