Book review: Marketing lessons from the Grateful Dead

The Grateful Dead are becoming an unlikely case study in viral media.

The Grateful Dead are a living hippie monument,” wrote music journalists David Dalton and Lenny Kaye, “lysergic storm troopers who have carried ‘the Message’ across continents and psychic thresholds, oblivious of all laws and boundaries, terrestrial or otherwise.” When Dalton and Kaye wrote that appraisal in 1977, punk and disco were already making the Dead, one of the few surviving institutions of 1960s West Coast hippie culture, look like a museum piece. Outside of a few brief years a decade earlier, the band had never been anywhere near the cultural mainstream. Fashions had come and gone without troubling them, and they wouldn’t score a Top 10 album or single until a fluke charting in 1987.

But, fashionable or not, by the time band member Jerry Garcia succumbed to a heart attack in 1995, the Dead were acknowledged as the most successful live act in music history, playing for millions and grossing millions more in three decades of hard touring. Though the band has changed shape since Garcia’s passing — members have toured intermittently under different names — their fan base remains as extensive and as rabid as ever, thanks to a relationship carefully nurtured by the Dead and their management. And as the rest of the business world grapples with what social media means for their relationships with consumers, the Dead are becoming an unlikely case study.

Marketing gurus David Meerman Scott and Brian Halligan take a crack at codifying the Dead’s non-musical innovations in Marketing Lessons from the Grateful Dead: What Every Business Can Learn from the Most Iconic Band in History (Wiley). Halligan is CEO of marketing software company HubSpot, and Scott is a bestselling author with a marketing strategy company. Between them, they’ve seen the Dead some 150 times, and they are part of the vibrant fan community the band cultivated. Here they identify a host of the band’s innovations that correlate with emerging business principles.

“Freemium” may be an ugly neologism, but the practice of giving something away and then selling a premium version of that product has been part of the Dead’s practice for decades. They were the first major act to encourage fans to tape their concerts, even providing a special section near the soundboard for Deadheads who wanted to record the show. “Conventional wisdom held that if fans made their own recordings, they wouldn’t need to buy records,” write the authors. And while the Dead’s records may never have sold in huge volume, taping encouraged a community of fans who would collect and trade homemade concert recordings, obsessing over the band’s ever-changing set lists and improvisational approach.

This early form of viral marketing provided a vehicle for word-of-mouth about the band and their extraordinary live shows to spread, and grew their fan base exponentially. “Each tape was like an advertisement that attracted new people to one of their concerts,” write Scott and Halligan. “The more concerts [they] performed, the more tapes were in the marketplace. The more copies were made of the tapes, the more advertisements were in the marketplace pulling in new customers.” By making the band’s content “spreadable,” concert ticket sales more than made up for any compromise of album royalties.

The Dead were also early to see the potential in communicating directly with that fan base. In 1968, the band hired somebody to run a booth at every concert and sign up thousands of fans for updates on the band and their tours. And they included an advertisement for their burgeoning newsletter service on a 1971 live album, promising to keep fans informed in exchange for a name and an address.

“At the time it was a radical idea for a band to add a ‘call to action’ to an album as an overt way to build their mailing list — and by extension, their following,” write Halligan and Scott. The band corresponded regularly with list members, and after a few years, the Dead were able to use their now-enormous database to ask fans to call radio stations and record stores when the band would release a new album. Their fans were happy to do it, because they felt they were part of a community, rather than simply being marketed to. The band has remained an early adopter of communications technologies, from Usenet through to iPhone apps.

The key element that’s allowed for the band’s success through these efforts, suggest the authors, is their authenticity. They’ve gone to great lengths to let their fans know that they genuinely value their relationship. When the rest of the concert industry was falling under Ticketmaster’s monopoly, the Dead established their own in-house ticketing service. The best seats for every concert were reserved for those fans who knew to call the band’s hotline for gig information and then mail in a money order. This way, the heart of the Dead experience was reserved for the truest believers. “We see so many organizations that do precisely the opposite,” the authors write. “Instead of putting loyal customers first, they ignore them while they try to get new ones.” And when the band makes mistakes, those loyal customers tend to be more forgiving.

