The Grateful Dead's Laid-Back, Yet Surprisingly Shrewd, Business Plan

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Grateful Dead fans gather in the parking lot before a show this summer at Levi's Stadium in Santa Clara, Calif. (Getty Images)
Grateful Dead fans gather in the parking lot before a show this summer at Levi's Stadium in Santa Clara, Calif. (Getty Images)

For the 50th anniversary of the Grateful Dead's founding, the band will perform three shows — their last — in Chicago this weekend. According to Billboard magazine, the "Fare Thee Well" concerts will bring in an estimated $50 million. That's pretty impressive, considering that band's lead guitarist died two decades ago.

If there's one thing the Grateful Dead has proven it knows how to do well, it's improvise. The song "Dark Star" alone launched hundreds of unique live jams, and that freeform lifestyle followed the band offstage.

"Improvisation became the one point in their very changeable universe, applied not only to music, but also to business," says Dennis McNally, the band's biographer and former publicist.

McNally says the band was also guided a spirit of inclusion and mutual respect toward their audience — values the members adopted during the "peace and love" hippie era of 1960s San Francisco. "The Grateful Dead treated their audience as partners, not as cows with wallets," he says.

That partnership was nourished by a few key decisions along the way. The Grateful Dead famously encouraged fans to tape their live shows, and those tapes were then traded among fans and served as a pre-Internet form of viral marketing. The more the tapes circulated, the more people wanted to go see them live.

"But that's not at all why they did it," McNally says. "They did it because they were terrible cops and recognized that if they stopped taping, they would have to ruin the ambiance of their own shows."

To get those fans to actually attend the shows, they created their own in-house, mail-order ticketing agency, and in the process created a massive database of devotees. The end result was twofold: They eliminated the middleman, thereby putting more money into their pockets, while gaining a reputation for superior customer service.

The band also made its own tapes of just about every show it ever played, recording directly from their sound board. Now those tapes live in a special vault in southern California.

Mark Pinkus is the president of Rhino Entertainment and its official General Manager of Grateful Dead Properties. He has access to that vault — a superfan's paradise, with thousands and thousands of tapes — along with a formal agreement with the band to handle the production and release of the music contained within.

"We have mapped it out, and believe we have about 24 more good years of releases at the pace we are doing right now — and we do eight releases a year right now," Pinkus says.

Rhino enlisted David Lemieux, the band's longtime archivist, to curate a series of releases for fans who want to hear what's on every one of those tapes.

"When we first started working together, I said, 'What's the dream project? What's the big project that you have always wanted to do?'" Pinkus recalls.

Lemieux came back at him with a Deadhead's dream release: all 22 shows of the band's landmark 1972 tour of Europe. Pinkus agreed by answering the most important question he could think of.

"How we make most of our decisions, because both of us are fans, is [by] asking, 'Would we buy this?' " he says.

They got their answer: A limited edition 73-CD set sold out in less than a week. Even so, Pinkus acknowledges the Grateful Dead can be a hard sell to nonbelievers.

"You tell people, this is the greatest live band in the world, and people who haven't seen them say, 'What are they like?' " Pinkus says. "Well, they kind of ramble on stage. They tune their instruments for a couple of minutes and then they do their thing for the next couple of hours. They don't talk to the crowd other than to say, 'Thank you, good night.' And yet they blow you away."

And they always do it their own way — while still managing to put a few nickels in their pockets.

Copyright 2016 NPR. To see more, visit http://www.npr.org/.

Copyright NPR. View this article on npr.org.

Transcript

LYNN NEARY, HOST:

This weekend, the remaining members of the Grateful Dead are celebrating the 50th anniversary of the founding of the band with three shows at Chicago's Soldier Field. Those concerts, in addition to shows in California last weekend, stand to bring in about $50 million according to Billboard magazine. Up until the death of lead guitarist Jerry Garcia, Grateful Dead concerts were some of the top-selling shows. But the band hasn't always raked in the money. Felix Contreras is one of NPR's resident deadheads, and he reports that some prescient business decisions helped the band create a loyal fan base, and it continues to grow even 20 years after the original group played their last notes together.

