Jam Bands and the GDP

For most people GDP refers to a country’s Gross Domestic Product. For people in, around, and a part of the world of jam bands, then and now, GDP means Grateful Dead Productions. For all of the twirling, the fun, confusion, and run-ins with the law, Jerry and Co. inadvertently created not only a thriving business in GDP (even in his death), they have also spawned, via Phish, Widespread Panic, Dark Star Orchestra and countless other jam bands, an entire sub-industry within the music industry. Panic, for example can gross $3M in a long weekend stopover on tour; not bad numbers for any type of work. The ‘Other Ones,’ one of several iterations of a Jerry-less Dead that played summer shows at Alpine Valley, WI, in 2001, grossed $3.5M in three days of work… The jam band industry, considered all together, is somewhere around a $500M/year industry, and that does not include peripheral revenue and income from the sale of pot, shrooms, tofu burgers and electric wine coolers.

Then there is the Vault. Every show that the Grateful Dead ever played is on tape, in the Vault. Historically, these have been freely available, tapers actually encouraged to tape the shows along the way. Now, though, in the absence of GDP’s annual $60M in touring revenue, they continue to puzzle over how to make ‘use’ of the magic in the vault. A couple of years ago, when the band was trying to get back together, they came near accepting several million dollars in venture capital money to digitize the entire vault in a one-off project, and in doing so giving away partial ownership of the band’s most significant asset. Rather, they have continued to tour in various projects, most significant of these has been Phil Lesh’s band. For now, GDP seems to have sorted out its business strategy sans Jerry. Thankfully, there is still sweet music from the Dead family out there for the few adventurous sojourners left standing.

Professor Garcia

Beyond the specifics of the Dead, though, are numerous business lessons embodied in the story of the Dead and the jam band culture/industry that has grown in its wake. In 1973, in his management textbook simply called ‘Management,’ Peter Drucker suggested that there are only two points of value in a firm — innovation and marketing — and that everything else is a cost; (I+M=V). For the Dead, every song on every night was an innovation, an innovation for the family of Dead Heads that travelled with them for some 30 years. In the case of the Dead, their formula was Innovation + Community = … Well, ok, I don’t know what it equals, really, but in addition to all of those things that can’t be said in public, it also added up to a real business!

And one without ‘marketing,’ per se. The Dead sold out every show for about a decade, and never advertised. Though they were, as Glenn Rifkin and Sam Hill suggest, ‘radical marketers.’ In their book, ‘Radical Marketing,’ Hill and Rifkin identity 10 companies that have grown audience, community, and loyalty in a unique and ‘radical’ way:

1. The Grateful Dead
2. Providian Financial
3. Harley-Davidson
4. The Iams Company
5. The National Basketball Association
6. Snap-on-Tools
7. Virgin Atlantic Airways
8. EMC Corp.
9. Harvard Business School
10. Boston Beer Company

There are 3 fundamental characteristics of companies that successfully market ‘radically,’ and then 10 basic rules that they embody. Here is how this is relevant to the Dead, Panic, etc. First the rules:

1. Radical marketers have very strong visceral ties with a specific target audience/community. (Think Dead Heads. As Jerry once said: ‘We are one of them.’)
2. Radical marketers tend to focus on growth and expansion rather than profit taking. (The Dead were always better at keepin’ on truckin’ than they were at getting rich.)
3. Radical marketers tend to be very resource-constrained and are forced to work with marketing budgets that are far smaller than average. (In the case of the Dead, their solution was simply roping off a section of the floor for tapers.)

And the 10 rules:

1. The CEO must own the marketing function. (Every one of Jerry’s solos was, as crude as it sounds, marketing.)
2. Make sure the marketing department starts small and flat, and innovative. (Or in the case of the Dead, non-existent. Though that is not true now, of course.)
3. Get out of the office and get face-to-face with the people who matter most. (Like Dead Heads.)
4. Use market research cautiously. (What is market research?)
5. Hire only passionate missionaries. (Staff the company with members of the audience, then you are authentic through and through.)
6. Create a community of customers. (The Dead started the ‘Experience Economy.’)
7. Love and respect your customers. (No problem here, just put your clothes back on…)
8. Rethink the marketing mix. (Re-tune that guitar.)
9. Celebrate uncommon sense. (Mistakes happen; learn from them, and play it again tomorrow night.)
10. Be true to the brand. (Or, be true to the band.)

Clearly it is not so easy, but the basic lessons are. The Grateful Dead were the first 2.0 business ever. It was a user-centered thing from the beginning, and was till the end. As one song said, ‘The Music Played the Band,’ which could have read, ‘The Dead Heads Played the Band.’ What is so brilliant, in retrospect as it relates to the Dead and today with respect to jam bands across the country, is that the business success of such groups is almost an afterthought. The music industry freaked out at the whole Napster copyright thing, and record sales are down, blah blah blah… The jam bands never blinked, they just stayed on the road, with their community/customers, making a life and making a little (sometimes a lot) of money.

At the end of the discussion, one thing is clear. If you connect with a community, and you know it well enough to creatively innovate for them night after night, then they will come back, and you will play another show/sell another widget. Me, I’d rather play another show. Widgets give me gas…

The Butcher