Manage Radio Like the Grateful Dead

There was a great piece in the Atlantic Magazine recently about the influence – as unlikely as it is – that the Grateful Dead has had on the business world.

The article was fascinating especially in light of all the Harvard and Stanford grads that are using their Ivy League educations to – well, ruin the media business.

And even if they are not Harvard and Stanford alumni, the Grateful Dead is just a group of stoners who somehow got more things right than the suits running the record industry, radio and even some high powered new media businesses.

Let’s take a look.

The Dead never started out to become the Peter Drucker of the media world. But I believe they would have loved Drucker and he the group. Drucker appeared as keynote speaker at one of my media seminars before his death.

And now Drucker is dead, Jerry Garcia is Dead (I mean, dead) but the concepts that they developed are very much alive and worth your consideration.

For example:

Focus on the loyalist of fans

According to the Atlantic Magazine article, the Dead established phone hotlines to keep fans abreast of their touring schedule, reserved the best seats in the arena for them, held the best ticket prices which the band handled through its own mail order house.

As the article said, “If you lived in New York and wanted to see a show in Seattle, you didn’t have to travel there to get tickets—and you could get really good tickets, without even camping out”.

The Dead was ahead of the business world – even Japan – in treating fans well.

But let’s stop for a second to look at how the radio industry treats listeners.


Do most stations even care to super serve their loyalist listeners?

I think not. Most -- no.

They are more enamored of getting Arbitron’s People Meter to report as much drive-by listening as they can.

Even at Christmas, a time when listeners can’t seem to get enough holiday music, most stations gladly take the spike of PPM numbers but do not reward their listeners with rich content, community involvement, civic outreach. In many cases, an iPod can do the same thing.

Taking away personalities that fans care about never made sense.

Issuing news releases that sound like bullshit every time a radio personality is separated from their fans is counter-intuitive.

Are station owners watching their loyal listeners’ backs or are they just after an impersonal relationship?

Appoint a board of directors with rotating CEO

Here’s another idea Lew Dickey, Farid Suleman and Lee and Bain won’t like.

According to the Atlantic Magazine article, the Dead set up a board of directors consisting of band, road crew and other organization members. The CEO was not the same person year in and year out – it rotated.

The radio industry is a fiefdom and the boards do not intend to be democratic. How do you think they have made a sham of oversight?

What I am saying is that when you let these poor excuses for business execs take control, they shut down fan focus, the benefits of loyal customers and product integrity.

In the record industry you would think someone would have noticed how Jerry Garcia can run a group from the great beyond better than living label executives. Maybe because Garcia was only one member of a like-minded group that knew putting loyal customers first paid off in business.

Give it away until they buy it

Proctor & Gamble hands out freebies with the hope that consumers will buy their new products. These are called "samples".

The radio industry plays music for free so fans can then buy concert tickets, music, merch. That is, they sample it before making a purchase decision.

To quote the article:

“They founded a profitable merchandising division and, peace and love notwithstanding, did not hesitate to sue those who violated their copyrights. But they weren’t greedy, and they adapted well. They famously permitted fans to tape their shows, ceding a major revenue source in potential record sales.

According to Barnes (Barry Barnes, a business professor at Huizenga School of Business and Entrepreneurship at Nova Southeastern University, in Florida), the decision was not entirely selfless: it reflected a shrewd assessment that tape sharing would widen their audience, a ban would be unenforceable, and anyone inclined to tape a show would probably spend money elsewhere, such as on merchandise or tickets. The Dead became one of the most profitable bands of all time”.

In other words, the RIAA fighting free filing sharing is exactly the wrong model. The one that actually is proven to work is the one that the Grateful Dead taught us – give it away until they buy it.

The Dead’s John Perry Barlow said it best when he said, “the best way to raise demand for your product is to give it away”. (Read more here).

The Dead couldn’t control taping at their concerts just as record labels can’t control file sharing on the Internet so they gave fans a place to plug in and record their concerts.

The Wall Street Journal can control who reads their content but they can’t control what happens to it after a paid subscriber reads it and decides to pass it along.

When I turned Inside Radio from a printed publication into a daily fax, subscribers paid $495 a year to get it but one radio CEO (you know who you are and I do too) would have his secretary refax it to all his stations and friends – every day. Inside Radio subscriptions topped the half million dollar mark each year even with sharing and that’s just subscriptions not advertising, employment, conventions or other forms of income.

Stealing helped promote Inside Radio before file sharing set off all the wrong alarms for business executives.

So what can we learn?
  1. That rewarding loyal fans and building your enterprise around them is good business that pays great dividends and even allows you to skate through a recession.
  2. All good ideas do not come from the CEO or for that matter the board of directors even if they are college educated.
  3. In order to buy, you have to try. If you like what you’re reading here, perhaps you’ll buy it if the price is right.
  4. You can’t charge for something that you can’t control. So, a CD buyer walking out of a Sam Goody store had to pay for it or get arrested but the Internet is so massive, it is better to cooperate with the inevitable and let music piracy sell music, merch and concert tickets.
Isn’t it fascinating that certified wacky entrepreneurs like Ted Turner knew how to build and run a cable empire and Time Warner couldn’t run it when they bought it? Turner knew the connection to his fans.

Remember what Peter Drucker told my conference attendees.

The seller does better than the buyer in the sale of most businesses. That’s probably because the acquirer forgets what it took to attract loyal fans (never knew or failed to keep the employees who did know) and the sellers couldn’t have built the business without them.

Loyal fans – not PPM numbers.

Rabid music fans – not filesharing pirates.

Let’s go to school on the Grateful Dead. Here’s a link to the outstanding article that inspired today’s piece.

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