[LINK] John Perry Barlow of Grateful Dead at e-G8

[Tom Koltai]

<SNIP>
> References:
> How to "Truck" the Brand: Lessons from the Grateful Dead By 
> Glenn Rifkin
> http://www.strategy-business.com/press/16635507/9095_Incorrect

Sorry Folks, the Link that I supplied has changed.

The new link is: http://www.strategy-business.com/article/9095?pg=all

And now quoted here-under... (Just because this article demonstrates
that without rigorous Copyright DRM locks or lawsuits, a brand still has
value.
In fact more value than anything ever created by the music industry,
however the value is transferred to the creators and not the
corporations that enforced "for hire" contracts to steal the ownership
from the creators.

TomK

Quote/
How to "Truck" the Brand: Lessons from the Grateful Dead

Sound marketing principles from an unlikely source, the Grateful Dead
rock group. Jerry Garcia and his fellow musicians emerged from the
non-materialistic counterculture of the 1960's to create an
exceptionally strong and lucrative brand name that has stood the test of
time, and even Mr. Garcia's death in 1995. The basis of the Grateful
Dead brand was the group's sustained personal relationship with its
customers, derived from an unusual dedication to playing its distinctive
and improvisational music at live performances.
By Glenn Rifkin

In the fickle world of music, where groups come and go with amazing
rapidity, the Grateful Dead attracted audiences, sold albums and
expanded their product line for 30 years. What lessons can a rock group
teach the rest of us about marketing?

This is a story about brands and best practices. While its subject is a
rock group -- and a defunct one, at that -- the lessons that it offers
are universal. They are as relevant to the marketing of soup, roof tiles
and shampoos as they are to the marketing of music. Marketing is
marketing, after all, and there is always something to be learned from
the world's best, even if their strategies and styles evolved during the
Summer of Love in the streets of San Francisco rather than at meetings
on Madison Avenue.

The group in question, the Grateful Dead, managed to hold on to its
special perch in the fickle world of entertainment for more than 30
years, becoming a gold standard in an industry that has seen thousands
of other rock "brands" come and go. Though serving as one of the key
symbols of a 60's counterculture known for its disdain of materialism,
the Dead also pioneered some of the most lucrative moves in the music
business and were masters at turning their brand name into a cash cow.

At its height, the band pulled in as much as $95 million a year, not
only from the usual sources of concert tickets and CD sales, but also
from an ever-multiplying roster of spinoff products. Even now, more than
a year after its fabled leader, Jerry Garcia, died and the surviving
members went their separate musical ways, the group is a flourishing
business entity.

The Dead musicians, and their managers, did all this by ignoring many of
the usual rules. They were able to attract an army of loyal fans, known
as Deadheads, without ever having a No. 1 hit. In fact, the Dead
sometimes went years without producing a new album, preferring to reach
their fans through frequent lengthy concerts. And the band completely
eschewed mainstream music industry promotion and big advertising
campaigns.

In essence, then, the Dead's story is a case study of substance over
form in the context of niche marketing.

>From the day it opened for business, the group had a clear sense of what
its "product" should be and who its audience was. But while the band
members appreciated the huge amounts of money they eventually earned --
and recognized the potential to earn still more -- the money never came
first and they never let the bottom line dictate what went out the
"factory door." By zealously protecting their product's quality, their
customers were always sure of what that money was buying -- and never
begrudged the fact that the band was getting wealthy in the process.

"The Dead have an image, a brand equity and trust from their customers,"
said Elizabeth Moore, corporate communications manager at the Procter &
Gamble Company in Cincinnati. "They met a genuine consumer need and
never became a me-too product. There are very clear parallels to
products we market."

Sam I. Hill, chief marketing officer at Booz-Allen & Hamilton in
Chicago, is no less a fan on business grounds. In his view, the Dead
represent the best of "non-traditional" marketing, i.e., making a simple
value proposition to a select group of customers without the hype and
hoopla of an overwrought promotional campaign.

"The Dead established a long-term personal relationship with their
customers and that was the basis of the brand -- it was sustained
development against a single segment," Mr. Hill explained. "That's what
marketing should be about, rather than glitz and tricks."