Meanwhile, the openness and authenticity of communication through the band’s newsletters, a “pre-Internet social network” — information about solo projects, wedding and birth announcements from the band’s road and office crew — has helped make that fan base a real community. That community travels with the band from show to show, and over the years has established a huge part of the Dead’s brand value. “Our community defines who we are. Companies cannot force a mindset on their customers,” write Scott and Halligan. “The Grateful Dead let their audience define the … experience. They made fans an equal partner on a journey.” It’s a trip that’s surely been long and strange; but as Halligan and Scott remind us, it’s also been profitable.

Executive summaries

The Zeroes: My Misadventures in the Decade Wall Street Went Insane (Portfolio)
Randall Lane

Former Forbes reporter Lane collaborated with Canadian-British trading tycoon Magnus Greaves to create Doubledown Media in 2003, launching a series of magazines — Trader Monthly, Dealmaker, Private Air — that catered to traders, hedge fund managers and other members of the decade’s new financial elite. That gave Lane a ringside seat for the peak years of New Gilded Age excess, and he recalls plenty of the lavish parties and attentiongrabbing events he organized to promote Doubledown’s titles, and to connect their readers to luxury goods vendors like Maybach and Gulfstream. But Lane’s memoir gets most interesting when the bizarre figure of former ballplayer Lenny (Nails) Dykstra shuffles into view. Dykstra spent the early years of ‘the zeroes’ building a profile for himself as a Jim Cramer- endorsed financial guru and enjoying the attendant lifestyle, and he commissions Doubledown to develop a magazine for professional athletes. As Lane ventures further into Dykstra’s world, it becomes clear to him that Nails’s empire is a fraudulent, over-leveraged house of cards. Scamming his partners, abusing his employees and allegedly (and illegally) pumping stock he’s been given in exchange for promotion, Dykstra comes across as an unstable and broken person, one of the biggest zeroes in a decade full of them.

Economyths: Ten Ways Economics Gets It Wrong (Wiley)
David Orrell

Edmonton native Orrell is an Oxford-trained mathematician and complex systems analyst who’s explored particle accelerator design, weather forecasting, and cancer biology. Economics is supposed to provide mathematical modelling of human behaviour, but the apparent divergence of economic theory from reality in recent years has become a burr under Orrell’s saddle. ‘The fundamental assumptions that form the basis of economic theory are flawed,’ he writes. ‘Not just the mathematical models, but the actual mental models that economists have of the economy are completely wrong.’ One of those who find in the discipline more ideology than science, Orrell argues against 10 principles of economic orthodoxy, including the rationality and predictability of the market and its potential to provide happiness. If he’s a dilettante, he’s one with serious chops, and an appealing curiosity. Invoking history, physics, biology, climatology and his background in complex systems to debunk neoclassical economics, Orrell makes a plea for an unorthodox economics, one drawing on ethics and environmentalism as well as emerging areas of mathematics like non-linear dynamics and network theory. The ideas being explored in these fields may seem ‘scattered and unrelated,’ but Orrell does an intriguing job of stitching them together.

From Those Wonderful Folks Who Gave You Pearl Harbor: Front-Line Dispatches from the Advertising War (Simon and Schuster)
Jerry Della Femina

Forty years after its first release, advertising legend Della Femina’s memoir of life on Madison Avenue in the 1960s has become part of the Don Draper canon, helping guide the fictional world of the television series Mad Men. Back in print to coincide with the show’s fourth season, the book offers a look at the era’s ad business that’s unencumbered by the TV show’s melodramatics and attempted profundity. Which isn’t to say the book’s dull: ‘We made the antics depicted on every episode of Mad Men look like Rebecca of Sunnybrook Farm,’ Della Femina writes in a new foreword. And he offers anecdotes aplenty about booze, drugs and sex — the latter of which he encouraged at his own agency, because ‘nothing got creative people to come in early and leave late better than the prospect of sexual adventure.’ But most of the memoir is concerned with the mechanics of the ad trade during a period of great creative upheaval. If in places the details are a little inside, Della Femina’s thick Brooklynese voice could belong to the raconteur on the next bar stool over. His yarns about famous and infamous pitches, success stories and burnouts, describe the end of Madison Avenue as a stuffy bastion of WASPiness and the beginning of its golden age.