Listen To The Band Implementing nontraditional methods and best-practice business decisions, the Grateful Dead has had a remarkable 30-year run as a rock icon. Follow their lead, and keep your business truckin'.

Radical marketing, by its very nature, can be applied byorganizations both large and small across a wide diversity ofindustries. It often finds a champion in the most unlikelyplaces.

The Grateful Dead, for example, would seem a strange bedfellowin any collection of exemplary business organizations. A rock'n' roll band, and a defunct one at that, seems hardly theplace to find lessons in brand building and marketing.

Yet the Grateful Dead, over the course of a remarkable 30-yearrun as a rock icon, employed a raft of nontraditional methods tobuild a brand that endures and continues to grow more than fouryears after the group disbanded. The 1995 death of Jerry Garcia,the band's musical and spiritual leader, at the age of 53marked the end of an era as well as of the band. But, if anything,the brand has actually thrived and grown stronger sinceGarcia's death, fueled by a broad and radical marketing plan byGrateful Dead Productions, the band's longtime corporateentity, and an insatiable desire on the part of Grateful Dead fansfor the band to live on.

Because the lessons it offers are universal, as relevant toselling perfume or cars as they are to marketing music, theGrateful Dead is a radical marketer worthy of attention. TheGrateful Dead, through a series of both serendipitous circumstancesand conscious best-practice business decisions, built a model thatflew in the face of conventional music industry wisdom. Whatemerged was a highly successful, easily recognizable brand with thecachet of a Harley-Davidson and a vast following of fans known asDeadheads, who were as devoted as a religious sect.

In many ways, the Dead is in an enviable position. A highlyprofitable, debt-free, privately held 34-year-old company likeGrateful Dead Productions, still owned and run by the founders, isunusual in today's dynamic business environment. This fiscalserenity, along with the continuity of ownership and leadership,provides a prognosis for the future that is remarkably upbeat.

Sam Hill, co-founder of Helios Consulting Group, has almost20 years of experience working on marketing issues. Businessjournalist Glenn Rifkin has written extensively for The New YorkTimes and contributes to many business publications.

Keeping the Value Proposition

The remaining band members and their business advisorsunderstand that the best brands can--and must--reinvent themselves,like Madonna or the NBA, and that they flourish where others mightsimply close up shop and go home. Big traditional marketers likePepsi and McDonald's spend hundreds of millions of dollarsrefreshing their brands, keeping them from getting stale. TheGrateful Dead lost its musical center and guiding genius with thedeath of Jerry Garcia, but the value proposition for its customersnever waned. In fact, quite the opposite occurred as the remainingband members and their organization found a way to reinvent thebrand and make it flourish.

From its nondescript, 32,000-square-foot headquarters in Novato,California, Grateful Dead Productions has become the L.L. Bean ofrock music, sending out its combination fan magazine and catalog tomore than 150,000 fans who can choose from among more than 500Grateful Dead items, from golf balls to CDs, and from baby clothesto toothbrushes. Employees wearing the group's trademarktie-dyed T-shirts ship more than 1,000 packages a day, andmerchandise sales reached more than $8 million in 1998. That'sjust a fraction of the $60 million that all Grateful Dead itemsgenerate each year for the band, the record companies and outsidelicensees. Grateful Dead Productions has revenues of more than $20million from a combination of products that it makes and sellsitself and from royalties it receives from licensed items.

The Grateful Dead represents the best of radical marketingbecause it focused on a single value proposition that was built ona devotion to a unique but consistent style of music and acarefully established, long-term relationship with its customers.Unlike successful traditional marketers like Procter & Gamble,the Grateful Dead never used massive advertising or promotion; theysimply went deep into a niche market. And in so doing, they wonpraise from even the most traditional of marketers.

A Clear Mission

Like other great radical marketers, the Grateful Dead eschewedglitz and tricks and focused on a single element, a marketinghallmark that is far too often ignored by even the biggestorganizations. In essence, the Dead's story is a case study ofsubstance over form in the context of niche marketing.