Mr. Hill sees parallels to other great marketers -- companies like Nike,
IAMS Pet Foods, Snap-On Tools and MTV -- that concentrated initially on
their products and only later on their profits. Nike set out to build a
better running shoe; IAMS, a high-quality pet food. These companies
simply believed in what they were doing and "were smart enough to see
when it worked, and to exploit it," Mr. Hill said.

The Grateful Dead had similar smarts. The band members may have looked
laid back on stage, where T-shirts, jeans and sneakers were de rigueur,
but several became astute businessmen. The Dead incorporated in 1976
and, with the band members as the board of directors, became a serious
business venture.

Decisions were made along the way -- allowing fans to tape live
concerts, setting up a mail-order ticketing service to guarantee easier
access to tickets as well as reasonable prices, bringing in vendors from
the parking lots as official licensees and investing millions of dollars
in state-of-the-art sound and light systems -- that had a profound
impact on customer devotion and, thus, on extending the brand.

"But all decisions were made based on the integrity of the music,"
insists Dennis McNally, the band's publicist. "Many simply turned out to
be great business decisions as well."

The thread connecting the Dead's music to products as disparate as
running shoes and pet food, says Mr. Hill, is that "the great brands
have a single, clear, intuitively compelling message or symbol."

For the Dead, that message was embodied in the lifestyle and community
that developed around the band's ceaseless desire to play its music live
and improvisationally. The Dead annually mounted four regional tours,
which had, for their fans, the lure of a spiritual crusade. Tens of
thousands of otherwise rational adults poured their souls -- and their
wallets -- into the worship of the band. Well-coiffed baby-boomer
stockbrokers, lawyers, doctors and academics now wear Jerry Garcia ties
to their offices and love to trade stories about Dead shows they have
attended over the years. Second- and even third-generation Deadheads are
following in their footsteps.

Some sense of community is almost always the driver behind a product's
success, marketing experts say. Benson P. Shapiro, a marketing professor
at the Harvard Business School, says the key to creating a brand is the
good feeling a buyer gets in acquiring and owning a product. Much of
that feeling is tied to joining a group. "There is deep ego satisfaction
and pleasure in belonging," Professor Shapiro said.

Though all successful rock musicians, from the Rolling Stones to Bruce
Springsteen, have a large and loyal following, the community that grew
up around the Grateful Dead is a breed apart in the depth of its
dedication over the long haul.

The band earned its "incredible trust" from fans by never wavering from
its original musical credo, said Peter McQuaid, the head of Grateful
Dead Merchandising Inc., a key part of the Dead's business empire. "The
group never packaged itself," he said. "What they did was for that
night, for that moment."

Indeed, Mr. McQuaid said, when others seek to duplicate the band's
success by asking how the group pulled it off, they are already missing
the point. "The Grateful Dead became a success because they never asked
that question," he said. "They just tried to make great music each and
every night, and that brought incredible satisfaction to the customer."

Mr. McNally, the band's publicist, goes so far as to argue that what the
Grateful Dead created was "not purposeful and is not duplicable on
Madison Avenue."

But it is the Dead's very commitment to quality, and to the satisfaction
of their audience, that is the foundation of any solid brand, marketing
experts say.

"They followed some very good marketing principles, like control of the
brand, creating a clear brand image and a well-defined value
proposition," said Booz-Allen's Mr. Hill. "I don't see how that is not
replicable."

What follows is a look at the five key principles of brand creation that
were practiced, whether purposefully or not, by the Grateful Dead.

Know Thy Customer Intimately and Create a Product That Fills a Need

"Let it grow, greatly yield..."
(from "Let It Grow")

The Grateful Dead were just one of dozens of successful bands that
emerged from the San Francisco Bay area in the mid-1960's. Their music,
like that of the Jefferson Airplane or Big Brother and the Holding
Company, became a focal point for the countercultural revolution then
being waged by millions of the country's restless youth.