(SOUNDBITE OF GRATEFUL DEAD SONG, "DARK STAR")

FELIX CONTRERAS, BYLINE: This is "Dark Star," the Grateful Dead's legendary vehicle for improvisation that launched hundreds of live jams over their 30 year run.

(SOUNDBITE OF GRATEFUL DEAD SONG, "DARK STAR")

DENNIS MCNALLY: Improvisation is the key to what they did.

CONTRERAS: Dennis McNally is the band's biographer and was also their publicist from 1984 until Jerry Garcia's death 1995.

MCNALLY: Improvisation became not only the one still point in their very changeable universe, but it applied to business.

CONTRERAS: The band's business decisions were also informed by a spirit of inclusion and mutual respect toward their audience - values the band adopted during the peace-and-love hippie area of 1960's San Francisco.

MCNALLY: The Grateful Dead treated their audience as partners, not as cows with wallets.

CONTRERAS: That partnership was nourished by a few key decisions along the way. The Grateful Dead famously encouraged fans to tape their live shows. Those tapes were then traded among fans and served as a pre-Internet form of viral marketing. The more people who heard the tapes, the more people wanted to go see them live.

MCNALLY: But that's not at all why they did it. They did it because they were terrible cops and recognized that in order to stop taping, they would have to ruin the ambience of their own shows.

CONTRERAS: Achieving that ambiance also required big investments in the band's sound to create the best possible listening experience for the audience. So when the band collectively squeezes down to a whisper...

(SOUNDBITE OF GRATEFUL DEAD SONG)

CONTRERAS: ...The intricate musical conversation is in full view, which allows the band and the audience to take a step toward transcendence or something like it.

(SOUNDBITE OF GRATEFUL DEAD SONG)

CONTRERAS: And to get those fans to the shows, they created their own in-house mail-order ticketing agency and in the process, created a massive database of devotees. The end result was twofold. They eliminated the middleman, thereby putting more money into their pockets while gaining a reputation for superior customer service. Another thing the band did was tape just about every show they ever played directly from their soundboard. And now those tapes live in a special vault in Southern California.

MARK PINKUS: This is an "American Beauty" ...

CONTRERAS: Mark Pinkus is the president of Rhino Entertainment and general manager of Grateful Dead properties. And he takes us inside a deadhead's paradise - thousands and thousands of tapes.

PINKUS: It includes the masters for "Box Of Rain," "Friend Of The Devil" ...

CONTRERAS: Rhino has an agreement with the band to handle the production and release of these tapes.

DAVID LEMIEUX: We have mapped it out and believe that we have about 24 more good years of releases at the pace that we're doing. And we do eight releases a year right now of the Grateful Dead.

CONTRERAS: Rhino enlisted David Lemieux, the band's long-time archivist, to curate a series of releases for fans who want to hear from every tape in the vault.

PINKUS: When we first started working closely together, I said what's the dream project? What's the big project that you've always wanted to do?

CONTRERAS: Lemieux came back at him with a deadhead's dream release - all 22 shows of the band's landmark 1972 tour of Europe.

(SOUNDBITE OF ARCHIVED RECORDING)

GRATEFUL DEAD: (Singing) Dark, stark rations pouring insulated new ashes (ph).

PINKUS: I said we've got to do that. We make most of our decisions because both of us are fans - is would we buy this?

CONTRERAS: They got their answer - a limited edition, 73 CD set sold out in less than a week. This enormous back catalog can be intimidating to new listeners, and as a longtime fan who saw his first show in 1984, Pinkus acknowledges that the band can be a hard sell to nonbelievers.

PINKUS: I can tell people this is the greatest live band in the world, and people that haven't seen them - well, what are they like? Well, they kind of ramble on stage. They tune their instruments for two, three minutes, and then they do their thing for the next couple of hours, and they don't talk to the crowd other than to say thank you, good night, and yet they blow you away.

CONTRERAS: While always doing things their own way and still managing to put a few nickels in their pockets. Felix Contreras, NPR News.

(SOUNDBITE OF GRATEFUL DEAD SONG) Transcript provided by NPR, Copyright NPR.