From the day the band came together, the group had a clear senseof what its "product" should be and who its audience was.Even when the band members eventually started earning great sums ofmoney and enjoying the lifestyle the money brought, they never putthe money first and never let the bottom line dictate what went outthe factory door. The music was always the driver and the catalystfor all decisions and strategies.

Despite the band's roots in the antimaterialistic,counterculture era of sex, drugs and rock 'n' roll, severalmembers became astute businessmen, aware there was revenue beinggenerated around their popularity. The band incorporated in 1973and, with the band members as co-CEOs and the board of directors,became a serious business venture. Each band member has an equalshare of the profits and an equal vote in approving allmerchandising and business decisions. The first crucial move was toagree that if a band member left or died, his shares would bebrought back into the organization so control remained central and[the remaining members] could carry out their mission withoutstruggling with outsiders.

Indeed, the grungy, spontaneous image to some degree belies thegenius of the band's business acumen. Decisions were made alongthe way--from instituting a ceiling on ticket prices to focusing ontouring rather than recording--that flew in the face ofconventional industry wisdom but had a profound impact on customerdevotion and the extension of the brand.

Making the Visceral Connection

A brand, most marketers agree, is more than a product--it'sa relationship with consumers. Great brands have a single, clearintuitively compelling message or symbol.

For the Grateful Dead, that message was embodied in the musicand in the lifestyle and community that developed around theband's ceaseless desire to play that music live andimprovisationally. In so doing, the band members owned themarketing function themselves. They never handed it off to apublicity firm or pushed it down into layers of a bureaucraticorganization. By getting out with the customers more than any otherrock band, the Dead created a visceral connection with theircustomer base and turned that connection into huge profits.

Like other radical marketers, the Dead started out with fewresources and a modest plan. What they had was a product theybelieved in completely and a passion to share that product--themusic--with an audience. The idea that thousands of rock bands comeand go and few reach star status was never a concern for the Dead.They just wanted to play. And in so doing, they followed a set ofkey radical marketing rules that fueled their success.

• Love and respect the customer. Respect and love of thecustomer must be demonstrated consistently as a brand attributethrough actions, not lip service. For example, when other rock'n' roll legends like the Rolling Stones began to acceptcorporate sponsorship of their tours and raised ticket prices toastronomical levels, the Dead held the line, refused to cedecontrol of their product in any way, and kept ticket prices at aceiling of $30.

In 1983, to curtail ticket-scalping opportunities and to makesure all its fans had equal access to tickets, the band set up itsown mail-order ticket service. Thus, students willing to sleep outon sidewalks would not be the only ones able to get tickets toconcerts.

The focus extended to employees as well. At its zenith, GratefulDead Productions had more than 80 full-time employees, including avast road crew that stayed on the payroll even when a tour ended.When the financial rewards began to grow astronomically, the wealthwas shared. Like other great radical marketers, the Dead understoodthe value of employees who shared the enthusiasm for the productand would in effect represent the company to the customers.

The crew earned six-figure salaries, and the Dead was the firstrock band to offer generous profit-sharing, retirement and healthplans. Well before daycare was a corporate issue, the Dead alwayshad a secure children's play area backstage for the children ofcrew members and guests.

• Get face-to-face with customers. The Dead playedcountless live shows and turned the accepted record industryformula on its ear. Rather than record an album and mount a tour topromote the album while visiting radio stations and schmoozing withdisc jockeys, the Dead took the opposite view. They simply playedas long and as often as possible in front of live audiences. CEOswilling to spend four or more hours, day after day, with theircustomers are likely to spawn tremendous customer loyalty anddevotion.

• Celebrate uncommon sense. What characterized Garcia andhis bandmates, Bob Weir, Phil Lesh, Mickey Hart and BillKreutzmann, was the uniqueness of their product and theirwillingness to stick with the product against all conventionalindustry wisdom.