What set the Dead apart was their sound, which was built around the
distinctive voice and guitar work of Mr. Garcia and was an unlikely
fusion of the improvisational nature of jazz with a rock dance beat. It
was a sound that left many people cold. But those who liked it, really
liked it. Bill Graham, the famed rock promoter who was an early backer
of the Dead, once said, "They are not the best at what they do, they are
the only ones who do what they do."

And they did it from beginning to end, adds Mr. Hill of Booz-Allen.
"They picked a customer group, remained true to it, close to it and
didn't branch out," he said. "The Jefferson Airplane became the
Jefferson Starship and went mainstream and started playing Muzak. The
Dead never changed their music -- on purpose and by design, they never
went mainstream."

The glue that bonded the Dead to their Deadheads was the group's live
performances. Most of each show was unrehearsed and unplanned, with the
band playing only what it felt was right for the moment. "They might
start a song and then stop and say, 'Nah, not that one,' "Mr. McNally
said. "It was like being present at a conversation of musical friends."

The conversation -- filled with old songs and new -- proved captivating.
"It was musically fascinating -- that was what hooked me at first," said
David Gans, an author of three books about the band and host of a
nationally syndicated radio program, "The Grateful Dead Hour." "The
reward was to be there."

How The Grateful Dead Earned their Money

Source: Grateful Dead Merchandising Inc.

And so the Dead began to play countless live shows, in the process
turning the accepted music industry formula on its ear. That formula
casts recorded music as the profit center, and live appearances, in
large part, as just one of the drivers. The typical rock performer
records an album and then goes on tour to "support" its sales, singing
the same new songs night after night at concerts that become little more
than a cookie-cutter marketing tool.

But the lure of the Dead's music was the way in which it mutated on
stage, from night to night, and the group's studio recordings have
always been merely an afterthought for its fans. The band had only one
certified megahit, the "In the Dark" album, and that came late in its
career, in 1987. And the Dead have been all but ignored by the MTV
generation, a fact that has only strengthened their hold on longtime
fans.

For the Dead, then, the concert became the profit center. In the group's
last full year on tour, 1994, concert sales came to about $50 million
while CD's pulled in just $5 million to $10 million. Another $35 million
or so came from Dead merchandise, a big chunk of which was sold at the
concerts.

In business terms, those trademark concerts are a classic example of
discontinuous improvement or change, said Ms. Moore of Procter & Gamble.
With such change, a company does not try to improve an existing product
with a new flavor or color, say, but rather to develop something
radically different to fill a previously unidentified need.

At Procter & Gamble, Ms. Moore says, Tide was such a product in the
1940's, when it was introduced as the first synthetic detergent. Olean,
a fat substitute now in test marketing with the Pringles brand of potato
chips, is another example, she said. These kinds of "transcendent"
products, like the Dead's concerts, inspire tremendous long-term
loyalty.

"The Dead didn't worry about following musical trends," Ms. Moore said.
"They created their own trend, which is what discontinuous change is all
about."

Create a Community

"When there was no ear to hear, you sang to me..."
(from "Attics of My Life")

Jay Novack is a 35-year-old account executive at MHA Event Management in
Norwood, Mass. Mr. Novack is also a Deadhead.

"There's a sense of community, a feeling we're all in this together," he
said, explaining why. "You don't get that at other concerts where there
may be 30,000 individuals. With the Dead, you go to six shows in seven
nights at the Boston Garden and see the same people wearing the same
clothes talking about the same things. That was the big draw for me, the
sense of community."

Similar tight-knit communities abound in the marketplace. Owners of
Harley-Davidson motorcycles and Jaguar, Mercedes-Benz and B.M.W. cars
often become fanatical devotees of those products, joining clubs with
fellow owners, attending regular gatherings to swap stories and product
information and buying related paraphernalia like jackets, hats and
coffee mugs. Ms. Moore recounted that when Tide was introduced,
housewives would run out into the street if they spotted a P.&G.
delivery truck driving by in order to share their experiences and show
off their clean laundry.

The magic of the Grateful Dead brand is just how tight its community is.
There are certainly some casual fans who have attended only a few
concerts. Most fans, however, are serious members of an exclusive club.

