Studying the Grateful Dead - in Biz School

(CBS)  The Grateful Dead was one of rock and roll's most enduring acts - making records and touring constantly for 30 years, until 1995, when lead singer and guitarist Jerry Garcia died. With its roots in the 1960's counter-culture, the Dead improbably became America's most lucrative touring act. Now, the band's success is even being studied - in business schools, as CBS News correspondent Jim Axelrod reports.

In many ways, Barry Barnes is a typical "deadhead," as the most loyal fans of the Grateful Dead have long been known.

"I saw them 194 times over 21 years," Barnes said. "My best friends today - still 15 years after the band ended - are deadheads."

But Barnes - a professor at Nova Southeastern University's Wayne Huizenga School of Business - keeps an uncommonly close eye on the band even for deadheads. He teaches in his business courses about what he learned from all those years on the road following the band.

"Be true to your vision. Know exactly what you really love and you're passionate about. Stick to that," he said. "If you do what you love, the money will follow."

The Grateful Dead is a textbook example of the passion-based pay-off. At their peak, the band drew nearly 2 million fans to their shows every year. Fans report seeing them 150 times or more. And the Dead has had no problem selling $50 million worth of merchandise.

Long before the Internet changed media and marketing, the Dead pioneered an approach that we'd recognize today as "social networking."

"They were reaching out in a way that went beyond the usual sort of Beatles-mania fan club and really connecting to the fans," said Nina Nazionale, curator at the New York Historical Society, which just opened n exhibit on the Dead.

On the back of one 1971 album, the band asked their fans who they were.

"It says, 'Tell us where you are, and we'll keep you informed,'" Nazionale said, reading from the album cover. "That was the beginning of their mailing list, which by the mid-90s had a half-a-million people on it."

The Dead kept their fans in the loop with a newsletter and by selling their own tickets. Every concert sold out.

Fans sent in money orders in colorful envelopes hoping to stick out and get tickets for a concert experience like no other. The Dead's trademark improvisation guaranteed no two shows were ever exactly alike.

Memorabilia from the Grateful Dead's archives is now on display at the Historical Society - part of what will become a permanent archive at the University of California at Santa Cruz.

Barnes says lots of companies could learn from the way the Grateful Dead took care of business.

"If you really want to engage your employees, and you really want to be creative and innovative and respond in the moment to the situation at hand, then strategic improvisation and the Grateful Dead have important lessons for the 21st century," he said.

Two members of the Dead, Bob Weir and Phil Lesh, plan to tour together this summer with their new band, Furthur. The exhibit at the New York Historical Society is open until July.

[dougpilgrim]

ParisRomero you hit it right on the head! Swapping tapes, which lead to the free sharing of digitized music, maintained a following that not only kept their fan base, but bought in new fans, (like my kids). Who then go on to buy all their CD's and merchandise. I don't know if it was a "Business Plan"
but you now have 20 year olds, standing on line for a band that is not played on the radio, does not have a new video, and has not hit radio's top 40 was "touch of grey" in 1987.

[Keepemhonest]

Jim... didn't the refuse to license their recorded music to online music services---not their live stuff. I somehow remember in the late 1990s and early 2000s trying to buy Grateful Dead music on early services such as Music Match, MP3 and others. At the time, I thought the Beatles and the Grateful Dead would not make their recorded studio music available and didn't think much about digitally downloadable music. Does anyone else remember that or am I mistaken?

[Keepemhonest]

I am a fan of the Grateful Dead's music. And I agree, they were using some marketing techniques well before their time. But I also recall that early in the online revolution the GD didn't license their music so it was hard to get online. Does anyone recall that? If so, that wasn't too social. One other fact that the business professor needs to teach his students. I lost four good friends to drug abuse. All four traced their use back to their first Grateful Dead Concert and the open air drug culture that accompanied it. Please don't confuse loyalty with addiction. All four used LSD first at a Grateful Dead concert, all four lost scores of years to drug addiction. It's an unfortunate legacy of the Grateful Dead. No other band made drugs so available and so much a part of the culture. That could attest for some of their loyal following too. I grieve the loss and caution my kids...great music, dangerous culture.

[gemini_jim]

Considering that live Grateful Dead music has been available for free all along on the internet, I'd say it's hardly their fault if you couldn't find it...

[dnamj]

I wish there had been an analysis of how the Dead created a traveling barter system between fans, allowing them to exchange good and services in creative ways to keep their journey going. One example I saw were people who were collecting cans and bottles in a place that had a deposit / return system (why don't we have those anymore btw?), using the money to buy cheese and break, and then selling grilled cheese sandwiches. Reclaiming waste followed by adding value to basic resources, all done in the simplest of ways. So many untold stories of why that was such a successful endeavor (the band and the fans).

[rwsmith29456]

They even advised people how to do a better job of recording their concerts. They were unique in that they never did anything to discourage their fan base. Being a Dead head might be a little obsessive, but you can't knock them for shear loyalty.

[dragon8me]

It was the electric kool-aid man.

[ParisRomero]

I can't believe you missed this point: One of the most successful marketing strategies that the Grateful Dead employed was encouraging and allowing their fans to record the concerts, then distribute the recordings among their fans. Unheard of, in the day. They encouraged "pirating" of their music - what better way to advertise? And THAT never cost THEM a penny!