In essence, the Dead weren't selling music, they wereselling a unique, spontaneous experience, a version of lifestylemarketing embodied by Harley-Davidson and Nike. Each concert was aunique event, with the same songs rarely repeated for weeks or evenyears. While common sense and music industry history dictatedotherwise, the Dead never wavered in their commitment to their ownlong, strange trip.

Loyalty is inspired by strategic decisions that may go againstaccepted industry business practices but demonstrate respect forthe customer. For example, in the 1980s, the Dead decided to buckconventional wisdom and allow fans to tape live performances. In anindustry where bootleg records cost artists and record companiesprofits, such a decision was tantamount to heresy. But like otherradical marketers, the Grateful Dead truly respected customers.Jerry Garcia said, "If we're done with the music, you canhave it."

The band prevailed upon its fans to follow an honor system. Theycould keep or trade the tapes with fellow Deadheads, but they couldnot sell copyrighted material for profit. Hal Kant, the band'slawyer, says they spent a great deal of money tracking down andsuing those who wouldn't honor the agreement. But the vastmajority of Deadheads stood behind the band. In fact, with theadvent of the Internet, a vast virtual community of tapers hasemerged, with Deadheads reaching out electronically via hundreds ofhomespun Web sites to share the experience yet again.

But the tapes were just the beginning. The Dead, with theidiosyncratic nature of its shows, built a layer of mystery intoits image. Serious Deadheads kept logs of each show, scribbling onnotepads during the concert which songs were performed, in whatorder, and the quality of the performance. Each nuance, each notethat Garcia missed or lyric he forgot, was logged in. Great bandsinspire passion that may seem ludicrous to those on the outside.But fanatics, be they motorcycle enthusiasts, pet lovers or rockfans, become important evangelists for the brand. This can bemanifested by a tattoo of a corporate logo, a stock investment or aprized tape collection.

The band's uncommon sense also led to sound strategicbusiness decisions. Unlike most rock 'n' roll groups, theDead never asked for big advances from concert promoters. Instead,[the members] took on the upfront risk themselves and receivedroyalties that were double the industry average. This practiceproved to be incredibly lucrative for the band in the long run.

And the Dead never left a promoter in the lurch. If a concertwas canceled because of bad weather or a competing event kept thecrowds down, the Dead would make it up to that promoter withanother concert date.

• Create a community. Great bands create a sense ofcommunity and belonging, and few did that better than the Dead. Avirtual nation of Dead fans incorporated the band into their livesin a way that corporate marketers can only dream about. And theDead were savvy enough, even in their early days, to tap into thiscommunity. They became database marketing pioneers well before theconcept grew in more traditional business settings.

Steve Brown, an enthusiastic Deadhead and one of the founders ofGrateful Dead Records, recalled the creation of the first Deadheaddatabase in the early 1970s. In Goin' Down the Road,Blair Jackson's 1992 book about the band, Brown recounted:

Around this time, we decided to plug in more directly to allthe Deadheads. The "Dead Freaks Unite" campaign,introduced inside the Skull and RosesLP in 1971, had been atremendous success--we'd built up a mailing list of 30,000names. To reach even more people, we decided after the Wake ofthe Flood album to send a Grateful Dead Records promotion boothon our tour with the band. Our gambit worked: We signed up another50,000 on the 1974 tours.

The most fervent Deadheads attended literally hundreds ofGrateful Dead concerts over the years, following the band fromvenue to venue, sleeping out on cold sidewalks, buying tickets fordozens of shows on a given tour, gobbling up Dead merchandise, andspending countless hours comparing set lists and finding endlessnuances in the songs that were chosen and the order in which theywere played.

This love and devotion translated into lucrative financialrewards for the band and the small universe of satellite businessesthat revolved around it. The Dead became one of the top-grossingbands in the world, averaging $50 million to $75 million in ticketsales each year as it toured major arenas around the country.

The band saw another marketing opportunity in this devotion andwent so far as to create a vast database of shows and play lists itcalls the Deadbase, which became available in print and ondiskettes.