"When you look at who the Deadheads are, they are people who were
demonstrating in the 60's and are now Wall Street lawyers," said
Harvard's Professor Shapiro. "They occasionally take a pro bono civil
rights case to feel good about themselves. But being a Deadhead is even
more important to them. It helps bring meaning to a life that got
co-opted along the line."

The Dead's penchant for playing a radically different show every night
was the cornerstone for creating the Deadhead community, according to
Rebecca Adams, an associate professor of sociology at the University of
North Carolina at Greensboro who is writing a book about the community.
If the band had played the same songs at each performance, fans would
have gone to only one or two shows. Instead, she said, the band made a
lot of decisions that gave Deadheads a reason to know one another.

For example, in the 80's, the Dead decided to buck conventional wisdom
and allow fans to tape their performances. In an industry where bootleg
copies cost artists and record companies huge profits, the decision was
tantamount to heresy. But Mr. Garcia was undeterred: "If we're done with
the music, you can have it." The band even set up a special area at
concerts for tapers to get the best sound.

In return, the Dead asked their fans to follow an honor system. They
could keep or trade the tapes with fellow Deadheads, but they could not
sell copyrighted material for profit.

In the Dead's case, the new open-door policy was a win-win decision. It
wasn't likely to hurt record sales much, especially since the group
didn't produce a studio album from 1981 to 1987. And it validated what
was already a thriving Deadhead subcommunity of tapers. Thanks to the
Internet, that subgroup has since grown into a giant global network.

But the tapes were only one strand in the ties that bound the community
together. Serious Deadheads kept logs of each show, scribbling on
notepads which songs were performed and in what order. Each nuance of
the performance -- which note Mr. Garcia missed or lyric he forgot --
was also logged.

Deadheads like Paul Santinelli, a 27-year-old product manager in
Sunnyvale, Calif., would sit for weeks, poring over play lists, trying
to predict which songs would be performed at a show, comparing sets that
were played at the same venue the year before or even 20 years earlier.
Would the band play "St. Stephen," an old hit that it hadn't performed
since 1979? "I got caught up in the anxiety," Mr. Santinelli says. "The
dynamic changed from show to show, set to set."

Not only did this bizarre bookkeeping create yet another sense of
community and clubbiness, but it also added to the band's mystique.

Creating such an aura around a brand is a powerful lure. Like the much
discussed advertising for Calvin Klein clothing or Nike sneakers, which
offer virtually no explanatory text, the implicit message is, "If we
have to explain, you'll never understand." This attitude contributes
mightily to the notion of an exclusive club in which membership helps
define the brand.

The band capitalized on this devotion by creating a huge data base of
shows and play lists, sold in book form and on diskette. Known as the
Deadbase, it is now in its eighth printing.

All this fostered a sense of urgency that translated into massive ticket
sales. Even as the band grew older, and Mr. Garcia, wracked by illness
and drug addiction, played poorly, the Dead retained their lure.

"The feeling was they could be bad one or two nights in a row, but the
next show could be the show, and you didn't want to miss that," said Mr.
Novack, the Deadhead from Norwood, Mass.

Professor Shapiro says the ability to retain a brand's cachet is crucial
to its long-term survival. "If you make it too ubiquitous, it loses
cachet," he explains. "What the Dead did is make sure they didn't let
records or CD's cheapen their image or make it pedestrian. That's an
important thing; there has to be a sense of 'I'm in, you're out.' "

Professor Shapiro adds that the merchandising of the band has not turned
off its followers because, for them, "it is more about affiliation, more
of a sense of belonging, than crass merchandising."

Make Quality Job One

"Built to last while the years roll past..."
(from "Built to Last")

Despite their scraggly appearance, noted drug use and free-form style,
the members of the band -- which also included Bob Weir, Phil Lesh,
Mickey Hart and Bill Kreutzmann, among others -- had an unceasing
commitment to improve their product and serve their audience.

In part, they did that by keeping their employees nearly as loyal as
their fans. At its zenith, the band's parent company, Grateful Dead
Productions Inc., which was based in San Rafael, Calif., had more than
70 full-time employees, including a large road crew that stayed on the
payroll even when a tour ended. From the early 70's, when everyone
earned $125 a week, including the band members, the financial rewards
grew astronomically and the wealth got shared.

