Unconventional in many ways over its 30-year span, the Grateful Dead are now frequently praised for its business smarts. Some claim their success as America's most lucrative touring act was partly because they embraced social networking long before the internet arrived.
The Dead first reached out to fans on the cover of its 1971 album (Skull & Roses),
asking, "Dead Freaks United: Who are you? Where are you? How are you? Send
us your name and address and we'll keep you informed." A mailing
address for "Dead Heads" was provided.
"That was the beginning of their mailing list, which by the mid-90s had a half-a-million people on it," Nina Nazionale, curator at the New York Historical Society, which recently opened an exhibit on the Dead, told CBS News.
The newsletters provided news, gossip, occasional giveaways, and always solicited feedback from fans. An even more innovative way the band developed its followers was by eventually selling their own tickets. A telephone hotline alerted fans of the band's touring schedule before any public announcements. In this way, some of the best seats were reserved for its most rabid fans. Moreover, a fan living in New York could get tickets to shows in other cities to follow the band across the country.
Barry Barnes, a business professor Nova Southeastern University in Florida, said this helped bond fans and build the band's counterculture community across the country.
The other radical strategy was to let fans tape shows. While losing potential record sales, tape-sharing among devotees significantly widened its fan base. Speaking to Atlantic Magazine, John Barlow, one of the band's lyricists and long-time internet proponent, said businesses today are just recognizing the correlation between familiarity and value.
"Adam Smith taught that the scarcer you make something, the more valuable it becomes. In the physical world, that works beautifully," said Mr. Barlow. "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."
Product is also credited for the band's success. The three-hour shows with a focus on improvisation promised a different show every night. Obviously, making a business case becomes complicated considering the Dead's ties to the drug counterculture.
But Prof. Barnes, an admitted "deadhead," references the Dead in his classes to illustrate "strategic improvisation" and creating passion around a brand.
"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 told CBS News.
Discussion Question: What lessons can be learned from the success of the Grateful Dead around social media and driving customer loyalty?