• Brand extension with integrity. Like other great radicalmarketers, the Grateful Dead inspired clever and innovative ways toextend its brand without damaging its integrity. In 1972, forexample, the Grateful Dead became one of the first bands to createits own record label, a radical concept at the time, but a way tocontrol quality and retain the spirit of the music they played. TheDead were also among the first bands to inspire vast merchandisesales, specifically T-shirts, posters and stickers of theband's varied logos.

The band members had always been loath to police their concertsites. For many years, they were content to let entrepreneurialfans reap the rewards, as long as copyrighted material was notbeing co-opted, and allow this marketplace to exist in the parkinglots of its concert venues. But they were eventually convinced thatthey were giving away more than $250,000 worth of potentialrevenues with each concert. Rather than force everyone out ofbusiness, however, the group made a radical decision: Bring in thebest and make them legitimate business partners.

Greg Burbank, for example, was a 21-year-old college dropoutselling stickers and tie-dyed T-shirts in the parking lot ofGrateful Dead concerts in the mid-1980s. One night, he and hispartner got a tap on the shoulder from a Dead crew member, whoasked them to come in and talk to representatives for the band."Rather than suing us for trademark infringement, they broughtus on board," Burbank remembers.

Today Liquid Blue, Burbank's company in Lincoln, RhodeIsland, is one of the largest licensees of Grateful Deadmerchandise in the country. The company sells around $4 millionworth of Grateful Dead paraphernalia to retail outlets each year."The Grateful Dead always put out quality products," saysBurbank. "Their emphasis was always on putting on the bestshow and the best products. The band was uncompromising that thequality of the merchandise match the quality of themusic."

Under Peter McQuaid's direction, Grateful Dead Merchandisinghas soared. Its quarterly catalog and fan newsletter not only bringthe Dead's brand to hundreds of thousands of Deadheads butprovide a regular, uninterrupted connection between the band andits customers. Although a few aging hippies have complained, mostDeadheads see no conflict between the band's countercultureroots and the commercialism of its merchandising. The Dead found away to sell without appearing to sell out.

"I Will Survive"

Like other great radical marketers, the Dead is simplyreinventing itself. Grateful Dead Records is creating anddistributing its own CDs; the Dead can offer these CDs at betterprices and realize higher profits. The goodwill generated by theDead and their organization has brought other musicians to themseeking the very expertise in brand development that the band hasacquired over 30 years of dedicated hard work.

While he was still alive, Garcia, a noted artist, beganextending his own personal brand by selling expensive ties adornedwith his artwork. His ties became the most popular neckwear in theUnited States; even the president was reportedly seen wearing one.A successful new line of Grateful Dead ties not associated with theJerry Garcia ties, along with other silk loungewear, shoes andboxer shorts, have hit the stores. "T-shirts will beimportant, but they won't be the backbone anymore,"McQuaid says. "An older, more sophisticated market willemerge, and people in boardrooms will wear Grateful Dead ties thatonly other Deadheads will recognize. It will be subtle."

In this vein, McQuaid is planning to build the brand into alifestyle product line for the retail market. He is hoping to sellproducts like an upscale, tie-dyed set of towels through retailoutlets like Nordstrom. Without any reference to the Grateful Dead,these items have great cachet among the band's fans.

McQuaid adds that he is already looking offshore for additionalmarketing opportunities. Although the Dead toured mostly in theUnited States, the band has tremendous appeal overseas. "Thereis huge interest in Japan in the Dead," McQuaid says,"and we expect to find a big market there."

Burbank says that new products keep the Dead in a growth mode.He points out that long-defunct acts like Jimi Hendrix or the Doorscontinue to be among the most popular in merchandising circles."Hendrix only toured for four or five years before hedied," Burbank says. "The Grateful Dead have touchedmillions of people, and there are 14-year-old kids who now thinkthe Dead are a cool thing. That train has been rolling for 30years. It's not coming to an abrupt halt."

Contact Sources

Grateful Dead Productions Inc., (800)225-3323, http://www.dead.net

Liquid Blue,greg@liquidblue.com, http://www.liquidblue.com