The road crew, for example, earned six-figure salaries, according to Mr.
McNally, the publicist, and they also had generous profit-sharing and
health plans. "There was simply no turnover," he said, "and no
absenteeism." Indeed, Ram Rod, the crew chief, held his job for 28
years.

That degree of two-way loyalty, reminiscent of pre-downsizing days at
I.B.M. or AT&T, has long been a characteristic of successful companies.
Yet such devotion to the crew is foreign to the rock music business,
where most bands let their workers go as soon as a tour is over. But for
a band that spent as much time on the road as the Dead did, a stable
staff was essential to make sure that everything ran well and on time.

The Dead also invested a small fortune in sound equipment, building
perhaps the most sophisticated system in the industry.

By the 80's, the band decided to address the problems its fans were
encountering trying to get concert tickets. While younger fans were more
than willing to sleep out on sidewalks to keep their place in line,
Deadheads with jobs and careers kept finding themselves shut out of
events. So in 1983, the band set up its own mail-order ticket service.

"This way people with real lives could go to a show," Mr. McNally said.
And the service helped end scalping scams as well.

As the band's popularity grew, it became a point of pride to keep ticket
prices affordable. While bands like the Eagles, during their recent
reunion tour, charged up to $100 a ticket, the Dead never asked for more
than $30.

And, in general, the Dead let the Deadheads create their own environment
at the concerts. Two exceptions: the band members were quite vocal about
vendors selling copyrighted material and about gate-crashers. "If you
don't have a ticket, don't come," they would tell the audience.

They also pushed hard to limit the flea market atmosphere in the parking
lots around the concert sites. Often, so much was going on that some
fans with tickets could not find spots to leave their cars.

Extend the Brand

"The Golden Road (to unlimited devotion)"
(a Grateful Dead song title)

In the mid-80's, Greg Burbank was a 21-year-old college dropout selling
stickers and tie-dyed T-shirts in some of those parking lots. One night,
he and his partner got a tap on the shoulder from a Dead crew member
asking them to come in and talk to representatives of the band. "Rather
than suing us for trademark infringement, they brought us on board," Mr.
Burbank remembers.

Today, Liquid Blue Inc., Mr. Burbank's company in Lincoln, R.I., is one
of the largest licensees of Grateful Dead merchandise, selling around $4
million worth to retail outlets each year.

The band was, in fact, among the first rock groups to inspire vast sales
of merchandise, of T-shirts, posters, stickers and the like. Though for
many years they were content to let entrepreneurial fans reap the
rewards, Mr. Garcia and his colleagues were eventually convinced that
they were giving away more than a quarter of a million dollars in
revenue each night. By taking over the merchandising themselves, they
decided, they would not only gain the financial rewards, but also a
measure of quality control. That is when they made the decision to bring
in certain parking lot vendors, those who had sold high-quality goods,
rather than force them all out of business.

"These people had a real respect for the band and the music," said Mr.
McQuaid, the head of the Dead's merchandising arm. "It was far more
satisfying to have a relationship with someone with high regard for the
group than to create a stable of artists inside our company."

Today, Grateful Dead Merchandising, with 22 full-time employees based in
Novato, Calif., is a wholly owned subsidiary of Grateful Dead
Productions, the group's umbrella corporation. The rock world's answer
to L.L. Bean, the merchandising unit sends a quarterly publication to
the 140,000 people in its data base, about half of whom are active
buyers. A combination fanzine and catalogue, the publication offers up
to 500 items -- from golf balls to baby clothes -- festooned with
various Grateful Dead logos.

The direct-mail operation accounted for about 15 percent of the $35
million in non-music sales in 1994, with the rest coming from royalties
from hundreds of licensees.

Non-music sales grew at a rate of 25 percent a year in the last three
years of the band's life, according to Mr. McQuaid. They went up even
faster in 1995, to a total of $45 million, in the wake of Mr. Garcia's
death, of a heart attack at age 53, in August of that year.

Sales spiked so high that retail outlets quickly ran out of CD's and
other band merchandise. The mail-order operation had to work around the
clock for nearly four months to keep up with demand; it logged 15,000
calls a day for the first week after Mr. Garcia's death.

The band's ability to mix counterculture sentiment with unabashed
marketing pitches was at work even then. In a note to readers of the
catalogue, the Dead's merchandising arm expressed sorrow over Mr.
Garcia's death and then noted, "Deadheads have expressed an overwhelming
desire to have something ... anything ... some music, a memento, an
amulet, a power object ... to console them, to inspire them, to remind
them of the good times. And it's our privilege to be able to provide
these things."

Sales of Dead merchandise in 1996 should be in the range of $40 million
to $50 million, with the mail-order operation responsible for $10
million of that, according to Mr. McQuaid.

Jerry Garcia may be gone, but his army of Deadheads clearly lives on.

Find New Distribution Channels

"I will survive..."
(from "Touch of Grey")

So what happens to that army now?

The Dead built an institution, not just a rock band, notes Professor
Shapiro of Harvard. "It's amazing how brands have a hold," he said.
"People get very attached."

One measure of that attachment is the fact that the Dead's official
World Wide Web site on the Internet still receives upward of 100,000
visits a day. What's more, there are hundreds of unofficial sites,
including dozens with links to merchandise sales opportunities.

For his part, Mr. McQuaid believes the Dead brand can live on
indefinitely, in terms of new products and through new channels of
distribution. He points out that the money Deadheads spent on concert
tickets may now be aimed at merchandise and music sales.

There will be plenty to choose from. There are tapes in the vault of
thousands of Grateful Dead shows and the surviving members of the band
intend to digitally mix these concerts and release them regularly for
years to come. The remaining members have all embarked on separate
projects with new groups and their continued presence on the road will
likely fuel sales of both new and old Dead CD's.

As for new merchandise, Mr. McQuaid is starting to market a line of
"lifestyle" products, including expensive tie-dyed towels and silk ties.
The new items, to be sold in such mainstream retail outlets as
Nordstrom, will be devoid of Dead logos or any other direct visual
reference to the band.

"We're now discovering a large market that is emerging among baby
boomers who aren't wearing Dead T-shirts but still want to show their
devotion to the band," Mr. McQuaid said. "People in board rooms will
wear Grateful Dead ties that only other Deadheads will recognize. It
will be subtle."

Not everything is all that subtle, however. Landmark USA, a shoe
manufacturer in Wisconsin, is marketing Dead Treads, a sandal that
leaves a skeletal footprint in the sand. Mr. McQuaid says the sandals
are available at Nordstrom and other retail outlets around the country.

Mr. McQuaid says that he is looking off-shore for additional marketing
opportunities. "We're working on a distribution deal in Japan," he said.
"There is huge interest there in the Dead and we expect to find a big
market."

Mr. Burbank of Liquid Blue points out that long-defunct acts like Jimi
Hendrix and Led Zeppelin continue to be among the most popular in
merchandising circles. "Hendrix only toured for four or five years
before he died," Mr. Burbank said. "The Grateful Dead have touched
millions of people and there are 14-year-old kids who now think the Dead
are a cool thing. That train was rolling for 30 years. It's not coming
to an abrupt halt."

Mr. Hill of Booz-Allen agrees. Thanks to the band's sound marketing
principles, the Dead's deep relationship with its customers will not
dissolve any time soon, he said.

"It's easy to dismiss the Dead in a fad business where image is
important," Mr. Hill added. "But the Dead managed to succeed over three
generations. They are not a flash in the pan."

The Dead's own catalogue may have said it best: "Many thought that
without a touring band as its focus, this remarkable community would
evaporate like the mythical village of Brigadoon. Well, did we ever fool
them! Because the Deadhead community is alive and well in many forms ...
All it takes is some good tapes cranked up loud and room to twirl and it
lives in the thousands of lasting friendships that grew out of the
wonderful adventure we have been sharing all these years."

As brand testimonials go, that is about as good as it gets.

Photos courtesy of Grateful Dead Merchandising Inc.

Reprint No. 97106
/Quote